Annual Report 2009 A strategy for unlocking value WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Annual Report 2009 Our mission
Anglo American aims to be the leading global mining company – through world class assets in the most attractive commodities, operational excellence and a resolute commitment to safe and sustainable mining.
Find out more Cover photo 7ITHIN THIS REPORT WE HAVE INCLUDED -ANTOS "LANCOS IN THE !TACAMA REFERENCES TO äND OUT MORE INFORMATION $ESERT IN #HILE HAS BEEN IN ON CERTAIN SECTIONS EITHER WITHIN THE OPERATION FOR NEARLY YEARS REPORT ITSELF OR ONLINE )N THE MINE PRODUCED MORE THAN KT OF COPPER
&OR MORE INFORMATION WITHIN This page THIS REPORT ,OAD HAUL TRUCKS IN THE OPEN PIT AT ,OS "RONCES IN #HILE 4HE MINE WHICH LIES AT METRES &OR MORE INFORMATION ONLINE ABOVE SEA LEVEL AND HAS EXTENSIVE RESERVES PRODUCED MORE THAN KT OF COPPER IN WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 - WorldReginfo
About Anglo American Operating and financial review Governance Financial statements Ore Reserves & Mineral Resources Other information Statement of directors’ directors’ of Statement Exchange rates and commodity prices and rates Exchange responsibilities report review Independent remuneration remuneration Independent 94 Responsibility statements Responsibility94 95 statements report auditors’ Independent Principal 96 statistics Production 171 178 179 financial data Key 181 Summary by business operation 182 earnings segment by Reconciliation of 183 reported Reconciliation of earnings 184 The business – an overviewinformation Shareholder187 188 Other American Anglo publications 92 92 Introduction 148 Platinum 149 Copper 152 Nickel 155 156 products Phosphate and Niobium 157 Zinc Ore 159 Iron 161 Manganese 162 Coal 02 Group overview Group 02 Highlights 04 statement Chairman’s 06 08 Chief executive’s statement 12 choice of investment The 16 performance (KPIs) indicators Key 18 Performance KPIs against Resources28 30 performance financial Group Platinum34 Diamonds 38 Copper 42 Nickel 46 50 Coal Manganese and Ore Iron Metallurgical 54 Coal Thermal 58 62 Industrial Other and Mining 64 uncertainties and risks Principal Board The 68 management Executive 70 report Directors’governance 71 Corporate 75 report Remuneration 80 91 100 100 Notes to the financial statements Annual Report 2009 Report Annual 01 Anglo American plc About Anglo American OurGroup mission overview
Rio de Janeiro
São Paulo
Santiago
+EY &OR MORE INFORMATION SEE PAGES #ORPORATE AND REPRESENTATIVE OFäCES 0LATINUM &OR MORE INFORMATION VISIT $IAMONDS WWWANGLOAMERICANCOUK #OPPER .ICKEL )RON /RE AND -ANGANESE -ETALLURGICAL #OAL 4HERMAL #OAL /THER -INING AND )NDUSTRIAL
)N ADDITION TO ITS OPERATIONS !NGLO !MERICANÓS EXPLORATION ACTIVITIES AND PROJECTS COVER MANY PARTS OF THE GLOBE
Since 2002... 2006 Restructuring of Kumba Resources to 2002 Anglo Base Metals separately list Kumba Iron Ore (with Anglo 2007 Demerger of Mondi sees Anglo acquires the Disputada American holding 64%) and Exxaro, which American’s former paper and packaging copper operations in became South Africa’s largest black economic business become a dual-listed company Chile from Exxon Mobil. empowered (BEE) natural resource company. in London and Johannesburg.
2003 Anglo American 2006 Shareholding 2007 Cynthia Carroll acquires a major stake in AngloGold Ashanti appointed chief executive in Kumba Resources. reduced from 51% to 42%. in March.
02 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 London American Anglo About
Luxembourg
Beijing
New Delhi
Johannesburg Brisbane
Precious Base Bulk Platinum Copper Iron Ore and Manganese Thermal Coal Business profile Business profile Business profile Business profile The world’s leading primary producer Six operations in Chile account for Comprises operations in South Africa, Thermal Coal operations managed of platinum, accounting for around the majority of current copper output Brazil and Australia out of South Africa 40% of newly mined platinum output Significant future growth from Minas Rio project to begin production Coal is exported from South Africa, Operations based in South Africa approved expansion at Los Bronces of high grade pellet feed in 2012 South America and Australia throughout the Med-Atlantic and Product details Product details Product details Indo-Pacific markets Primarily used in autocatalysts Used mainly in wire and cable, brass, Key component in steel, the most and jewellery tubing and pipes widely used of all metals Product details Also employed in chemical, electrical, Copper’s thermal conductivity also Global steel consumption forecast About 40% of all electricity generated electronic, glass and petroleum makes it suitable for use in heat to grow in excess of 5% pa over globally is powered by thermal coal industries and medical applications transfer applications such as air the next 3 years About 5.8 billion tonnes of hard coal conditioning and refrigeration are produced globally each year
Diamonds Nickel Metallurgical Coal Other Mining and Industrial Business profile Business profile Business profile Business profile Anglo American owns 45% of De Beers Major operations in Brazil and Venezuela Metallurgical Coal operations managed Assets include: Tarmac, the Group’s De Beers produces about 40% of the Barro Alto project in Brazil is expected out of Australia portfolio of zinc assets, Scaw Metals, world’s diamonds by value and is the to more than double nickel production Project pipeline includes more than Copebrás, Catalão, Peace River world’s largest supplier and marketer by 2012 20 mining prospects Coal and the Group’s share in the of rough gem diamonds Carbones del Guasare coal assets Product details Product details Accounted for approximately Product details About 60% of all nickel is used in Key raw material for 70% of the 13% of 2009 Group EBITDA The most important diamond jewellery the production of stainless steel world’s steel industry Preparatory work for the separation market is the United States, followed Around 25% is used to make other Demand driven by economic, industrial of these businesses has commenced by China and Japan types of steel and for super-alloys, and steel growth Some stones are used for industrial which can withstand extreme purposes such as cutting and drilling temperatures
2009 Major restructuring of 2007 Purchase of a 49% 2007 Acquisition of the 2008 Anglo American the Group to further focus on stake in the Minas Rio iron Michiquillay copper project acquires control of the Minas core commodities and improve ore project in Brazil. in northern Peru. Rio iron ore project. operational delivery.
2007 Disposal of remaining 2008 Acquisition of a 70% 2009 Anglo American sells 2009 Anglo American 29% holding in Highveld interest in the Foxleigh coal its remaining shareholding achieves record safety Steel and Vanadium. mine in Australia. in AngloGold Ashanti. performance.
Anglo American plc Annual Report 2009 03 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 About Anglo American Highlights A strategy for unlocking value
&OR MORE INFORMATION SEE PAGE > Delivering operational efficiencies > Asset optimisation and procurement delivered more than $1.6 billion of benefits in 2009 ($1.4 billion from core operations), exceeding target > Asset optimisation and procurement target of $2 billion now to be delivered from core businesses alone by 2011 > Anglo Platinum – significant restructuring achieved, flat cash operating costs target met, 3 high cost shafts on care and maintenance, labour productivity up 21% in 2 years > Significant cash cost reduction of $712 million (5%) and productivity improvements achieved across the Group – headcount reduced by 23,400 > Creating a more effective, focused business > Major Group reorganisation completed, creating new generation of leadership within a leaner, more effective structure > Board strengthened and refreshed – new chairman and 3 new non-executive directors to bring further mining, commercial and financial expertise > Divestment programme under way – running businesses to maximise value; sales of Tarmac’s European aggregates and Polish concrete products businesses agreed with expected proceeds of approximately $400 million; Zinc sale process initiated with significant buyer interest > Clear strategy driving targeted, high quality growth of selected commodities > $17 billion of approved projects in most attractive commodities to drive organic production growth of more than one third by 2013 – copper to grow by 33%; iron ore by 82%; nickel by 139% > Development of four key strategic projects on track – Minas Rio, Los Bronces, Barro Alto and Kolomela (Sishen South) > New growth projects: Quellaveco (copper) and Grosvenor (metallurgical coal) – first stage approvals expected in 2010
04 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating profit Underlying earnings Underlying earnings per share (2008: $10.1 bn) (2008: $5.2 bn) (2008: $4.36) $5.0 bn $2.6 bn $2.14 American Anglo About
Capital expenditure Dividends per share Underlying earnings per share $ bn Cents $
)NTERIM &INAL 3PECIAL %XCLUDES DISCONTINUED OPERATIONS
2009 operating profit by business unit /PERATING PROäT INCLUDES SHARE OF ASSOCIATESÓ OPERATING PROäT BEFORE SHARE OF ASSOCIATESÓ TAX äNANCE CHARGES $ million AND MINORITY INTERESTS AND IS BEFORE SPECIAL ITEMS AND REMEASUREMENTS UNLESS OTHERWISE STATED 3EE NOTES AND TO THE äNANCIAL STATEMENTS FOR OPERATING PROäT 0RECIOUS"ASE "ULK /THER -INING AND )NDUSTRIAL ON A TOTAL 'ROUP BASIS &OR DEäNITION OF SPECIAL ITEMS AND REMEASUREMENTS SEE NOTE TO THE äNANCIAL STATEMENTS 0LATINUM #OPPER )RON /RE AND -ANGANESE /THER -INING AND )NDUSTRIAL 3EE NOTE TO THE äNANCIAL STATEMENTS FOR BASIS OF $IAMONDS .ICKEL -ETALLURGICAL #OAL CALCULATION OF UNDERLYING EARNINGS 4HERMAL #OAL /PERATIONS CONSIDERED CORE TO THE 'ROUP ARE 0LATINUM $IAMONDS #OPPER .ICKEL )RON /RE AND -ANGANESE -ETALLURGICAL #OAL AND 4HERMAL #OAL 5NLESS OTHERWISE STATED ÒTONNESÓ ARE METRIC TONS Ò-TÓ DENOTES MILLION TONNES ÒKTÓ DENOTES THOUSAND TONNES AND ÒKOZÓ DENOTES THOUSAND OUNCES 5NLESS OTHERWISE STATED ÒÓ AND ÒDOLLARSÓ DENOTE 53 DOLLARS AND ÒCENTSÓ DENOTES 53 CENTS
&OR MORE INFORMATION ON OUR BUSINESS UNIT PERFORMANCE SEE PAGES TO
Anglo American plc Annual Report 2009 05 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 About Anglo American Chairman’s statement Delivering on our commitments
We are committed to key projects to maximise our long term returns.
Sir John Parker Chairman, appointed August 2009
Career in brief
1964 Joins the ship design team 2002 Appointed chairman of National at Harland & Wolff as a naval Grid Transco when the Lattice architect and engineer Group and National Grid merge.
1978 Joins the board of British Becomes chairman of RMC Group, Shipbuilders Corporation Aggregates and Cement. He is also knighted for services to 1983 Returns to Harland & Wolff as the defence and shipbuilding chairman and chief executive, industries leading a transfer from the public to the private sector 2004 Appointed Chair of the Court of the Bank of England 1986 Joins British Coal Corporation as a non-executive director 2005 Appointed chairman of P&O, leading the sale to Dubai’s 1993 Joins Babcock International DP World as CEO (becoming chairman the following year) 2009 Joins Anglo American as chairman
1997 Becomes a non-executive director of British Gas, which leads to him becoming chairman of the Lattice Group when it demerges from BG Group
06 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 A world class combination Sustainable development Outlook of resources and people /PERATING OUR BUSINESSES IN A SOCIALLY AND 4HE WORLD ECONOMY HAS RECOVERED AFTER THE )N THIS MY äRST YEAR AS CHAIRMAN OF ENVIRONMENTALLY RESPONSIBLE WAY AND EARNING SEVERE RECESSION OF LATE AND EARLY AND DESERVING TRUST ARE FUNDAMENTAL TO OUR 5NPRECEDENTED POLICY STIMULUS AND MORE !NGLO !MERICAN ) AM PLEASED TO REPORT ON A American Anglo About VERY CREDITABLE OVERALL PERFORMANCE DURING LICENCE TO OPERATE AND TO DELIVERING LONG TERM RECENTLY A TURN IN THE INVENTORY CYCLE HAVE AN EXTREMELY VOLATILE YEAR IN OUR MARKETS VALUE TO OUR INVESTORS CONTRIBUTED TO THE UPTURN )N THE MAJOR ADVANCED ECONOMIES THERE ARE SOME SIGNIäCANT HEADWINDS 9OUR COMPANY IS IN VERY GOOD SHAPE TO MEET /UR COMMITMENT TO EXCELLENCE IN THIS äELD IS THAT WILL PROBABLY RESTRAIN GROWTH IN AND THE CHALLENGES AHEAD WE HAVE A FORMIDABLE NOT A FUNCTION OF THE ECONOMIC CYCLE )NDEED &INANCIAL SYSTEMS ARE FRAGILE HOUSEHOLDS PORTFOLIO OF TOP QUALITY ASSETS AND PROJECTS IN DIFäCULT ECONOMIC TIMES THE RESPONSIBILITY AND COMPANIES ARE REBUILDING BALANCE SHEETS WE ARE A MORE äT FOR PURPOSE AND LEAN ON US TO DEMONSTRATE THAT WE ARE A CONSISTENT AND POLICYMAKERS ARE UNDER PRESSURE TO WITHDRAW ORGANISATION OUR BUSINESS IS ADEQUATELY SUPPORTIVE PARTNER FOR SUSTAINABLE DEVELOPMENT EXTREME STIMULUS MEASURES 0ROSPECTS ARE MUCH FUNDED OUR "OARD HAS BEEN REFRESHED AND IS ALL THE GREATER WE ARE ENTHUSIASTICALLY EXECUTING OUR CLEAR BRIGHTER IN THE MAJOR EMERGING ECONOMIES #HINA STRATEGY FOR DELIVERING VALUE 7E CONTINUED TO INTEGRATE SUSTAINABLE AND )NDIA ARE GROWING STRONGLY AS INCREASES IN DEVELOPMENT INTO OUR BUSINESS PROCESSES IN INFRASTRUCTURE SPENDING HAVE OFFSET THE WEAKNESS )N MY äRST FEW MONTHS ) HAVE TRAVELLED EXTENSIVELY 7E LAUNCHED TWO MAJOR POLICIES THE OF EXPORT MARKETS 7HILE POLICYMAKERS WILL AROUND THE 'ROUP ) HAVE BEEN IMPRESSED NOT !NGLO %NVIRONMENT 7AY AND THE !NGLO 3OCIAL PROBABLY SEEK TO CURB OVERHEATING RISKS LONGER ONLY BY !NGLO !MERICANÓS ASSET QUALITY BUT ALSO 7AY WHICH ESTABLISH DEMANDING ENVIRONMENTAL TERM ECONOMIC FUNDAMENTALS REMAIN SOUND BY THE PROFESSIONALISM OF ITS PEOPLE 7E HAVE AND SOCIAL MANAGEMENT STANDARDS 7E ASSESSED %CONOMIC GROWTH IN THE EMERGING ECONOMIES A TOP CLASS TEAM WITH AN UNPARALLELED RECORD OUR SOCIAL PERFORMANCE AGAINST THE STANDARDS IN WILL CONTINUE TO OUTPACE THAT IN THE ADVANCED OF INNOVATION AND LEADERSHIP IN EXPLORATION IN THE 3OCIAL 7AY AT THE END OF IDENTIFYING ECONOMIES OVER THE NEXT DECADE ENGINEERING AND IN MINING OPERATIONS MANY EXAMPLES OF BEST PRACTICE BUT ALSO SOME GAPS WHICH WE AIM TO CLOSE IN Refreshing the Board A clear strategy for delivering value 7E ALSO LAUNCHED A NEW VERSION OF OUR ) BELIEVE IT IS THE "OARDÓS JOB TO SET THE DRUMBEAT )N WE INCREASINGLY REAPED THE BENEäT 'OOD #ITIZENSHIP "USINESS 0RINCIPLES Ð OUR FOR THE BUSINESS BY OWNING THE STRATEGY FROM INITIATIVES WE PUT IN PLACE TO CREATE GREATER CORPORATE CODE OF CONDUCT !LONGSIDE A GREATER EMPOWERING MANAGEMENT TO EXECUTE IT AND SHAREHOLDER VALUE !N IMPORTANT ELEMENT IS OUR FOCUS ON ENVIRONMENTAL ISSUES THIS EMPHASISES HOLD THEM ACCOUNTABLE FOR DELIVERY 4HUS THE ASSET OPTIMISATION PROGRAMME WHICH AIMS TO AN INCREASED COMMITMENT TO OUR ALREADY "OARD NEEDS TO BE äT FOR PURPOSE WITH THE RIGHT UNLOCK VALUE FROM EXISTING ASSETS AND ACHIEVE EXTENSIVE PROGRAMMES ON ()6!)$3 TREATMENT RANGE OF SKILL SETS TO BE CAPABLE OF TACKLING ANY OPERATIONAL EXCELLENCE THROUGH ONGOING COST AS WELL AS TO DIVERSITY AND FAMILY LIFE ISSUE THAT COMES THROUGH THE BOARDROOM DOOR AND PRODUCTIVITY IMPROVEMENTS )T ALSO STRENGTHENS OUR STANCE AGAINST CORRUPTION )T IS AGAINST THAT BACKGROUND THAT ) WELCOME !NOTHER SIGNIäCANT INITIATIVE IS A STREAMLINED IN WE DEVELOPED A COMPREHENSIVE 3IR 0HILIP (AMPTON WITH HIS WEALTH OF SUPPLY CHAIN IN ORDER TO CAPITALISE ON THE SCALE OF "USINESS )NTEGRITY 0OLICY ACCOMPANIED BY äNANCIAL STRATEGIC AND BOARDROOM EXPERIENCE THE 'ROUP AND TO DELIVER COST SAVINGS BY FORMING DETAILED ANTI CORRUPTION 0ERFORMANCE 3TANDARDS *ACK 4HOMPSON A LIFELONG SUCCESSFUL MINING STRATEGIC GLOBAL PARTNERSHIPS WITH KEY SUPPLIERS 4HIS WILL BE ROLLED OUT THROUGH THE BUSINESS EXECUTIVE AND 2AY /Ó2OURKE WHO HAS SPENT &URTHERMORE A FAR REACHING AND BOLD RESTRUCTURING IN A LIFETIME OF ACHIEVEMENT IN LARGE SCALE COMPLEX CONSTRUCTION PROJECTS OF THE 'ROUP HAS ENABLED IT TO BECOME A MORE #LIMATE CHANGE TOOK CENTRE STAGE AT THE END EFFECTIVE ORGANISATION 4HE NEW OPERATING MODEL OF !LTHOUGH THE #OPENHAGEN !CCORD FELL ) WOULD ALSO LIKE TO TAKE THIS OPPORTUNITY TO IS DESIGNED TO MAKE !NGLO !MERICAN NIMBLE SHORT OF EXPECTATIONS WE REMAIN COMMITTED Ð THANK 3IR 2OB -ARGETTS #HRIS &AY AND &RED LEAN AND äT TO EXECUTE OUR BUSINESS STRATEGY AS BOTH A MAJOR CONSUMER OF ENERGY AND A MAJOR 0HASWANA FOR THE VALUABLE CONTRIBUTIONS THEY !LL THESE ACTIONS IN COMBINATION HAVE LED TO COAL PRODUCER Ð TO MINIMISE OUR OWN CARBON HAVE MADE OVER THE YEARS TO THE SUCCESS OF A NEW SENSE OF PURPOSE FOR OUR 'ROUP 7E ARE EMISSIONS PLAY A PROACTIVE ROLE IN THE ONGOING !NGLO !MERICAN ) ALSO WISH TO PAY TRIBUTE NOW VERY CLEAR ON OUR STRATEGIC PRIORITIES 7E INTERNATIONAL DEBATE AND WORK TO DEVELOP OUR TO +AREL 6AN -IERT WHO PASSED AWAY IN *UNE ARE FOCUSED ON THOSE COMMODITIES WE CONSIDER TECHNOLOGICAL RESPONSE !N EXAMPLE OF THIS IS LAST YEAR (E IS GREATLY MISSED OUR INVESTMENT IN METHANE CAPTURE IN !USTRALIA WILL GIVE !NGLO !MERICAN THE BEST MIX FOR THE -Y äNAL WORDS GO TO MY PREDECESSOR WHERE WE HAVE HELPED DEVELOP TWO MINE GAS FUTURE WE KNOW WHERE WE ARE HEADED AND 3IR -ARK -OODY 3TUART (E ACHIEVED SO POWER STATIONS WHICH TOGETHER WILL REDUCE WE ARE WELL POSITIONED FOR THE NEXT COMMODITY MUCH IN HIS NEARLY SEVEN YEARS AS CHAIRMAN CARBON DIOXIDE EMISSIONS BY AROUND -TPA UPCYCLE AND BEYOND TO EMBED SUSTAINABILITY AND GOOD CORPORATE -ORE BROADLY !NGLO !MERICAN CONTINUES GOVERNANCE BOTH IN OUR OWN BUSINESS AND IN Safety TO SUPPORT LEADING INTERNATIONAL INITIATIVES THE GLOBAL ARENA TO PROMOTE RESPONSIBLE CORPORATE ACTIVITY .O COMPANY CAN EVER BE RANKED AS TRULY GREAT /N BEHALF OF THE "OARD ) WISH ALL OF THOSE 7E REMAIN COMMITTED TO THE 5NITED .ATIONS IF IT HAS AN UNSATISFACTORY SAFETY RECORD !S YOUR STEPPING DOWN A LONG AND ACTIVE RETIREMENT 'LOBAL #OMPACT AND THE %XTRACTIVES )NDUSTRY NEW CHAIRMAN ) WOULD LIKE TO STATE CATEGORICALLY ) ALSO WISH TO THANK ALL OUR EMPLOYEES AND 4RANSPARENCY )NITIATIVE AND HAVE BEEN PLEASED THAT SAFETY WILL HAVE MY UNREMITTING ATTENTION PAY TRIBUTE TO THEIR DEDICATION AND THEIR TO SEE THE LATTER STEADILY GAIN TRACTION 7E AS IT HAS ALWAYS BEEN MY NUMBER ONE AGENDA LOYALTY TO !NGLO !MERICAN ITEM -Y PHILOSOPHY IS THAT THE PEOPLE WHO CONTINUE TO SUPPORT THE )NVESTMENT #LIMATE &ACILITY FOR !FRICA TO WHICH WE HAVE CONTRIBUTED COME TO WORK FOR YOU EACH DAY HAVE THE RIGHT Dividend TO RETURN HOME SAFE TO THEIR FAMILIES EACH NIGHT MILLION TO DATE 7E ARE ALSO ACTIVELY ENGAGED IN DISCUSSIONS AROUND THE REVIEW OF THE 4HE RESUMPTION OF THE DIVIDEND AT THE EARLIEST )T IS ENCOURAGING TO REPORT THAT !NGLO !MERICAN /%#$ 'UIDELINES FOR -ULTINATIONAL %NTERPRISES POSSIBLE TIME REMAINS A KEY PRIORITY FOR THE IS MAKING FURTHER INROADS IN IMPROVING ITS SAFETY AND CONTINUE TO PLAY AN ACTIVE ROLE IN SUPPORT "OARD !SSUMING THAT THE COMMODITY PRICE PERFORMANCE )N THERE WAS ANOTHER OF THE 6OLUNTARY 0RINCIPLES ON 3ECURITY AND ENVIRONMENT AND OUTLOOK CONTINUE TO IMPROVE SIGNIäCANT DECLINE IN THE NUMBER OF PEOPLE (UMAN 2IGHTS AND THE BUSINESS PERFORMANCE REMAINS ROBUST WHO LOST THEIR LIVES ON COMPANY BUSINESS THE "OARD WOULD EXPECT TO BE ABLE TO ANNOUNCE ACCOMPANIED BY A SIMILAR DOWNWARD TREND IN THE RESUMPTION OF A DIVIDEND IN RESPECT OF THE LOST TIME INJURIES /VER THE PAST THREE YEARS CURRENT äNANCIAL YEAR UNDER #YNTHIA #ARROLLÓS LEADERSHIP THE NUMBER OF FATALITIES HAS BEEN REDUCED BY NEARLY Ð A MOST ENCOURAGING DEVELOPMENT Ð BUT WE REMAIN INTENT ON A ZERO INJURIES OBJECTIVE
Sir John Parker Chairman
Anglo American plc Annual Report 2009 07 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 About Anglo American Chief executive’s statement Aligning the organisation with our strategy
Cynthia Carroll
New Executive Committee
Chief Executive Cynthia Carroll
Other Mining Anglo Platinum Copper Nickel Kumba Iron Ore Iron Ore Brazil Metallurgical Coal Thermal Coal and Industrial CEO CEO CEO CEO CEO CEO CEO Group Director Neville Nicolau John MacKenzie Walter De Simoni Chris Griffith Stephan Weber Seamus French Norman Mbazima Duncan Wanblad (South Africa) (Chile) (Brazil) (South Africa) (Brazil) (Australia) (South Africa) (UK)
Group Finance Director #ORPORATE &INANCE \ &INANCE AND 0ERFORMANCE -ANAGEMENT \ 4AX \ 4REASURY \ )NVESTOR 2ELATIONS \ )NFORMATION -ANAGEMENT \ ,EGAL \ )NTERNAL !UDIT \ #OMPANY 3ECRETARIAL René Médori 'LOBAL 3HARED 3ERVICES \ 0ROCUREMENT (UK)
Group Director 4ECHNICAL 3ERVICES \ %XPLORATION \ 2ESEARCH AND $EVELOPMENT \ "USINESS 3UPPORT Ð 0LATINUM #OPPER AND .ICKEL of Mining and Technology Brian Beamish (UK)
Group Director of Business !SSET /PTIMISATION \ 0ROJECT -ANAGEMENT \ #OMMERCIAL #O ORDINATION \ 3AFETY AND 3USTAINABLE $EVELOPMENT \ %NERGY \ "USINESS 3UPPORT Ð )RON /RE -ETALLURGICAL #OAL AND 4HERMAL #OAL Performance and Projects David Weston (UK)
Group Director of (UMAN 2ESOURCES \ /RGANISATIONAL 4RANSFORMATION \ #OMMUNICATIONS \ 'OVERNMENT 2ELATIONS HR and Communications Mervyn Walker (UK)
Group Director Strategy and 'ROUP 3TRATEGY \ "USINESS $EVELOPMENT Business Development Peter Whitcutt (UK)
08 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial performance )N /CTOBER WE ANNOUNCED A MAJOR CORPORATE REORGANISATION TO ENSURE DELIVERY OF A CLEAR WAS ANOTHER EXTRAORDINARY YEAR FOR THE CORPORATE STRATEGY TO CREATE A MORE STREAMLINED MINING INDUSTRY AND ONE OF GREAT CHANGE AND AND EFäCIENT MANAGEMENT STRUCTURE AND FURTHER SIGNIäCANT DELIVERY FOR !NGLO !MERICAN 4HE FOCUS THE 'ROUP ON ITS CORE MINING BUSINESSES American Anglo About EARLY PART OF THE YEAR SAW A CONTINUATION OF THE 4HROUGH OUR REDESIGN OF THE 'ROUPÓS STRUCTURE VERY CONSIDERABLE GLOBAL ECONOMIC UNCERTAINTY WE HAVE CREATED SEVEN FOCUSED COMMODITY THAT ENGULFED THE WORLD IN LATE THOUGH ) BUSINESSES WITH THEIR MANAGEMENT TEAMS AM PLEASED TO REPORT THAT THE DECISIVE MEASURES LOCATED IN THE AREA OF CORE GEOGRAPHIC FOCUS FOR WE PUT IN PLACE TO POSITION THE 'ROUP THROUGH EACH COMMODITY RESPONSIBLE FOR OPERATIONAL THE DOWNTURN WERE CERTAINLY EFFECTIVE !S THE PERFORMANCE AND PROJECT DELIVERY 4HE RATIONALISED YEAR PROGRESSED VARYING DEGREES OF CONäDENCE CORPORATE CENTRE WILL BE RESPONSIBLE FOR PROVIDING RETURNED TO THE WORLD MARKETS AND THE PRICES STRATEGIC SUPPORT TO THE BUSINESSES AND WILL BE OF MANY COMMODITIES INCREASED STEADILY IN LINE FOCUSED ON DELIVERING SYNERGIES TECHNOLOGY AND WITH DEMAND RECOVERY CONTINUING TO BE DRIVEN BUSINESS PERFORMANCE 7E HAVE WORKED QUICKLY PRINCIPALLY BY THE EMERGING ECONOMIES OF #HINA TO IMPLEMENT THESE NEW STRUCTURES AND WE EXPECT AND )NDIA FULL IMPLEMENTATION BY THE END OF THE äRST QUARTER !GAINST WHAT HAS BEEN AN UNPREDICTABLE OF WITH ASSOCIATED ANNUALISED COST SAVINGS ECONOMIC BACKGROUND !NGLO !MERICAN DELIVERED OF APPROXIMATELY MILLION 4AKEN TOGETHER WITH A SOLID OPERATING PERFORMANCE WITH OPERATING OUR OVERALL 'ROUP RESTRUCTURING AND EFäCIENCY PROäT OF BILLION AND UNDERLYING EARNINGS OF INITIATIVES THIS HAS RESULTED IN A REDUCTION OF BILLION WITH STRONG PERFORMANCES ACROSS OUR TOTAL HEADCOUNT OF DURING OUR BUSINESSES 4WO AREAS OF SYNERGY WHERE WE ARE CONTINUING Delivering operational 0ROäT ATTRIBUTABLE TO EQUITY SHAREHOLDERS TO DELIVER CLEAR AND SUBSTANTIAL VALUE ARE IN efficiencies AT BILLION WAS LOWER REåECTING OUR ASSET OPTIMISATION AND GLOBAL PROCUREMENT OUR TRADING PERFORMANCE AND INCLUDES THE PROGRAMMES 7E ARE NOW WELL ADVANCED Cash cost reduction in 2009 BILLION GAIN ON THE DISPOSAL OF OUR RESIDUAL TOWARDS DELIVERING OUR STATED COMBINED TARGET SHARES IN !NGLO'OLD !SHANTI AND THE BILLION OF BILLION OF UPLIFT IN GENERATING $712 million AFTER TAX AND MINORITY INTEREST IMPAIRMENT MORE THAN BILLION IN AHEAD OF OF !MAP EXPECTATIONS "ASED ON OUR EXCELLENT PROGRESS Asset optimisation and procurement target to be TO DATE WE NOW EXPECT TO ACHIEVE OUR BILLION delivered by 2011 from core operations alone Delivering value through ASSET OPTIMISATION AND PROCUREMENT TARGETS FROM operational excellence OUR CORE BUSINESSES ALONE ON THE SAME TIMELINE $2 billion !NGLO !MERICAN IS NOW A MORE FOCUSED AND #OST CONTROL CONTINUES TO BE A MAJOR FOCUS FOR PERFORMANCE ORIENTED INTERNATIONAL MINING !NGLO !MERICAN !NGLO 0LATINUM HAS A CLEAR COMPANY 7E HAVE A CLEAR STRATEGY IN PLACE STRATEGY TO MOVE THE COST POSITION OF ITS AND ARE DRIVING HARDER THAN EVER IN PURSUIT OF OPERATIONS TO THE äRST AND SECOND QUARTILE OUR AMBITION OF BEING THE INVESTMENT PARTNER WHILE IN IT ACHIEVED åAT CASH OPERATING AND EMPLOYER OF CHOICE IN THE MINING INDUSTRY UNIT COSTS AND SIGNIäCANT FURTHER PRODUCTIVITY IMPROVEMENTS &URTHERMORE FOLLOWING A FULL )N WE MADE SIGNIäCANT PROGRESS ON SEVERAL RESTRUCTURING OF THE OPERATIONS AT 2USTENBURG FRONTS DELIVERING ON AND EXCEEDING OUR TARGETS AND !MANDELBULT TO ENABLE GREATER OPERATIONAL Ð ACHIEVING A STEP CHANGE IN SAFETY PERFORMANCE CONTROL AND åEXIBILITY THE COMPANY HAS REMOVED RESTRUCTURING THE 'ROUP AND LAYING THE FOUNDATION KOZ ANNUALISED OF HIGH COST PRODUCTION BY FOR SIGNIäCANT CULTURAL CHANGE WHILE CONTINUING PLACING THREE SHAFTS ON CARE AND MAINTENANCE OUR HIGHLY SUCCESSFUL COST AND EFäCIENCY 7E HAVE DELIVERED COST REDUCTIONS ACROSS THE INITIATIVES TAKING !NGLO !MERICAN INTO A NEW 'ROUP MOST NOTABLY AT OUR $IAMONDS AND MORE DYNAMIC ERA OF VALUE DELIVERY -ETALLURGICAL #OAL BUSINESSES
(EADCOUNT REDUCTION INCLUDES CONTRACTORS AND OF $E "EERS
Asset optimisation(1) Procurement(2) Sustainable operating profit improvements Cost savings (opex and capex) Total Group (excl. Tarmac) Core businesses Total Group (excl. Tarmac) Core businesses Anglo American is FY 09 target Revised FY 2011 target FY 09 target Revised FY 2011 target now a more focused and performance $m $m 1,000 ...... 1,000 ...... oriented international .. Revised FY 2011 .. FY 2009 .. .. Revised FY 2011 . target $1,000 m .. $863 m .. . target $1,000 m 800 . 800 ...... mining company. Core . . . . $749 m . . . 600 600 . FY 2009 target . . . $700 m . . . FY 2009 . $510 m . 400 400 Core $445 m H1 2009 $335 m Core FY 2009 target 200 $279 m 200 H1 2009 $330 m $131 m Core 0 0 $99 m H1 2009 H1 FY 2009 FY 2010 FY 2011 2009 H1 FY 2009 FY 2010 FY 2011
Notes: 1. Excludes one-off benefits of $209 million and Tarmac $86 million 2. Excludes Tarmac $16 million
Anglo American plc Annual Report 2009 09 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 About Anglo American Chief executive’s statement continued
!NGLO !MERICAN HAS PROVIDED STRONG SUPPORT Safety Health TO THE RECAPITALISATIONS OF BOTH !NGLO 0LATINUM 7E HAVE CONTINUED TO DELIVER FURTHER REDUCTIONS 7E HAVE BEEN DEDICATED TO THE ISSUE OF AND $E "EERS POSITIONING THEM TO TAKE FULL IN LOST TIME INJURIES AND FATALITIES BY TAKING A ()6 AND !)$3 SINCE THE S Ð OF ADVANTAGE OF ECONOMIC RECOVERY AND THE MORE FOCUSED RISK BASED APPROACH AND DRIVING PERMANENT WORKERS HAVE BEEN TESTED FOR DELIVERY OF THEIR LONG TERM GROWTH PROSPECTS IMPLEMENTATION AND COMPLIANCE WITH THE &ATAL ()6 SINCE THE PROGRAMME BEGAN Ð AND IN AS RESPECTIVE INDUSTRY LEADERS 2ISK 3TANDARDS FOR THE TOP äVE SAFETY RISKS WE EXTENDED OUR POLICY COMMITMENT 7E ALSO MADE EXCELLENT PROGRESS DURING ACROSS THE BUSINESS TO INCLUDE THE DEPENDANTS OF ALL OUR EMPLOYEES DISPOSING OF OTHER INTERESTS !S WE REPORTED AT /UR PIONEERING WORK WAS RECOGNISED IN !NGLO !MERICANÓS SAFETY RECORD WHEN ) JOINED THE HALF YEAR !NGLO !MERICAN DISPOSED OF ITS BY THE 'LOBAL "USINESS #OALITION ON ()6!)$3 THE 'ROUP WAS UNACCEPTABLE /UR LOST TIME RESIDUAL SHAREHOLDING IN !NGLO'OLD !SHANTI IN 4UBERCULOSIS AND -ALARIA AWARDING THE "USINESS INJURY FREQUENCY RATE ,4)&2 IS NOW LOWER THE äRST QUARTER AND IN (ULAMIN AND 4ONGAAT %XCELLENCE !WARD FOR "EST 7ORKPLACE 0ROGRAMME THAN IN AND SHOWS A LIKE FOR LIKE (ULETT IN *ULY AND !UGUST RESPECTIVELY TO OUR 3OUTH !FRICAN COAL BUSINESS FOR THEIR IMPROVEMENT SINCE 7E ARE ALSO ENCOURAGED GENERATING TOTAL PROCEEDS OF BILLION GROUND BREAKING WORK BY THE CONTINUING REDUCTION IN FATALITIES AND $URING THE äRST QUARTER OF !NGLO !MERICAN WHILE STILL UNACCEPTABLE UNTIL WE REACH ZERO AGREED THE SALE OF 4ARMACÓS AGGREGATES THESE ARE NOW FEWER THAN AND NEARLY Outlook BUSINESSES IN &RANCE 'ERMANY 0OLAND AND THE FEWER THAN 2EGRETTABLY HOWEVER 4HE MEDIUM AND LONG TERM OUTLOOK FOR THE #ZECH 2EPUBLIC AND ITS 0OLISH CONCRETE PRODUCTS PEOPLE LOST THEIR LIVES WHILE ON COMPANY MINING INDUSTRY REMAINS STRONG $EMAND FOR BUSINESS WITH EXPECTED TOTAL PROCEEDS OF BUSINESS IN 4HE MAJORITY OF OUR SITES COMMODITIES IS EXPECTED TO REMAIN ROBUST WITH APPROXIMATELY MILLION OPERATE WITHOUT ANY FATALITIES Ð DURING THE CONTINUING SHIFT IN THE PATTERN OF ECONOMIC AND WE HAVE MANY EXAMPLES OF GROWTH TOWARDS FAST GROWING EMERGING Driving targeted, high EXCEPTIONAL SAFETY PERFORMANCE !T +UMBA )RON ECONOMIES )N ORDER TO SUSTAIN ITS GROWTH /RE FOR EXAMPLE 4HABAZIMBI HAS ACHIEVED TWO POTENTIAL WE ANTICIPATE THAT #HINA WILL CONTINUE quality growth YEARS ,4) FREE OUR BASE METALS BUSINESSES WERE TO UPGRADE AND DEVELOP ITS INFRASTRUCTURE WHILE !NGLO !MERICAN HAS A CLEAR STRATEGY OF DEPLOYING FATALITY FREE FOR THE äRST TIME SINCE AND THE LONGER TERM POTENTIAL OF )NDIA AND "RAZIL CAPITAL IN THOSE COMMODITIES THAT DELIVER )RON /RE "RAZIL DELIVERED A IMPROVEMENT IN IS EXPECTED TO PROVIDE FURTHER SUPPORT 4HESE LONG TERM THROUGH THE CYCLE RETURNS FOR OUR ITS ,4)&2 )N *ANUARY !NGLO 0LATINUM ALSO ECONOMIES ALSO HAVE THE GREATEST SCOPE FOR SHAREHOLDERS WHICH HAVE STRONG FUNDAMENTALS ACHIEVED A SIGNIäCANT MILESTONE OF OPERATING STRONG CONSUMER SPENDING GROWTH THE PRINCIPAL AND HAVE THE MOST ATTRACTIVE RISK RETURN FOR FOUR CONSECUTIVE MONTHS WITHOUT A FATAL LONG TERM DEMAND DRIVER FOR PLATINUM GROUP PROäLES 7E HAVE DEVELOPED A PORTFOLIO OF INCIDENT Ð A äRST FOR THE COMPANY METALS AND DIAMONDS WORLD CLASS LOW COST LONG LIFE OPERATING ASSETS )N HUGE POLICY STIMULUS AND A TURN AND GROWTH PROJECTS FOCUSED ON THOSE MOST Sustainable development STRUCTURALLY ATTRACTIVE COMMODITIES IN THE INVENTORY CYCLE DROVE THE REBOUND IN /UR SUSTAINABLE DEVELOPMENT AGENDA INDUSTRIAL ACTIVITY )N THE POSITIVE EFFECTS /UR DECISION TO CONTINUE THE DEVELOPMENT OF PROGRESSED ON SEVERAL FRONTS DURING THE YEAR OF THESE FACTORS ARE LIKELY TO START TO FADE SEVERAL OF OUR KEY STRATEGIC GROWTH PROJECTS INCLUDING ENSURING THAT OUR FOUNDATIONS FOR 4HE ECONOMIC HEADWINDS ARE MOST NOTICEABLE DURING THE ECONOMIC DOWNTURN POSITIONS US TO EFFECTIVE WATER MANAGEMENT ARE ALIGNED AND IN THE ADVANCED ECONOMIES WHERE CONTINUING CAPITALISE ON THE NEXT PHASE OF GLOBAL ECONOMIC IN PLACE ACROSS ALL OF OUR OPERATIONS 4HESE BALANCE SHEET REPAIR WILL CONSTRAIN DEMAND GROWTH AND TO DELIVER OUR PROJECTED ORGANIC SYSTEMS PROCESSES AND TOOLS ARE ESSENTIAL PROSPECTS (OWEVER THE OUTLOOK FOR THE PRODUCTION GROWTH OF OVER ONE THIRD BY FOR THE DELIVERY OF OUR 'ROUPÓS WATER STRATEGY EMERGING ECONOMIES IS MUCH BRIGHTER #HINA AND &OUR MAJOR PROJECTS Ð THE -INAS 2IO IRON ORE AND TO IDENTIFY OPPORTUNITIES FOR MANAGING )NDIA ARE LIKELY TO GROW STRONGLY THOUGH PROJECT AND THE "ARRO !LTO NICKEL PROJECT BOTH AND UTILISING WATER MORE EFFECTIVELY IN THE THE POTENTIAL FOR SETBACKS REMAINS AS A WEAK IN "RAZIL THE ,OS "RONCES COPPER EXPANSION COMMUNITIES AND CATCHMENT AREAS WHERE EXTERNAL ENVIRONMENT COMBINES WITH PROJECT IN #HILE AND THE +OLOMELA PREVIOUSLY WE OPERATE INTENSIFYING DOMESTIC INåATION PRESSURES 3ISHEN 3OUTH IRON ORE PROJECT IN 3OUTH !FRICA 7E LAUNCHED THE !NGLO %NVIRONMENT 7AY Ð ARE ALL WELL PLACED ON THEIR RESPECTIVE INDUSTRY !%7 IN -ARCH WHICH SETS OUT A COST CURVES HAVE LONG RESOURCE LIVES FURTHER CONSISTENT APPROACH TO RESPONSIBLE EXPANSION POTENTIAL AND ARE ON TRACK TO ENTER ENVIRONMENTAL MANAGEMENT SUPPORTING OUR PRODUCTION SOME FROM NEXT YEAR ONWARDS IN VISION FOR MINIMISING HARM TO THE ENVIRONMENT WHAT WE EXPECT TO BE A GROWING COMMODITY BY DESIGNING OPERATING AND CLOSING ALL OF OUR Cynthia Carroll DEMAND ENVIRONMENT OPERATIONS IN AN ENVIRONMENTALLY RESPONSIBLE Chief executive 7E WILL BE DRIVING FORWARD THESE AND OTHER MANNER /UR -INE #LOSURE 4OOLBOX A WORLD PROJECTS DURING INVESTING BILLION LEADING APPROACH SUPPORTS DELIVERY AGAINST IN PROJECTS OUT OF A TOTAL PLANNED CAPITAL THE !%7 STANDARDS AND IS CURRENTLY BEING USED EXPENDITURE INVESTMENT OF BILLION FOR IN MORE THAN OPERATIONS IN 3OUTH !MERICA THE YEAR 7E ARE ALSO MODERNISING OUR PROJECT 3OUTH !FRICA .AMIBIA AND %UROPE MANAGEMENT PROCESSES AND STANDARDS TO 4HERE WERE BIODIVERSITY PEER REVIEWS ENSURE THEY NOT ONLY CAPTURE LESSONS FROM CONDUCTED DURING FOUR IN CONJUNCTION PREVIOUS PROJECTS BUT THAT THEY PROVIDE US WITH WITH &LORA AND &AUNA )NTERNATIONAL AS PART OF WORLD CLASS TOOLS FOR THE FUTURE ALLOCATION OF OUR GLOBAL STRATEGIC PARTNERSHIP 'IVEN THE CAPITAL AND CONTROL OF MAJOR PROJECTS INCREASINGLY ENERGY INTENSIVE NATURE OF OUR OPERATIONS OUR EFFORTS TO IMPROVE ENERGY EFäCIENCY CONTINUE TO BE A MAJOR FOCUS
10 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 12 About Anglo American Anglo About
1 Diamond sorters in the new Debswana sorting facility in Gaborone, Botswana. 2 Two of Sishen Mine’s custom-built 254 t capacity haul trucks being assembled on site. The new model truck was developed jointly over a five year period by Kumba and Komatsu. 3 Relobohile Tsiame (left) and Mbonelwa Mafikwana are mining operators at Thermal Coal’s Goedehoop colliery in South Africa.
In 2009, we achieved a year on year reduction of 27% in the lost time injury frequency rate at our operations.
LTIFR 3 (2008: 1.04) 0.76 Percentage of employees undertaking voluntary counselling and testing for HIV/AIDS (2008: 77%) 82%
Anglo American plc Annual Report 2009 11 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review The investment of choice Clear strategic priorities
1
12 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 !NGLO !MERICAN IS ONE OF THE WORLDÓS LARGEST A world class asset portfolio DIVERSIäED MINING GROUPS PRODUCING PRECIOUS !NGLO !MERICAN HAS A WORLD CLASS ASSET BASE AND BULK COMMODITIES AND OPERATING PORTFOLIO WITH AN EXTENSIVE RESOURCE BASE PREDOMINANTLY IN SOUTHERN !FRICA !USTRALIA THAT IS COMPLEMENTED BY BROWNäELD EXPANSIONS "RAZIL AND #HILE AND A STRONG PIPELINE OF APPROVED PROJECTS !NGLO !MERICANÓS AMBITION IS ÒTO BE THE LEADING > )T OWNS MANY 4IER ASSETS BEING AMONG THE GLOBAL MINING COMPANYÓ Ð THE INVESTMENT LARGEST AND HIGHEST QUALITY PRODUCING MINES OF PARTNER AND EMPLOYER OF CHOICE THEIR RESPECTIVE COMMODITIES CHARACTERISED BY ECONOMIES OF SCALE EXPANDABLE RESOURCE The most attractive commodities BASES AND ATTRACTIVE INDUSTRY COST POSITIONS )N ORDER TO REALISE ITS AMBITION OF BEING THE > !NGLO !MERICANÓS EXTENSIVE RESOURCE BASE INVESTMENT OF CHOICE !NGLO !MERICAN HAS A IS EXPECTED TO CONTINUE TO DELIVER ATTRACTIVE CLEAR STRATEGY OF DEPLOYING ITS CAPITAL IN THOSE GROWTH OPTIONS FROM MINE LIFE EXTENSIONS BROWNäELD EXPANSIONS AND GREENäELD PROJECTS
COMMODITIES THAT DELIVER SUPERIOR LONG TERM Operating and financial review THROUGH THE CYCLE RETURNS FOR ITS SHAREHOLDERS !CROSS ITS CORE MINING PORTFOLIO THE 'ROUPÓS MINES HAVE SUFäCIENT RESOURCES TO SUPPORT 4HE #OMPANY HAS IDENTIäED COPPER DIAMONDS CURRENT PRODUCTION LEVELS FOR AT LEAST YEARS IRON ORE METALLURGICAL COAL NICKEL PLATINUM > -ANY OF !NGLO !MERICANÓS OPERATIONS PRODUCE AND THERMAL COAL AS HAVING THE MOST ATTRACTIVE HIGH QUALITY PRODUCTS &OR EXAMPLE 3ISHEN FUNDAMENTALS PRODUCES ONE OF THE BEST QUALITY IRON ORE )N MANY OF THESE COMMODITIES !NGLO !MERICAN LUMP PRODUCTS GLOBALLY -INAS 2IOÓS HIGH IRON HAS A LEADING POSITION SUCH AS IN PLATINUM AND CONTENT AND LOW LEVELS OF IMPURITIES DIAMONDS WHERE THE 'ROUP IS THE CLEAR WORLD MEAN THAT IT WILL PRODUCE THE HIGHEST QUALITY 1 A field officer receiving camp supplies at the Los Sulfatos LEADER AND IRON ORE AND METALLURGICAL COAL IN PELLET FEED ORE IN THE MARKET !NGLO !MERICAN exploration site, close to the WHICH IT IS EXPANDING ITS MARKET SHARE ALSO HAS A STRONG PRESENCE IN ALL MAJOR Los Bronces copper mine in Chile, SEABORNE METALLURGICAL COAL PRODUCTS WITH at an altitude of between 4,000 and !NGLO !MERICAN IS ALSO FOCUSED ON THOSE 4,500 metres above sea level. MORE THAN OF PRODUCTION BEING PREMIUM COMMODITIES MOST LEVERAGED TO DEMAND GROWTH HARD COKING COAL 2 At Anglo Platinum’s Mogalakwena IN THE EMERGING ECONOMIES IN PARTICULAR #HINA open pit in South Africa, a water "RAZIL AND )NDIA > &URTHERMORE !NGLO !MERICANÓS ATTRACTIVE COST cannon suppresses dust during CURVE POSITION ALLOWS FOR MORE STABLE PRODUCTION ore loading operations. #HINA WHICH CONTINUES TO BE THE GREAT DRIVER OF AND SUSTAINABLE MARGINS THUS ENHANCING GROWTH IN MINING AND METALS STILL HAS RELATIVELY !NGLO !MERICANÓS PROäTABILITY THROUGH THE LOW PER CAPITA CONSUMPTION LEVELS AS WELL CYCLE IN ITS CORE COMMODITY MARKETS AS A STRUCTURAL DEäCIT IN SUCH COMMODITIES PARTICULARLY IRON ORE COPPER AND THE PLATINUM GROUP METALS Ð WHILE IN THE COUNTRY BECAME A NET IMPORTER OF BOTH THERMAL AND METALLURGICAL COAL FOR THE äRST TIME -EANWHILE )NDIA THE WORLDÓS SECOND MOST POPULOUS NATION IS LIKELY TO HAVE A GROWTH RATE APPROACHING DOUBLE DIGITS IN AS MANUFACTURING INDUSTRIES AND INFRASTRUCTURE INVESTMENT ! 4IER ASSET IS DEäNED AS A LARGE EXPANDABLE 2 LONG LIFE YEARS MINE WITH FAVOURABLE MINERALOGY BECOME MAJOR PARTS OF ITS EXPANDING ECONOMY AND GEOGRAPHIC LOCATION AND IN THE LOWER HALF OF THE THUS BOOSTING DEMAND FOR NATURAL RESOURCES COST CURVE
China’s share of world production and consumption (2009E–2013E Aggregate)
Bulk commodities1 Production share Consumption share Consumption rank
0% 55% #1 Iron ore
#1 Manganese3 0% 42%
#5 Metallurgical coal 1% 4%
#5 Thermal coal 5% 6%
Exchange traded commodities2 Production share Consumption share Consumption rank
#1 Platinum3 0% 20%
#1 Copper 6% 29%
#1 Nickel 5% 28%
#1 Zinc 25% 35%
Notes: 1. Iron ore represents share of world traded market (predominantly seaborne); thermal and metallurgical coal represent share of internationally traded market; manganese represents share of seaborne export market 2. Nickel, copper and zinc represent share of world mined product markets 3. Platinum and manganese data for 2008 Source: AME, Johnson Matthey (platinum) and International Institute (manganese) for production and consumption data
Anglo American plc Annual Report 2009 13 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review The investment of choice continued
At the Minas Rio project’s port Unlocking further value of Açu on the Atlantic coast, a 300 tonne Cantitraveller crane from the portfolio is engaged in incrementally )N FURTHER INITIATIVES WERE PUT IN TRAIN TO launching the port jetty which, DRIVE SHAREHOLDER VALUE !N IMPORTANT ELEMENT on completion, will be 2.9 km in length, including 400 m on land. IS THE 'ROUPÓS ASSET OPTIMISATION PROGRAMME WHICH AIMS TO UNLOCK VALUE FROM EXISTING ASSETS AND ACHIEVE PROJECT DELIVERY EXCELLENCE THROUGH ONGOING COST AND PRODUCTIVITY IMPROVEMENTS !NOTHER SIGNIäCANT INITIATIVE HAS BEEN THE FORMATION OF A STREAMLINED SUPPLY CHAIN IN ORDER TO CAPITALISE ON THE SCALE OF THE 'ROUP AND TO DELIVER COST SAVINGS BY FORMING STRATEGIC GLOBAL PARTNERSHIPS WITH KEY SUPPLIERS !LREADY IN THE 'ROUPÓS ASSET OPTIMISATION AND PROCUREMENT PROGRAMMES HAVE DELIVERED MORE Anglo American has a leading THAN BILLION BILLION FROM CORE OPERATIONS OF BENEäTS AHEAD OF EXPECTATIONS position in attractive commodities. 4HE BILLION ASSET OPTIMISATION AND PROCUREMENT TARGETS ARE EXPECTED TO BE REACHED FROM CORE OPERATIONS ALONE BY 4O ENSURE DELIVERY OF THE SUSTAINABLE GROWTH REQUIRED FROM !NGLO !MERICANÓS PORTFOLIO AND TO ACHIEVE THE EFäCIENCIES AND PERFORMANCE REQUIRED TO OUTPERFORM ITS COMPETITORS A FAR REACHING RESTRUCTURING OF THE 'ROUP WAS ANNOUNCED AT THE END OF 4HIS HAS ENABLED IT TO BECOME A MORE EFFECTIVE EFäCIENT AND AGILE ORGANISATION WITH INCREASED CLARITY OVER DECISION MAKING AND GREATER SPEED OF IMPLEMENTATION 4HE NEW STRUCTURE CREATES A FOCUS ON OPERATIONAL PERFORMANCE AND PROJECT DELIVERY THROUGH SEVEN BUSINESS UNITS FOCUSED ON THE CORE COMMODITIES IN THE PORTFOLIO AND LOCATED IN THE AREAS OF KEY GEOGRAPHIC FOCUS FOR EACH COMMODITY 4HESE ARE !NGLO 0LATINUM 3OUTH !FRICA )RON /RE "RAZIL +UMBA )RON /RE 3OUTH !FRICA #OPPER #HILE .ICKEL "RAZIL -ETALLURGICAL #OAL !USTRALIA AND 4HERMAL #OAL 3OUTH !FRICA 4HE REORGANISATION HAS RESULTED IN A LEAN CORPORATE CENTRE FOCUSED ON ACTIVITIES THAT INCREASE SHAREHOLDER VALUE BEYOND THAT WHICH THE COMMODITY BUSINESS UNITS COULD ACHIEVE ALONE 4HESE INCLUDE PROVIDING OVERALL STRATEGIC DIRECTION AND GOVERNANCE ESTABLISHING AND MAINTAINING COMMON PROCESSES AND STANDARDS AND HELPING TO TRANSFER BEST PRACTICE CAPTURING ECONOMIES OF SCALE AND FACILITATING SYNERGIES IN KEY VALUE DRIVING FUNCTIONS SUCH AS PROCUREMENT ASSET OPTIMISATION PROJECT MANAGEMENT AND LOGISTICS 4OWARDS THE END OF !NGLO !MERICAN ANNOUNCED ITS INTENTION TO DIVEST OF THE FOLLOWING ASSETS INTERNATIONAL STEEL PRODUCTS MANUFACTURER 3CAW -ETALS "RAZILIAN PHOSPHATES PRODUCER #OPEBRS AND FERRONIOBIUM PRODUCER #ATALO AS WELL AS THE 'ROUPÓS PORTFOLIO OF ZINC ASSETS 4OGETHER WITH 4ARMAC ALREADY IDENTIäED FOR DIVESTMENT THESE ASSETS ACCOUNTED FOR APPROXIMATELY OF 'ROUP %")4$! 4HE PROCEEDS OF THESE DIVESTMENTS WHICH WILL BE TIMED TO MAXIMISE VALUE WILL HELP TO STRENGTHEN THE BALANCE SHEET AND TO DELIVER THE 'ROUPÓS WORLD CLASS PROJECTS
14 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 )N FOUR MAJOR BOND TRANSACTIONS RAISING A WILL PRODUCE AN AVERAGE KTPA OF NICKEL IN FULL Anglo American project pipeline TOTAL OF BILLION REäNANCED THE 'ROUPÓS SHORT PRODUCTION WITH A COST POSITION IN THE LOWER HALF to lift organic growth output by TERM DEBT POSITION 3IMULTANEOUSLY CAPITAL OF THE CURVE over a third by 2013 EXPENDITURE FOR WAS CUT BY MORE THAN +UMBA )RON /REÓS +OLOMELA PROJECT PREVIOUSLY Indexed production growth (2009 = 100)
HALF THOUGH NOT AT THE EXPENSE OF THE 'ROUPÓS Operating and financial review KNOWN AS THE 3ISHEN 3OUTH PROJECT IS ON TRACK MOST IMPORTANT GROWTH PROJECTS AND PROGRESSING WELL TOWARDS äRST PRODUCTION &URTHER PROGRESS CONTINUES TO BE MADE TO FOCUS DURING THE äRST HALF OF +OLOMELA IS SITUATED THE 'ROUP ON ITS CORE MINING PORTFOLIO $URING KM TO THE SOUTH OF +UMBAÓS WORLD CLASS 3ISHEN 140 !NGLO !MERICAN DISPOSED OF INVESTMENTS MINE AND WHEN FULL PRODUCTION IS ACHIEVED IN 130 CONSIDERED AS NOT BEING CORE TO THE #OMPANYÓS WILL PRODUCE -TPA OF HIGH QUALITY IRON STRATEGY FOR THE FUTURE INCLUDING ITS RESIDUAL ORE WITH FURTHER POTENTIAL FOR EXPANSION 120 SHAREHOLDING IN !NGLO'OLD !SHANTI FOR 4HE ACQUISITION OF THE -INAS 2IO IRON ORE PROJECT 110 BILLION REALISING A TOTAL OF BILLION REPRESENTED A UNIQUE OPPORTUNITY TO GAIN CONTROL 100 $URING THE äRST QUARTER OF !NGLO !MERICAN OF A MULTI BILLION TONNE RESOURCE IN THE HIGHLY AGREED THE SALE OF 4ARMACÓS AGGREGATES ATTRACTIVE SEABORNE IRON ORE MARKET WITH THE 90 BUSINESSES IN &RANCE 'ERMANY 0OLAND AND THE BENEäT OF AN INTEGRATED LOGISTICS SYSTEM 80 #ZECH 2EPUBLIC AND ITS 0OLISH CONCRETE PRODUCTS !NGLO !MERICAN OBTAINED A SERIES OF IMPORTANT 200920102011 2012 2013 BUSINESS WITH EXPECTED TOTAL PROCEEDS OF LICENCES FOR THE äRST PHASE OF THE PROJECT DURING
APPROXIMATELY MILLION MOST NOTABLY THE äRST PART OF THE Current operations Los Bronces expansion Barro Alto Minas Rio phase 1 Kolomela )NSTALLATION ,ICENCE FOR THE MINE AND BENEäCIATION Source: Anglo American Developing four world class PLANT AWARDED IN $ECEMBER FOLLOWING THE EARLIER AWARD OF THE FEDERAL PERMIT FOR LAND projects CLEARANCE AT THE MINE 4HE SECOND PART OF THE !NGLO !MERICANÓS BILLION PIPELINE OF )NSTALLATION ,ICENCE IS EXPECTED TO BE APPROVED Life of mine per commodity APPROVED PROJECTS SPANS THE MOST STRUCTURALLY DURING THE EARLY PART OF #ONSTRUCTION OF Years, minimum to maximum ATTRACTIVE COMMODITIES OF PLATINUM IRON ORE THE PORT AT !¢U IS WELL ADVANCED AND THE COPPER AND NICKEL 4HE DECISION TO PRESERVE THE EARTHWORKS FOR THE BENEäCIATION PLANT AND DEVELOPMENT OF ITS FOUR KEY NEAR TERM STRATEGIC PIPELINE ARE PROGRESSING TOWARDS äRST PRODUCTION Platinum 10 to 60 GROWTH PROJECTS Ð THE -INAS 2IO AND +OLOMELA IN THE SECOND HALF OF WITH RAMP UP TO Copper 5 to 39 FORMERLY 3ISHEN 3OUTH IRON ORE PROJECTS ANNUAL IRON ORE PRODUCTION OF -TPA IN IN "RAZIL AND 3OUTH !FRICA RESPECTIVELY THE Nickel 6 to 27 4HE SIZE OF THE -INAS 2IO OREBODY AND THE "ARRO !LTO NICKEL DEVELOPMENT IN "RAZIL AND THE Metallurgical ,OS "RONCES COPPER EXPANSION IN #HILE Ð DURING PROJECTÓS DEDICATED LOGISTICS INFRASTRUCTURE coal 2 to 29 MEANS THAT IT HAS CONSIDERABLE EXPANSION Thermal THE ECONOMIC DOWNTURN POSITIONS THE 'ROUP TO coal 3 to 31 CAPITALISE ON THE NEXT PHASE OF GLOBAL ECONOMIC POTENTIAL WITH STUDIES UNDER WAY FOR THE GROWTH 4HE FOUR PROJECTS ARE ALL WELL PLACED EXPANSION OF THE PROJECT TO UP TO -TPA Iron ore 6 to 28 ON THEIR RESPECTIVE INDUSTRY COST CURVES HAVE !NGLO !MERICAN ACQUIRED THE -INAS 2IO PROJECT Range (years) 0 1020 30 405060 LONG LIVES AND ARE ON TRACK TO ENTER PRODUCTION IN TWO TRANSACTIONS IN AND AND AT FROM ONWARDS IN WHAT IS EXPECTED TO BE THE END OF DECLARED A RESOURCE OF -T A GROWING COMMODITY DEMAND ENVIRONMENT -EASURED AND )NDICATED AND AN ADDITIONAL -T OF )NFERRED RESOURCE !FTER CONSIDERABLE !NGLO !MERICANÓS ,OS "RONCES COPPER EXPANSION GEOLOGICAL WORK THIS TOTAL RESOURCE HAS INCREASED PROJECT IS ON SCHEDULE WITH äRST PRODUCTION FOURFOLD SINCE TO BILLION TONNES PLANNED IN THE FOURTH QUARTER OF AND INCLUDING -T OF )NFERRED RESOURCE OUTPUT EXPECTED TO INCREASE FROM THE FOURTH QUARTER OF TO AN AVERAGE OF KTPA !NGLO !MERICANÓS FORECAST ATTRIBUTABLE SHARE OVER THE äRST THREE YEARS OF FULL PRODUCTION OF THE POST ACQUISITION CAPITAL EXPENDITURE FOR AN AVERAGE OF OVER KTPA OVER THE äRST THE äRST PHASE OF THE PROJECT HAS INCREASED BY YEARS !T PEAK PRODUCTION LEVELS ,OS "RONCES BILLION FROM BILLION TO BILLION IS EXPECTED TO BE THE äFTH LARGEST COPPER MINE OWING TO SCOPING CHANGES AT THE MINE PIPELINE IN THE WORLD WITH RESERVES THAT SUPPORT A MINE AND PORT AS WELL AS FOREIGN EXCHANGE MOVEMENTS LIFE OF YEARS 2ESOURCE AND MINERALISATION 4HESE FOUR MAJOR EXPANSION PROJECTS ARE THE STUDIES CARRIED OUT BY !NGLO !MERICANÓS KEY COMPONENTS IN DRIVING THE 'ROUPÓS ORGANIC TECHNICAL TEAMS SUPPORT FURTHER POTENTIAL PRODUCTION GROWTH BY MORE THAN ONE THIRD BY EXPANSION 4WO VERY SIGNIäCANT HIGH QUALITY "Y THAT TIME THE 'ROUPÓS PRODUCTION OF DISCOVERIES HAVE BEEN MADE AT ,OS 3ULFATOS COPPER WILL HAVE INCREASED BY IRON ORE AND 3AN %NRIQUE -ONOLITO CLOSE TO ,OS "RONCES BY AND NICKEL BY WHICH TOGETHER HAVE INCREASED THE 'ROUPÓS COPPER RESOURCES EXCLUDING RESERVES BY )N ADDITION !NGLO !MERICAN EXPECTS TO MAKE APPROXIMATELY äRST STAGE APPROVAL DECISIONS IN RELATION TO THE DEVELOPMENT OF TWO FURTHER HIGH QUALITY GROWTH 4HE "ARRO !LTO NICKEL PROJECT IS ALSO ON SCHEDULE PROJECTS DURING Ð THE KTPA 1UELLAVECO TOWARDS START UP IN EARLY WITH THE OVERALL COPPER PROJECT IN 0ERU AND THE -TPA 'ROSVENOR DEVELOPMENT ALMOST COMPLETE AT THE YEAR METALLURGICAL COAL PROJECT IN !USTRALIA END 4HIS PROJECT WHICH HAS FURTHER POTENTIAL FROM AN EXTENSIVE RESOURCE BASE LEVERAGES AN EXISTING OPERATION AND PROVEN TECHNOLOGY AND
Anglo American plc Annual Report 2009 15 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Key performance indicators (KPIs)
Anglo American uses KPIs to help measure its performance. Strategic aims Strategic focus The KPIs are aligned to the Investment of choice !SSET OPTIMISATION three key strategic aims of AND äNANCIAL the Group !NGLO !MERICAN SEEKS TO OUTPERFORM ITS COMPETITORS PERFORMANCE IN DELIVERING VALUE TO SHAREHOLDERS %VERYTHING THAT !NGLO !MERICANÓS STRATEGY IS TO BECOME THE 'ROUP HOPES TO ACHIEVE FOR ALL OTHER STAKEHOLDERS THE LEADING GLOBAL MINING COMPANY $URING Ð PARTICULARLY HOST GOVERNMENTS COMMUNITIES AND THREE KEY AIMS THAT SHOULD UNDERPIN EMPLOYEES Ð MUST BE BUILT ON A PLATFORM OF SECTOR THIS AMBITION WERE IDENTIäED LEADING äNANCIAL PERFORMANCE INVESTMENT OF CHOICE PARTNER OF CHOICE AND EMPLOYER OF CHOICE
)N IMPLEMENTING ITS STRATEGY !NGLO !MERICAN MEASURES PERFORMANCE WITH REFERENCE TO THE +0)S SET OUT IN THE ADJACENT TABLE 4HESE +0)S ARE ALIGNED TO ITS KEY AIMS AND ARE EMPLOYED ACROSS THE 'ROUP 4HE +0)S .EW CAPITAL ENCOMPASS BOTH äNANCIAL AND NON äNANCIAL INVESTMENTS INDICATORS AS WELL AS QUANTITATIVE AND QUALITATIVE MEASURES 7HILE THESE +0)S ARE HELPFUL IN MEASURING THE 'ROUPÓS Partner of choice 3USTAINABLE PERFORMANCE IT IS RECOGNISED THAT THEY DEVELOPMENT ARE NOT EXHAUSTIVE AND MANY ADDITIONAL !NGLO !MERICAN HAS A HISTORY OF SUCCESSFUL PERFORMANCE MEASURES ARE ALSO USED TO COLLABORATION WITH ITS STAKEHOLDERS INCLUDING MONITOR PROGRESS GOVERNMENTS COMMUNITIES AND NON GOVERNMENTAL ORGANISATIONS .'/S 4HE 'ROUP UNDERSTANDS THAT IT CAN ONLY THRIVE IF IT IS WELCOMED AND RESPECTED IN THE COUNTRIES AND COMMUNITIES IN WHICH IT OPERATES
Employer of choice 3AFETY "ECOMING THE EMPLOYER OF CHOICE FOR !NGLO !MERICAN BEGINS WITH AN AIM TO PROVIDE A SAFE AND SUPPORTIVE WORKING ENVIRONMENT FOR EVERYONE WHO WORKS FOR THE ORGANISATION 4HE 'ROUPÓS COMMITMENT TO ZERO HARM REMAINS ITS PRIMARY FOCUS 4HE ORGANISATION OFFERS A RANGE OF CAREER PATHS FOR BOTH TECHNICAL AND PROFESSIONAL PEOPLE 7ITH ITS GLOBAL FOOTPRINT AND GROWTH ASPIRATIONS !NGLO !MERICAN CAN OFFER BOTH 0EOPLE AN EXCITING AND A FULäLLING EMPLOYMENT PROPOSITION
2EåECTS MANAGED OPERATIONS
16 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 KPI Description Results and target (if applicable)
4OTAL SHAREHOLDER 3HARE PRICE GROWTH PLUS DIVIDENDS REINVESTED OVER THE 0LEASE REFER TO THE 2EMUNERATION REPORT ON RETURN 432 PERFORMANCE PERIOD ! PERFORMANCE PERIOD OF THREE YEARS PAGES TO Operating and financial review IS USED AND 432 IS CALCULATED ANNUALLY
2ETURN ON CAPITAL 4OTAL OPERATING PROäT BEFORE IMPAIRMENTS FOR THE YEAR EMPLOYED 2/#% DIVIDED BY THE AVERAGE TOTAL CAPITAL LESS OTHER INVESTMENTS AND ADJUSTED FOR IMPAIRMENTS
!SSET OPTIMISATION !/ 3USTAINABLE OPERATING PROäT BENEäT FROM OPTIMISED MILLION PERFORMANCE OF THE ASSET BASE OF THE CORE BUSINESSES 4ARGET BILLION BY
/NE !NGLO 3UPPLY #HAIN #OST SAVINGS TO THE 'ROUP RESULTING FROM CENTRALISED MILLION /!3# PROCUREMENT FROM CORE BUSINESSES 4ARGET BILLION BY
5NDERLYING EARNINGS 5NDERLYING EARNINGS ARE NET PROäT ATTRIBUTABLE TO EQUITY PER SHARE SHAREHOLDERS ADJUSTED FOR THE EFFECT OF SPECIAL ITEMS AND REMEASUREMENTS AND ANY RELATED TAX AND MINORITY INTERESTS
#APITAL PROJECTS /PTIMISE THE PIPELINE OF PROJECTS AND ENSURE THAT NEW CAPITAL ! SUMMARY OF THE 'ROUPÓS CAPITAL PROJECTS AND INVESTMENT IS ONLY COMMITTED TO PROJECTS THAT DELIVER THE BEST VALUE TO AND INVESTMENTS IS ON PAGES TO THE 'ROUP ON A RISK ADJUSTED NET PRESENT VALUE BASIS
%NERGY EFäCIENCY )MPROVEMENTS IN ENERGY EFäCIENCY ARE MEASURED MILLION '* TOTAL ENERGY USED FROM A BASELINE MILLION '* TOTAL ENERGY USED 4ARGET ! IMPROVEMENT BY
4OTAL WATER USE 4OTAL WATER USE INCLUDES ONLY WATER USED FOR PRIMARY MILLION M ACTIVITIES MILLION M 4ARGET "USINESS UNITS ARE CURRENTLY SETTING OPERATIONAL TARGETS
-T #/ EQUIVALENT #/ EMISSION INTENSITY 2EDUCTION IN #/ EMISSIONS PER UNIT OF PRODUCTION IS -T #/ EQUIVALENT MEASURED FROM A BASELINE 4ARGET ! REDUCTION BY
#ORPORATE SOCIAL INVESTMENT 3OCIAL INVESTMENT AS DEäNED BY THE ,ONDON "ENCHMARKING 3PEND Ð MILLION OF PROäT 'ROUP INCLUDES DONATIONS GIFTS IN KIND AND STAFF TIME FOR BEFORE TAX 3PEND Ð MILLION OF PROäT ADMINISTERING COMMUNITY PROGRAMMES AND VOLUNTEERING BEFORE TAX IN #OMPANY TIME
%NTERPRISE DEVELOPMENT .UMBER OF COMPANIES SUPPORTED AND NUMBER OF JOBS .UMBER OF BUSINESSES SUPPORTED SUSTAINED BY COMPANIES SUPPORTED BY !NGLO !MERICAN NUMBER OF JOBS SUSTAINED .UMBER OF BUSINESSES SUPPORTED ENTERPRISE DEVELOPMENT INITIATIVES NUMBER OF JOBS SUSTAINED 4ARGET .UMBER OF BUSINESSES SUPPORTED NUMBER OF JOBS SUSTAINED
7ORK RELATED FATAL INJURY &)&2 IS CALCULATED AS THE NUMBER OF FATAL INJURIES TO FATALITIES &)&2 FREQUENCY RATE &)&2 EMPLOYEES OR CONTRACTORS PER HOURS WORKED FATALITIES &)&2 TARGET ZERO INCIDENTS
,OST TIME INJURY FREQUENCY 4HE NUMBER OF LOST TIME INJURIES ,4)S PER RATE ,4)&2 HOURS WORKED !N ,4) IS AN OCCUPATIONAL INJURY WHICH TARGET ZERO INCIDENTS RENDERS THE PERSON UNABLE TO PERFORM HISHER DUTIES 4HE ULTIMATE GOAL OF ZERO HARM REMAINS FOR ONE FULL SHIFT OR MORE THE DAY AFTER THE INJURY WAS INCURRED WHETHER A SCHEDULED WORKDAY OR NOT
6OLUNTARY LABOUR .UMBER OF PERMANENT EMPLOYEE RESIGNATIONS AS TURNOVER A PERCENTAGE OF TOTAL PERMANENT EMPLOYEES
'ENDER DIVERSITY 0ERCENTAGE OF WOMEN AND FEMALE MANAGERS EMPLOYED FEMALES FEMALE MANAGERS BY THE 'ROUP FEMALES FEMALE MANAGERS
6OLUNTARY COUNSELLING 0ERCENTAGE OF EMPLOYEES UNDERTAKING VOLUNTARY AND TESTING 6#4 FOR ANNUAL ()6 TESTS WITH COMPULSORY COUNSELLING SUPPORT TARGET 6#4 IN HIGH DISEASE BURDEN ()6!)$3 COUNTRIES IS THE LONG TERM GOAL
Anglo American plc Annual Report 2009 17 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Performance against KPIs
KPIs are employed Investment of choice !/ SUSTAINABLE OPERATING PROäT BENEäT CONTRIBUTIONS BY BUSINESS UNIT across the Group Financial performance "USINESS UNIT M to assess how well 4HE 'ROUPÓS äNANCIAL PERFORMANCE IN THE YEAR the strategic aims AND THE +0)S USED TO MEASURE IT ARE DISCUSSED !NGLO 0LATINUM are being met ON PAGES TO #OPPER .ICKEL Asset optimisation +UMBA )RON /RE 4HE #OMPANYÓS STRUCTURED APPROACH TO OPTIMISE BUSINESS OPERATIONS KNOWN AS ASSET OPTIMISATION -ETALLURGICAL #OAL !/ IS NOW A WELL ESTABLISHED PROCESS ACROSS 4HERMAL #OAL THE 'ROUP AND IS YIELDING SIGNIäCANT VALUE 4OTAL CORE ASSETS ! CLEAR FRAMEWORK äNANCIAL REPORTING POLICY HAS /THER -INING AND )NDUSTRIAL BEEN DEVELOPED AND DEPLOYED 'ROUP WIDE TO 4OTAL ENSURE THAT !/ TARGETS AND VALUE DELIVERY ARE MEASURED MONITORED AND AUDITED CONSISTENTLY %XCLUDING 4ARMAC !NGLO !MERICANÓS )NTERNAL !UDIT TEAM PROVIDES ! PORTFOLIO IN EXCESS OF PROJECTS HAS NOW INDEPENDENT ASSURANCE ON THE !/ VALUE REPORTED BEEN DEVELOPED 4HESE PROJECTS ARE PRIORITISED FOR RESOURCING AND IMPLEMENTATION ON A VALUE $URING THE äRST HALF OF !NGLO !MERICAN ADDING BASIS AND CURRENTLY OF THE VALUE ANNOUNCED A 'ROUP WIDE DELIVERY TARGET FOR DELIVERED IS CONTAINED IN THE TOP PROJECTS THE !/ PROGRAMME OF BILLION OPERATING PER BUSINESS UNIT PROäT FROM SUSTAINABLE PROJECTS BY THE END OF &OLLOWING THE REORGANISATION OF THE Projects that are delivering significant value 'ROUPÓS ASSETS ANNOUNCED IN THE FOURTH QUARTER > 0LATINUM 3MELTER #APACITY )NCREASE AIMS OF THIS TARGET HAS BEEN RETAINED AND TO IMPROVE INSTALLED SMELTING CAPACITY AND HAS NOW BEEN SET AS A STRETCH TARGET FOR THE REDUCE UNIT SMELTING COST ! NUMBER OF 'ROUPÓS IDENTIäED CORE ASSET PORTFOLIO ALONE DIFFERENT ACTIONS FROM A COMPREHENSIVE )N TERMS OF THE 'ROUPÓS CORE ASSETS MILLION PROGRAMME HAVE BEEN INSTITUTED AND BENEäTS OF OPERATING PROäT HAD BEEN DELIVERED FROM OF MILLION HAVE ALREADY BEEN DELIVERED SUSTAINABLE PROJECTS BY THE END OF ! > 4HE $AWSON COAL LOSS IMPROVEMENT PROJECT FURTHER AMOUNT OF MILLION WAS DELIVERED IN !USTRALIA IS AN EXAMPLE OF !/ IN ACTION DURING THE YEAR FROM ONE OFF PROJECTS THAT HAD 4HE PROJECT INVOLVES REDUCING THE AMOUNT OF BEEN IDENTIäED AS A RESULT OF THE !/ PROGRAMME COAL LOST DURING MINING BY APPLYING INNOVATIVE 4HE TOTAL VALUE OF MILLION FROM THE CORE BLASTING TECHNIQUES AND BEST PRACTICE DURING BUSINESSES WAS DERIVED FROM BOTH REVENUE THE MINING OPERATION TO IMPROVE RECOVERY ENHANCING AND DIRECT COST REDUCTION 4HE RETURN ON EVERY DOLLAR INVESTED IN EXPOSING ACTIVITIES AND MINING THE COAL IS THEREFORE OPTIMISED #OAL LOSS HAS BEEN SUBSTANTIALLY REDUCED SINCE )N RESPECT OF THE /THER -INING AND )NDUSTRIAL ASSET THE PROJECT COMMENCED DELIVERING IN EXCESS PORTFOLIO EXCLUDING 4ARMAC MILLION OF OF MILLION DURING BENEäT FROM SUSTAINABLE PROJECTS AND MILLION OF > #OPPER ,OS "RONCES Ð #HANGES MADE TO ONE OFF BENEäTS HAD BEEN DELIVERED BY END THE EQUIPMENT CONäGURATION IN THE MILLING DISCHARGE PEBBLE CIRCUITS AIM TO SIGNIäCANTLY INCREASE CIRCUIT AVAILABILITY THUS ELIMINATING A BOTTLENECK AND AS A RESULT INCREASING THROUGHPUT BY KT OF ORE PER MONTH 4HE ADDITIONAL THROUGHPUT RESULTED IN A BENEäT OF MILLION DURING > +UMBA )RON /RE Ð )MPROVING THE OVERALL EQUIPMENT EFFECTIVENESS OF THE TRUCK AND SHOVELS åEET THROUGH A SERIES OF DELIBERATE ACTIONS INCLUDING CHANGES TO WORK PATTERNS AND IMPROVED MAINTENANCE PROCEDURES Cathode washing at the San Francisco YIELDED BENEäTS OF MILLION IN cathode plant in Los Bronces. Supply Chain: Cost savings from centralised procurement Asset optimisation in action )N &EBRUARY THE 'ROUP SET OUT A PROGRAMME AIMED AT TRANSFORMING !NGLO !MERICANÓS Copper Los Bronces – SELE (Selective Electrode position Enhancement) PROCUREMENT AND SUPPLY CHAIN OPERATIONS GLOBALLY aims to improve the efficiency of the electrowinning plant through the use WITH THE AMBITIOUS THOUGH ACHIEVABLE TARGET TO of innovative technology. The project has increased current density in the BECOME THE INDUSTRY LEADER AND GLOBAL BENCHMARK electrowinning operation, yielding an additional 3.8 kt of copper in 2009 FOR SUPPLY CHAIN VALUE CREATION !T THE HEART OF at a value of $17 million. THIS STRATEGY IS WORKING MORE CLOSELY TOGETHER AS A SINGLE INTEGRATED ORGANISATION
18 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 3UPPLY #HAIN AIMS TO CREATE BILLION OF ADDITIONAL VALUE BY THROUGH MORE EFFECTIVE MANAGEMENT OF PURCHASED MATERIALS AND SERVICES WORKING WITH CROSS FUNCTIONAL
TEAMS IMPLEMENTING BEST PRACTICE POLICIES Operating and financial review DEVELOPING PROCESSES THAT CAN BE CONSISTENTLY APPLIED ACROSS THE 'ROUP AND IMPROVING INTERNAL CAPABILITY THROUGH BETTER TEAMWORK AND INDIVIDUAL COMPETENCIES )N MILLION FROM CORE OPERATIONS MILLION TOTAL 'ROUP EXCLUDING 4ARMAC OF SUPPLY CHAIN BENEäTS WERE DELIVERED AGAINST A TARGET OF MILLION 4HE PROGRESS MADE IMPLEMENTING INITIATIVES ACROSS THE 'ROUP OVER THE PAST YEAR HAS BEEN THE RESULT OF EFFECTIVE COLLABORATION BETWEEN GLOBAL STRATEGIC SOURCING TEAMS CROSS FUNCTIONAL REPRESENTATIVES FROM ASSET OPTIMISATION AND ENGINEERING AND Barrels of high quality lubricant at a blending plant are prepared for delivery. MINE SITE PERSONNEL ACROSS ALL BUSINESS UNIT (Photo courtesy of Shell) OPERATIONS #OLLABORATION BETWEEN THE BUSINESS UNIT AND CENTRAL TEAMS THAT MAKE UP 3UPPLY #HAIN HAS BEEN FUNDAMENTAL IN THE SUCCESSFUL Fuels and lubricants IMPLEMENTATION OF INITIATIVES
-OBILISATION OF THE CENTRALISED OPERATING With Anglo American spending more than As preferred suppliers, the companies are able MODEL HAS MEANT APPROXIMATELY OF $800 million each year in the fuels and lubricants to have their supply agreement terms extended !NGLO !MERICANÓS ANNUAL ADDRESSABLE SPEND (F&L) category, improvement opportunities and if they achieve the value targets agreed in äGURE IS NOW MANAGED THROUGH MATERIALS AND value initiatives are a high priority for Supply the global framework agreements. Under the SERVICES CATEGORIES BY STRATEGIC SOURCING TEAMS Chain. Instead of going out to tender globally agreements, Shell and BP are now allocating 4HESE TEAMS ARE RESPONSIBLE FOR DEVELOPING THE or regionally, however, the F&L category team more technical resources to the Group’s MOST EFFECTIVE VALUE CREATING STRATEGY FOR !NGLO turned to aligning with particular suppliers on operations and are providing Anglo American !MERICAN GLOBALLY DRIVING GLOBAL SOURCING SAVINGS a global basis. Most of the value identified came with technical expertise. They are working with not from price reduction, but in the technical Anglo American mine teams to ensure optimal OPPORTUNITIES AND SUPPORTING LOCAL BUSINESS UNIT expertise that potential suppliers could bring lubricants and lubrication practices are used INITIATIVES 4HIS CENTRALISED PROCUREMENT MODEL to Group operations. in order to extend equipment life. Fuel additives HAS PROVED TO BE A STRONG CONTRIBUTOR TOWARDS are now being employed to increase the energy THE SAVINGS DELIVERED BY 3UPPLY #HAIN From a list of about 10 suppliers, some 80% efficiency of fuels, which reduces the amount of the Group’s current spend is now with two of fuel used to do the same work. )NITIATIVES HAVE RANGED FROM TACTICAL Ð DELIVERING companies, Shell and BP. These two global CONSOLIDATION AND EFäCIENCY IMPROVEMENTS TO suppliers demonstrated the ability to offer the In turn, Shell and BP have given Anglo American STRATEGIC Ð FOCUSED ON LONGER TERM VALUE CREATING added value that was needed at the operations. ‘customer of choice’ status, meaning that they PARTNERSHIPS WITH SUPPLIERS 2ATIONALISING THE After months of negotiations with the companies, will accord the Company the highest level of 'ROUPÓS SUPPLY BASE HAS HELPED IN DEVELOPING global framework agreements were set up, recognition given to customers of similar size BETTER RELATIONSHIPS WITH SELECTED SUPPLIERS giving Anglo American preferred supplier with global agreements in place. This means 4HIS HAS YIELDED PRACTICAL ADVANTAGES SUCH AS status to them. enhanced security of supply, and improvements in commercial arrangements, innovation and !NGLO !MERICANÓS DEMANDS OF SUPPLIERS THAT global collaboration at the business units being THEY BECOME MORE TRANSPARENT AND REDUCING supplied by these companies. THE NUMBER OF CONTRACTS TO BE ADMINISTERED 7ITH THEIR GLOBAL APPROACH STRATEGIC SOURCING TEAMS HAVE BEEN ABLE TO DEVELOP A DEEPER ! PROJECT TEAM DEDICATED TO DELIVERING THE COMMUNITIES CLOSE TO 'ROUP OPERATIONS UNDERSTANDING OF THE MATERIALS AND SERVICES STANDARDISED POLICIES PROCESSES AND SYSTEMS TO WHILE ALSO SUPPORTING !NGLO !MERICANÓS SAFETY PURCHASED BY THE 'ROUP THIS HAS IDENTIäED COST IMPROVE MANAGEMENT OF CONTRACTS AND EFäCIENCY TARGET OF ZERO HARM LEVERS AND OPPORTUNITIES FOR WASTE AVOIDANCE OF TRANSACTIONS HAS MADE EXCELLENT PROGRESS AND TOTAL COST OF OWNERSHIP IMPROVEMENTS 3USTAINABLE $EVELOPMENT 3$ CRITERIA ARE )N 3EPTEMBER A WEB BASED SOLUTION WAS NOW PART OF THE 'ROUPÓS SUPPLIER ASSESSMENT )MPROVEMENTS TO SUPPLY CHAIN PROCESSES AND IMPLEMENTED FOR 3UPPLY #HAIN TO ENGAGE SUPPLIERS PROCESS /N SITE AUDITS HAVE BEEN COMPLETED SYSTEMS HAVE ALSO BEEN DELIVERED AIMED AT AND CONDUCT SOURCING EVENTS ONLINE 4HIS AT SUPPLIER FACTORIES ACROSS #HINA 3OUTH !FRICA ENGAGING SUPPLIERS MORE EFFECTIVELY THROUGH SOLUTION PROVIDES THE LINK BETWEEN SOURCING "RAZIL AND !USTRALIA WHILE IMPROVEMENT PLANS CONTRACT AND BUSINESS SYSTEMS FOR THE 'ROUP > 3TANDARDISATION THROUGH ADOPTION OF COMMON HAVE BEEN DEVELOPED TO ADDRESS ISSUES AND IS A KEY ELEMENT IN IMPROVING EFäCIENCY POLICIES PRACTICES AND METHODOLOGIES TO IDENTIäED AS AN 3$ RISK CREATE A SIMPLER WAY OF DOING BUSINESS WITH 3UPPLY #HAIN 3USTAINABLE $EVELOPMENT 3#3$ HAS SET A HIGH BENCHMARK FOR VALUE !NGLO !MERICAN IS A CORE ASPECT OF THE WAY IN WHICH THE 'ROUP DELIVERY )NITIATIVES IMPLEMENTED DURING THE > %FäCIENCY BY ENHANCING THE 'ROUPÓS WORKS AND IS ALIGNED TO !NGLO !MERICANÓS AMBITION YEAR HAVE DELIVERED IMMEDIATE BENEäTS WHILE SOURCING PROCESSES FROM TENDERING THROUGH OF BEING A PARTNER OF CHOICE 4HE AIM OF 3#3$ OTHERS HAVE BEEN INSTRUMENTAL IN ESTABLISHING TO TRANSACTION AND PAYMENTS IS TO BUY FROM SUPPLIERS THAT FOLLOW THE SOUND LONGER TERM PARTNERSHIPS THAT WILL SUPPORT THE PRINCIPLES AND PRACTICES OUTLINED IN THE 'ROUPÓS > 4RANSPARENCY MAKING CLEARER THE LINK 'ROUPÓS OVERALL TARGET OF CREATING BILLION OF 3#3$ POLICY AND CODE 4HE BENEäTS INCLUDE BETWEEN SUPPLIER PERFORMANCE AND THE ADDITIONAL ANNUAL VALUE FROM CORE OPERATIONS MITIGATION OF RISK FOR CUSTOMERS SUPPLIERS AND AWARD OF NEW BUSINESS ALONE BY
Anglo American plc Annual Report 2009 19 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Performance against KPIs continued
New capital investments !T !NGLO 0LATINUM THE MAJOR RESTRUCTURING OF +UMBA )RON /REÓS +OLOMELA PROJECT PREVIOUSLY !NGLO !MERICANÓS BILLION PIPELINE OF THE 2USTENBURG AND !MANDELBULT SECTION INTO KNOWN AS 3ISHEN 3OUTH IS PROGRESSING WELL APPROVED PROJECTS SPANS ITS CORE COMMODITIES SMALLER NEW MINING ENTITIES DURING HAS TOWARDS äRST PRODUCTION IN THE äRST HALF OF AND IS EXPECTED TO DELIVER ORGANIC PRODUCTION PROVIDED THE åEXIBILITY IN ITS PRODUCTION SYSTEM +OLOMELA IS SITUATED KM TO THE SOUTH GROWTH OF MORE THAN ONE THIRD BY TO REACT TO SHORT TERM MARKET CHANGES IN DEMAND OF +UMBAÓS WORLD CLASS 3ISHEN MINE AND WHEN FOR PLATINUM WHILE RETAINING OPTIONS TO EXPAND FULL PRODUCTION IS ACHIEVED IN EARLY WILL 4HE #OMPANYÓS DECISION TO PRESERVE THE PRODUCTION SHOULD DEMAND FOR PLATINUM INCREASE PRODUCE -TPA OF HIGH QUALITY IRON ORE WITH DEVELOPMENT OF ITS KEY NEAR TERM STRATEGIC 4HE MILLION -OGALAKWENA .ORTH PROJECT FURTHER POTENTIAL FOR EXPANSION !CROSS !NGLO GROWTH PROJECTS DURING THE ECONOMIC DOWNTURN EXPECTED TO DELIVER KOZPA REäNED !MERICANÓS IRON ORE INTERESTS IN "RAZIL AND POSITIONS THE 'ROUP TO CAPITALISE ON THE NEXT PLATINUM IN THE äRST QUARTILE OF THE COST CURVE 3OUTH !FRICA THE 'ROUP HAS THE POTENTIAL TO PHASE OF GLOBAL ECONOMIC GROWTH &OR THE LONGER IS PROGRESSING ON SCHEDULE AND WITHIN BUDGET INCREASE IRON ORE PRODUCTION TO IN EXCESS OF TERM THE 'ROUP HAS AN ARRAY OF PROJECTS UNDER WITH RAMP UP TO FULL PRODUCTION CONTINUING FROM -TPA WITHIN YEARS ACTIVE CONSIDERATION AT THE PRE FEASIBILITY OR THE SECOND QUARTER OF 4HE MILLION )N !USTRALIA THE MILLION ,AKE ,INDSAY FEASIBILITY STAGES 4HIS PIPELINE OF PROJECTS $ISHABA FORMERLY !MANDELBULT %AST 5PPER COKING AND THERMAL COAL PROJECT REACHED STRETCHES WELL INTO THE FUTURE ENSURING THE 5' EXPANSION PROJECT IS ON TRACK TO RAISE THE IMPLEMENTATION PHASE AND WILL BE OPTIMISED 'ROUP MAINTAINS A HIGH DEGREE OF åEXIBILITY MINEÓS PLATINUM OUTPUT BY KOZPA BY AHEAD OF ACHIEVING FULL PRODUCTION IN WITH REGARDS TO ITS ORGANIC GROWTH POTENTIAL /VER THE LONGER TERM A RANGE OF MAJOR PROJECTS ! DECISION IS EXPECTED IN RELATION TO THE äRST INCLUDING 3TYLDRIFT -ERENSKY PHASE WILL PROVIDE !NGLO !MERICANÓS ,OS "RONCES COPPER MINE IS STAGE APPROVAL OF THE -TPA 'ROSVENOR !NGLO 0LATINUM WITH ORGANIC GROWTH OPTIONS IN WELL ADVANCED WITH ITS EXPANSION PROJECT WITH METALLURGICAL COAL PROJECT IN !USTRALIA IN EXCESS OF KOZPA OF REäNED PLATINUM äRST PRODUCTION SCHEDULED FOR THE FOURTH QUARTER THE äRST STEP IN POTENTIALLY CREATING A LARGE OF AND IS EXPECTED TO INCREASE FROM THE 4HE -INAS 2IO IRON ORE PROJECT IN "RAZIL IS A SCALE OPERATIONAL CLUSTER AROUND THE EXISTING FOURTH QUARTER OF TO AN AVERAGE EXCEEDING MULTI BILLION TONNE RESOURCE WITH THE BENEäT -ORANBAH .ORTH OPERATION KTPA OVER THE äRST THREE YEARS OF FULL OF AN INTEGRATED LOGISTICS SYSTEM THAT WILL -INING COMMENCED DURING THE THIRD QUARTER PRODUCTION AN AVERAGE OF MORE THAN KTPA SUPPLY THE HIGHLY ATTRACTIVE SEABORNE IRON ORE OF AT THE MILLION :IBULO FORMERLY OVER THE äRST YEARS !T PEAK PRODUCTION MARKET !NGLO !MERICAN OBTAINED A SERIES OF :ONDAGSFONTEIN THERMAL COAL PROJECT WHICH LEVELS ,OS "RONCES IS EXPECTED TO BE THE äFTH IMPORTANT LICENCES FOR THE äRST PHASE OF THE INCLUDES A JOINT VENTURE PLANT WITH LARGEST COPPER MINE IN THE WORLD WITH RESERVES PROJECT DURING MOST NOTABLY THE äRST "(0 "ILLITON %NERGY #OAL 3OUTH !FRICA &ULL THAT SUPPORT A MINE LIFE OF YEARS 2ESOURCE PART OF THE )NSTALLATION ,ICENCE FOR THE MINE PRODUCTION OF -TPA OF THERMAL COAL IS AND MINERALISATION STUDIES CARRIED OUT BY !NGLO AND BENEäCIATION PLANT AWARDED IN $ECEMBER EXPECTED FROM 4HE -AFUBE PROJECT !MERICANÓS TECHNICAL TEAMS SUPPORT FURTHER FOLLOWING THE EARLIER AWARD OF THE FEDERAL PERMIT WAS COMPLETED ON SCHEDULE AND MARGINALLY POTENTIAL EXPANSION !NGLO !MERICAN HAS FOR LAND CLEARANCE AT THE MINE 4HE SECOND PART BELOW BUDGET IN THE THIRD QUARTER OF ALSO ANNOUNCED TWO VERY SIGNIäCANT AND HIGH OF THE )NSTALLATION ,ICENCE IS EXPECTED TO BE 4HE -AC7EST AND ,ANDAU .AVIGATION 7EST QUALITY NEW DISCOVERIES AT ,OS 3ULFATOS AND APPROVED DURING THE EARLY PART OF 4HE PROJECTS REACHED FULL PRODUCTION OF -TPA 3AN %NRIQUE -ONOLITO CLOSE TO THE ,OS "RONCES CONSTRUCTION OF THE PORT AT !¢U IS WELL ADVANCED AND -TPA RESPECTIVELY IN THE äRST HALF OF MINE IN #HILE 4HESE TWO NEW PROSPECTS AND THE EARTHWORKS FOR THE BENEäCIATION THE YEAR )N #OLOMBIA FULL PRODUCTION CAPACITY TOGETHER INCREASE THE 'ROUPÓS COPPER RESOURCES PLANT AND PIPELINE ARE PROGRESSING TOWARDS OF -TPA OF THERMAL COAL WAS ACHIEVED FOR THE EXCLUDING RESERVES BY APPROXIMATELY äRST PRODUCTION IN THE SECOND HALF OF MILLION EXPANSION AT #ERREJ®N DURING 4HE PHASED EXPANSION OF THE #OLLAHUASI COPPER WITH RAMP UP TO ANNUAL IRON ORE PRODUCTION &EASIBILITY STUDIES TO EXPAND THE OPERATION TO MINE CONTINUES WITH THE äRST PHASE EXPANSION OF -TPA IN TO KTPD DUE FOR COMPLETION EARLY IN AROUND -TPA BY CONTINUE 4HE LARGE SIZE OF THE -INAS 2IO OREBODY AND WHILE SIGNIäCANT POTENTIAL FOR SUBSEQUENT )N LATE THE SHAREHOLDERS OF $EBSWANA THE PROJECTÓS DEDICATED LOGISTICS INFRASTRUCTURE PHASED EXPANSIONS CONTINUES TO BE EVALUATED THE 'OVERNMENT OF THE 2EPUBLIC OF "OTSWANA MEANS THAT IT HAS CONSIDERABLE EXPANSION /UTSIDE #HILE SEVERAL UNAPPROVED PROJECTS AND $E "EERS APPROVED A MAJOR EXTENSION POTENTIAL WITH STUDIES UNDER WAY FOR THE PROVIDE SIGNIäCANT SCOPE FOR FUTURE ORGANIC PROJECT AT *WANENG THE WORLDÓS åAGSHIP DIAMOND EXPANSION OF THE PROJECT TO UP TO -TPA GROWTH )N 0ERU !NGLO !MERICAN EXPECTS TO MINE 4HE PROJECT ALSO KNOWN AS #UT WILL !NGLO !MERICAN ACQUIRED THE -INAS 2IO PROJECT MAKE A DECISION REGARDING THE APPROVAL AND ENSURE PROäTABLE AND CONTINUOUS PRODUCTION IN TWO TRANSACTIONS IN AND AND AT DEVELOPMENT OF THE KTPA 1UELLAVECO AT THE MINE UNTIL AT LEAST AND IS THE THE END OF DECLARED A RESOURCE OF -T COPPER PROJECT DURING !N EXPLORATION AND LARGEST EVER SINGLE CAPITAL COMMITMENT IN THE -EASURED AND )NDICATED AND AN ADDITIONAL A CONCEPTUAL STUDY ARE ALSO NOW UNDER WAY AT PRIVATE SECTOR IN "OTSWANA $EBSWANA WILL -T OF )NFERRED RESOURCE !FTER CONSIDERABLE THE KTPA -ICHIQUILLAY PROJECT )N !LASKA PROVIDE MILLION OF THE BILLION PROJECT GEOLOGICAL WORK THIS RESOURCE HAS INCREASED THE PRE FEASIBILITY STUDY FOR THE 0EBBLE COPPER INVESTMENT OVER THE NEXT YEARS PROJECT IN WHICH THE 'ROUP HAS A STAKE FOURFOLD SINCE TO BILLION TONNES IS ONGOING INCLUDING -T OF )NFERRED RESOURCE 4HE ANTICIPATED äNAL PRODUCT &E GRADE OVER THE LIFE 4HE "ARRO !LTO NICKEL PROJECT IN "RAZIL IS ON TRACK OF THE MINE IS PARTICULARLY HIGH COMPARED TO TOWARDS START UP IN EARLY WITH OVERALL OTHER PRODUCTS ON THE MARKET EXPECTED TO BE DEVELOPMENT ALMOST COMPLETE AT THE YEAR ABOVE AND BENEäTS FROM EXTREMELY LOW END 4HIS PROJECT WHICH HAS FURTHER POTENTIAL ALUMINA SILICA AND PHOSPHORUS CONTAMINANTS FROM AN EXTENSIVE RESOURCE BASE LEVERAGES AN EXISTING OPERATION AND PROVEN TECHNOLOGY AND WILL PRODUCE AN AVERAGE KTPA OF NICKEL IN FULL PRODUCTION WITH A POSITION IN THE LOWER HALF OF THE COST CURVE 4HE *ACAR¤ AND -ORRO 3EM "ONE PROJECTS ALSO IN "RAZIL PROVIDE !NGLO !MERICAN WITH SIGNIäCANT NICKEL PRODUCTION EXPANSION OPTIONS FROM ONWARDS
20 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Selected major projects Completed in 2009 #APEX
3ECTOR 0ROJECT #OUNTRY #OMPLETION DATE M 0RODUCTION VOLUME Operating and financial review )RON /RE AND -ANGANESE 3ISHEN EXPANSION 3OUTH !FRICA 1 -TPA IRON ORE -ETALLURGICAL #OAL ,AKE ,INDSAY !USTRALIA 1 -TPA 4HERMAL #OAL -AFUBE 3OUTH !FRICA 1 -TPA 'OEDEHOOP &INES 3OUTH !FRICA 1 -TPA -AC7EST 3OUTH !FRICA 1 -TPA .AVIGATION 7EST 3OUTH !FRICA 1 -TPA #ERREJ®N #OLOMBIA 1 -TPA ND STAGE Approved &IRST &ULL PRODUCTION PRODUCTION #APEX 3ECTOR 0ROJECT #OUNTRY DATE DATE M 0RODUCTION VOLUME 0LATINUM -# 0LANT #APACITY %XPANSION Ð PHASE 3OUTH !FRICA 1 1 KTPA WATERVAL CONVERTER MATTE -OGALAKWENA .ORTH 3OUTH !FRICA 1 KOZPA REäNED PLATINUM -AINSTREAM INERT GRIND PROJECTS 3OUTH !FRICA 1 1 )MPROVE PROCESS RECOVERIES "OKONI ,EBOWA "RAKFONTEIN -ERENSKY 3OUTH !FRICA 1 1 2EPLACE KOZPA REäNED PLATINUM "ASE METALS REäNERY EXPANSION 3OUTH !FRICA 1 1 KTPA NICKEL $ISHABA !MANDELBULT %AST 5PPER 5' 3OUTH !FRICA 1 1 KOZPA REäNED PLATINUM 4HEMBELANI 3HAFT 0AARDEKRAAL 3OUTH !FRICA 1 1 2EPLACE KOZPA REäNED PLATINUM 4WICKENHAM 3OUTH !FRICA 1 1 KOZPA REäNED PLATINUM 3TYLDRIFT -ERENSKY PHASE 3OUTH !FRICA 1 1 KOZPA REäNED PLATINUM 5NKI -INE :IMBABWE 1 1 KOZPA REäNED PLATINUM $IAMONDS *WANENG Ð #UT "OTSWANA MILLION CARATS #OPPER ,OS "RONCES EXPANSION #HILE 1 1 KTPA COPPER #OLLAHUASI KTPD #HILE 1 1 %XPANSION TO KTPD CAPACITY .ICKEL "ARRO !LTO "RAZIL 1 1 KTPA NICKEL )RON /RE AND -ANGANESE -INAS 2IO PHASE "RAZIL ( 1 -TPA IRON ORE PELLET FEED WET BASIS +OLOMELA PREVIOUSLY 3ISHEN 3OUTH 3OUTH !FRICA 1 1 -TPA IRON ORE 4HERMAL #OAL :IBULO PREVIOUSLY :ONDAGSFONTEIN 3OUTH !FRICA 1 1 -TPA THERMAL Future unapproved &IRST &ULL PRODUCTION PRODUCTION 3ECTOR 0ROJECT #OUNTRY DATE DATE 0RODUCTION VOLUME #OPPER 1UELLAVECO 0ERU KTPA COPPER #OLLAHUASI EXPANSION PHASE #HILE KTPA COPPER -ICHIQUILLAY 0ERU KTPA COPPER 0EBBLE 5NITED 3TATES 4"$ 4"$ KTPA COPPER .ICKEL *ACAR¤ PHASE "RAZIL KTPA NICKEL -ORRO 3EM "ONE "RAZIL KTPA NICKEL )RON /RE AND -ANGANESE 3ISHEN %XPANSION 0ROJECT PHASE " 3OUTH !FRICA -TPA IRON ORE 3ISHEN %XPANSION 0ROJECT 3OUTH !FRICA -TPA IRON ORE 3ISHEN #ONCENTRATE 3OUTH !FRICA -TPA IRON ORE PELLETS -INAS 2IO EXPANSION "RAZIL 4"$ 4"$ 5P TO -TPA IRON ORE PELLET FEED WET BASIS -ETALLURGICAL #OAL 'ROSVENOR !USTRALIA -TPA METALLURGICAL 4HERMAL #OAL (EIDELBERG UNDERGROUND 3OUTH !FRICA -TPA THERMAL %LDERS OPENCAST 3OUTH !FRICA -TPA THERMAL %LDERS UNDERGROUND 3OUTH !FRICA -TPA THERMAL .EW ,ARGO 3OUTH !FRICA -TPA THERMAL #ERREJ®N 0 #OLOMBIA -TPA THERMAL
#APITAL EXPENDITURE SHOWN ON BASIS IN NOMINAL TERMS 0RODUCTION REPRESENTS AVERAGE OVER äRST YEARS OF THE PROJECT 4OTAL PRODUCTION OF MINE WHEN PROJECT HAS RAMPED UP TO FULL !NGLO 0LATINUM PROJECTS REåECT APPROVED CAPITAL EXPENDITURE 0RODUCTION OVER THE äRST THREE YEARS OF THE PROJECT WILL AVERAGE PRODUCTION &URTHER PHASED EXPANSIONS HAVE THE POTENTIAL TO KTPA INCREASE PRODUCTION TO -TPA 2EPRESENTS OF AVERAGE INCREMENTAL OR REPLACEMENT PRODUCTION AT FULL PRODUCTION UNLESS OTHERWISE STATED #APITAL EXPENDITURE POST ACQUISITION OF !NGLO !MERICANÓS %XPANSION POTENTIAL TO KTPA SHAREHOLDING IN -INAS 2IO FOR OF THE MINE AND PIPELINE AND $EBSWANA WILL PROVIDE MILLION OF THE BILLION PROJECT SHARE OF THE PORT 4HE AGGREGATE COST OF OF THE MINE INVESTMENT OVER THE NEXT YEARS MILLION ATTRIBUTABLE PIPELINE AND PORT Ð AND CAPITAL EXPENDITURE INCURRED BOTH BEFORE AND 0EBBLE WILL PRODUCE MOLYBDENUM AND GOLD BY PRODUCTS -ICHIQUILLAY AFTER !NGLO !MERICANÓS SHAREHOLDING IN -INAS 2IO Ð HAS INCREASED WILL PRODUCE MOLYBDENUM GOLD AND SILVER BY PRODUCTS AND OTHER FROM BILLION TO BILLION PROJECTS WILL PRODUCE MOLYBDENUM AND SILVER BY PRODUCTS
Anglo American plc Annual Report 2009 21 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Performance against KPIs continued
Energy consumption Partner of choice Energy consumption GJ (million) $URING !NGLO !MERICAN CONSUMED Sustainable development MILLION GIGAJOULES '* OF ENERGY Year !NGLO !MERICANÓS SUSTAINABLE DEVELOPMENT MILLION '* 4HIS MILLION '* INCREASE IS 05 96 203 PERFORMANCE IS FUNDAMENTAL TO ITS INVESTMENT ALMOST WHOLLY ATTRIBUTABLE TO !NGLO !MERICANÓS PARTNER AND EMPLOYER OF CHOICE AGENDA )RON /RE "RAZIL BUSINESS REPORTING ON ITS ENERGY 06 107 197 USE FOR THE äRST TIME SINCE ACQUISITION 4HE #OMPANY IS COMMITTED TO OPERATING SAFELY 07 105 92 SUSTAINABLY AND RESPONSIBLY AND EMBEDS THIS Energy efficiency 08 103 2 INTO EVERY PART OF THE BUSINESS )T FULäLS THIS COMMITMENT BY RESPECTING THE ENVIRONMENT )MPROVING ENERGY EFäCIENCY HAS AN ECONOMIC 09 105 0 THROUGH EFFECTIVE STEWARDSHIP OF LAND AND SECURITY OF SUPPLY AND ENVIRONMENTAL CONTEXT AND IS A CORE ELEMENT OF THE #OMPANYÓS CLIMATE 050100 150 200 250 300 RESOURCES SUPPORTING THE DEVELOPMENT OF COMMUNITIES WHERE IT OPERATES AND ENSURING CHANGE STRATEGY )N !NGLO !MERICAN SET Group excluding divested businesses THE SAFETY OF EMPLOYEES CONTRACTORS AND A TARGET TO REDUCE ITS ENERGY INTENSITY BY Divested businesses LOCAL COMMUNITIES BY BASED ON A BASELINE "EHAVING IN THIS WAY IS ESSENTIAL FOR EARNING 4HE MAJORITY OF !NGLO !MERICANÓS ELECTRICAL AND MAINTAINING TRUST WITH STAKEHOLDERS POWER CONSUMPTION IS COAL äRED WHICH IS WHY IT IS SEEKING EFäCIENCY GAINS IN ELECTRICAL CO2e emissions Ð GOVERNMENTS COMMUNITIES CUSTOMERS Tonnes (million) SUPPLIERS AND EMPLOYEES Ð AND CREATES VALUE POWER USAGE THROUGH ASSET OPTIMISATION AND WHICH IS FUNDAMENTAL TO !NGLO !MERICANÓS CONTINUOUS IMPROVEMENT PROGRAMMES Year ABILITY TO DELIVER LONG TERM SUSTAINABLE RETURNS 05 16.5 15.9 TO SHAREHOLDERS Climate change !NGLO !MERICAN RECOGNISES ITS RESPONSIBILITY ! REVISED VERSION OF !NGLO !MERICANÓS 06 20.1 16.3 TO TAKE MEANINGFUL ACTION TOWARDS MITIGATING 'OOD #ITIZENSHIP "USINESS 0RINCIPLES WAS THE EFFECTS OF CLIMATE CHANGE AND TO HELP 07 19.4 5.1 LAUNCHED AT THE END OF THE YEAR 4HESE APPLY TO PROTECT ITS EMPLOYEES AND ASSETS AS WELL AS EVERY BUSINESS AND TO EVERY EMPLOYEE AND ARE 08 19.1 0.6 THE COMMUNITIES AND ENVIRONMENTS LINKED TO INTEGRAL TO THE WAY !NGLO !MERICAN OPERATES ITS OPERATIONS AGAINST ITS POTENTIAL IMPACTS 09 19.0 0 4HEY INCLUDE A GREATER FOCUS ON ENVIRONMENTAL 0612 18 24 30 36 ISSUES SUCH AS WATER CONSERVATION CLIMATE 4HERE ARE A NUMBER OF STRATEGIC PRINCIPLES CHANGE AND BIODIVERSITY A REINFORCED STANCE THAT UNDERPIN !NGLO !MERICANÓS APPROACH Group excluding divested businesses AGAINST CORRUPTION AN INCREASED COMMITMENT TO CLIMATE CHANGE 4HESE INCLUDE A FOCUS ON Divested businesses ON ()6!)$3 TREATMENT THE IMPORTANCE OF ENERGY EFäCIENCY THROUGH ASSET OPTIMISATION FAMILY LIFE AND WORK LIFE BALANCE AND THE CARBON REDUCING ÒSYNERGYÓ PROJECTS LOW CARBON PROMOTION OF DIVERSITY TECHNOLOGIES AND ADAPTATION TO CLIMATE CHANGE #LIMATE CHANGE ALSO REPRESENTS A COMMERCIAL 4HE "USINESS 0RINCIPLES ARE EMBEDDED IN OPPORTUNITY AND GUIDED BY THESE PRINCIPLES THE POLICIES PROJECTS AND COMMITMENTS AND REåECT #OMPANY IS LOOKING TO LEVERAGE ITS KNOWLEDGE THE #OMPANYÓS DETERMINATION TO LIVE BY ITS CORE AND ASSETS INTO GENERATING ADDITIONAL VALUE VALUES )N ADDITION THE #OMPANY HAS STRONG FOR STAKEHOLDERS GOVERNANCE SYSTEMS AND RISK MANAGEMENT PROCESSES IN PLACE TO IMPLEMENT ITS COMMITMENT Carbon dioxide emissions TO SUSTAINABLE DEVELOPMENT $URING CONSIDERABLE PROGRESS WAS MADE ON EMBEDDING /VER THE DECADE TO THE 'ROUP IS AIMING GLOBAL STANDARDS FOR ENVIRONMENT SAFETY HEALTH FOR A REDUCTION IN EMISSIONS PER UNIT OF AND SOCIAL ISSUES THAT ARE DESIGNED TO DRIVE PRODUCTION $URING !NGLO !MERICAN PERFORMANCE IMPROVEMENT EMITTED -T OF CARBON DIOXIDE EQUIVALENTS #/E -T Energy Carbon abatement !NGLO !MERICANÓS OVERALL OBJECTIVE IS TO SECURE !NGLO !MERICANÓS GOAL TO REDUCE #/ EMISSIONS AFFORDABLE RELIABLE AND SUSTAINABLE SUPPLIES OF ENERGY )N THE 'ROUP UNDERTOOK A EXTENDS BEYOND IMPROVING ENERGY CONSUMPTION DETAILED REVIEW OF ITS EXPOSURE TO ENERGY EFäCIENCIES TO IMPLEMENTING CARBON ABATEMENT SECURITY RISKS AND COSTS AFTER RELATED CONCERNS PROJECTS IN PARTICULAR THOSE THAT HAVE SYNERGIES AROSE THE PREVIOUS YEAR PARTICULARLY IN 3OUTH WITH OPERATIONAL ACTIVITIES !FRICA AND "RAZIL )N RESPONSE TO THESE KEY 3UCH PROJECTS INCLUDE !NGLO !MERICANÓS RISKS !NGLO !MERICAN WILL CONTINUE TO OPTIMISE COAL SEAM METHANE äRED POWER STATIONS AT ENERGY CONSUMPTION EFäCIENCIES DEVELOP -ORANBAH .ORTH AND #APCOAL IN 1UEENSLAND PROJECTS WHICH OFFER COST EFFECTIVE !USTRALIA 0OWERED BY MINE WASTE GAS THESE AND SUSTAINABLE SOURCES OF ENERGY WHILE FACILITIES CURRENTLY GENERATE A COMBINED ENSURING AVAILABILITY OF EMERGENCY POWER MEGAWATTS -7 OF POWER Ð EQUALLING SUPPLIES FOR THE SAFETY OF THE WORKFORCE A REDUCTION OF APPROXIMATELY -T OF #/E AS WELL AS CRITICAL OPERATIONAL NEEDS ANNUALLY WHICH IS THE EQUIVALENT OF PLANTING MILLION TREES OR TAKING CARS OFF THE ROAD 3IMILAR OPPORTUNITIES FOR THE 'ROUPÓS 3OUTH !FRICAN COAL OPERATIONS ARE LIMITED
22 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 OWING TO THE SIGNIäCANTLY LOWER INHERENT Water consumption Water consumption METHANE CONTENT OF (IGHVELD COAL SEAMS 4HE )N !NGLO !MERICAN CONSUMED MILLION Million m3 #OMPANY HOWEVER HAS STARTED ON A SMALLER CUBIC METRES M OF WATER FOR PRIMARY ACTIVITIES Year SCALE METHANE åARING PROJECT AT .EW $ENMARK 7HILE THIS REPRESENTS A RELATIVELY SMALL YEAR
Operating and financial review COLLIERY WHICH IS EXPECTED TO REDUCE ITS #/E ON YEAR INCREASE MILLION M 05 116 513 EMISSIONS BY AN ESTIMATED KTPA IT INCLUDES MILLION M OF WATER FROM THE 06 126 456 "RAZILIAN IRON ORE OPERATIONS THAT HAVE BEGUN Low carbon technology REPORTING FOR THE äRST TIME SINCE ACQUISITION AS 07 128 123 !DVANCING LOW CARBON TECHNOLOGIES WHICH WELL AS AN ADDITIONAL MILLION M OF HARVESTED 08 123 2 AFFECT !NGLO !MERICANÓS OPERATIONAL AND RAINFALL THAT !NGLO 0LATINUM HAD NOT PREVIOUSLY 09 125 0 PRODUCT RELATED #/ EMISSIONS PERFORMANCE IS REPORTED IN ITS CONSUMPTION äGURES /N A CRITICAL TO THE 'ROUPÓS SUCCESS IN THE LONG TERM LIKE FOR LIKE BASIS !NGLO !MERICAN ACHIEVED A 0100200 300 400 500 600 700 )N THIS REGARD THE #OMPANY PARTICIPATES IN A WATER SAVING BETWEEN AND NUMBER OF DOWNSTREAM RELATED CARBON RESEARCH Group excluding divested businesses !LTHOUGH THE 'ROUPÓS OVERALL WATER USE HAS AND ADVOCACY INITIATIVES Divested businesses REMAINED LARGELY UNCHANGED DESPITE ACQUISITIONS !NGLO !MERICAN AIMS TO IMPROVE ITS PERFORMANCE Adaptation THROUGH THE CONTINUED IMPLEMENTATION OF ITS !NGLO !MERICAN IS KEENLY AWARE OF THE RISKS 7ATER7AYS PROGRAMME CLIMATE CHANGE POSE TO THE BUSINESS AS WELL AS ITS POTENTIAL TO UNDERMINE CORPORATE SOCIO ECONOMIC 4HE 7ATER7AYS PROGRAMME HAS PROVIDED DEVELOPMENT EFFORTS 4HE #OMPANYÓS FOCUS WILL THE 'ROUP WITH A WATER VISION AND FRAMEWORK BE ON DEVELOPING REGIONAL CLIMATE CHANGE IMPACT THAT OUTLINES !NGLO !MERICANÓS APPROACH TO MODELS TO PROVIDE A BETTER UNDERSTANDING OF MANAGING WATER 4HESE ARE SUPPORTED BY BUSINESS AND SOCIETAL EXPOSURE TO CLIMATE A WATER PERFORMANCE STANDARD WHICH WAS CHANGE AND ASSOCIATED ADAPTATION REQUIREMENTS FORMALLY LAUNCHED IN AS PART OF THE GLOBAL 4HE 'ROUP ALSO HAS AN ENORMOUS OPPORTUNITY !NGLO %NVIRONMENT 7AY ROLL OUT ! COMMON TO COMBINE CARBON REDUCTION INITIATIVES WITH ITS SET OF WATER REPORTING DEäNITIONS HAS BEEN SOCIO ECONOMIC DEVELOPMENT ACTIVITIES THUS IMPLEMENTED AND MODELS FOR DETERMINING THE ACHIEVING DUAL BENEäTS TRUE VALUE OF WATER AND UNDERSTANDING WATER BALANCES HAVE BEEN DEVELOPED Exposure to climate policy 4HE WATER BALANCE JOURNEY MODEL IS AN OPERATIONAL 4HE 'ROUPÓS MOST IMMEDIATE FOCUS IS ON TOOL FOR UNDERSTANDING WATER BALANCES AND THE !USTRALIA WHICH DURING THE SECOND HALF OF QUALITY OF WATER MANAGEMENT SYSTEMS 4HE RELEASED ITS GREEN AND WHITE PAPERS INFORMATION IS USED IN CONJUNCTION WITH THE ON AN EMISSIONS TRADING SCHEME ENTITLED THE OUTCOMES OF SOCIAL AND ENVIRONMENTAL IMPACT #ARBON 0OLLUTION 2EDUCTION 3CHEME #023 ASSESSMENTS AND THE 3OCIO %CONOMIC !SSESSMENT )T WILL COME INTO FORCE IN IF THE FEDERAL 4OOLBOX 3%!4 THE 'ROUPÓS PRINCIPAL SOCIAL GOVERNMENT IS ABLE TO PASS LEGISLATION THROUGH IMPACT ASSESSMENT AND MANAGEMENT TOOL FOR THE 3ENATE BUT THE LIKELIHOOD OF THIS IS CURRENTLY EXISTING OPERATIONS TO IDENTIFY IMPROVEMENT UNCERTAIN )F THE LEGISLATION IS PASSED IT COULD OPPORTUNITIES AND TO UNDERSTAND HOW ANY HAVE SIGNIäCANT äNANCIAL IMPLICATIONS FOR ALL CHANGES MAY AFFECT OPERATIONS AND OTHER !USTRALIAN COAL COMPANIES !NGLO !MERICAN IS PARTIES THAT SHARE COMMON WATER RESOURCES HOLDING DISCUSSIONS WITH THE GOVERNMENT ON THE DESIGN OF THE #023 AS WELL AS THE POSSIBILITY OF 4HE ÒTRUE VALUE OF WATERÓ MODEL IS DESIGNED TO CO ORDINATED RESEARCH AND DEVELOPMENT HELP OPERATIONS CALCULATE THEIR OWN UNIQUE VALUE OPPORTUNITIES AND CLEAN COAL TECHNOLOGIES OF WATER 4HE MODEL TAKES INTO ACCOUNT THE ACTUAL -ETALLURGICAL #OAL HAS ESTABLISHED A TEAM TO UNIT COST OF WATER AS WELL AS AN EXTENDED SET OF ENSURE THAT THE BUSINESS IS PREPARED FOR THE ENVIRONMENTAL AND SOCIO ECONOMIC CONSIDERATIONS INTRODUCTION OF THE SCHEME AND TO IDENTIFY 4ESTING WILL CONTINUE DURING AFTER WHICH IT FURTHER OPPORTUNITIES TO IMPLEMENT CARBON IS ENVISAGED THAT THIS ÒTRUEÓ VALUE OF WATER WILL REDUCTION MEASURES BE USED TO SUPPORT DECISION MAKING RELATED TO WATER EFäCIENCYREDUCTION INITIATIVES AND THE Water DESIGN OF NEW PROJECTS 3ECURITY OF WATER SUPPLY IS OF VITAL IMPORTANCE ! 'ROUP WATER GUIDELINE DUE FOR RELEASE IN TO THE #OMPANY AND THE COMMUNITIES AND EARLY WILL LINK IN TO THE WATER PERFORMANCE COUNTRIES IN WHICH IT OPERATES 4HE THREAT POSED STANDARD AND PROVIDE CLARITY ON THE VARIOUS BY CLIMATE CHANGE IS ALSO REQUIRING THE 'ROUP ELEMENTS OF WATER MANAGEMENT AT AN OPERATIONAL TO LOOK AT NEW APPROACHES TO MANAGING WATER LEVEL 4HE INCLUSION OF MEASURES TO ADAPT TO THE AT ITS OPERATIONS MANY OF THEM LOCATED IN SOME POTENTIAL IMPACTS OF CLIMATE CHANGE WILL ALSO BE OF THE MOST WATER STRESSED REGIONS OF THE WORLD REQUIRED IN THIS PROCESS
)NCLUDING .AMAKWA 3ANDS AND 4ARMAC )BERIA WHICH WERE DIVESTED IN TOTAL ENERGY CONSUMED DURING WAS MILLION '* )NCLUDING .AMAKWA 3ANDS AND 4ARMAC )BERIA WHICH WERE DIVESTED
IN TOTAL #/E EMISSIONS WERE -T MILLION M WAS REPORTED IN WHICH INCLUDES .AMAKWA 3ANDS AND 4ARMAC )BERIA WHOSE NUMBERS WERE INCLUDED UP UNTIL THE POINT OF DIVESTMENT .OT INCLUDING THESE WATER USED FOR PRIMARY ACTIVITIES DURING WAS MILLION M
Anglo American plc Annual Report 2009 23 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Performance against KPIs continued
2009 Global social Social and community Corporate social investment investment expenditure !NGLO !MERICANÓS ABILITY TO MANAGE COMMUNITY !NGLO !MERICAN AND ITS MANAGED SUBSIDIARIES $ m ISSUES TO A HIGH STANDARD CONTINUES TO BE AN AND JOINT VENTURES CONTRIBUTED MILLION IMPORTANT FACTOR IN DELIVERING ON ITS GROWTH OF PRE TAX PROäT TO CHARITABLE CAUSES 1.1 PROJECTS 4HE #OMPANY CONTINUES TO WIN AND COMMUNITY DEVELOPMENT INITIATIVES IN 15.5 NUMEROUS AWARDS FOR ITS COMMUNITY DEVELOPMENT COMPARED WITH MILLION OF PRE TAX PROGRAMMES AND IS MAINTAINING ITS INVESTMENT PROäT IN 4HESE äGURES INCLUDE CASH 3.4 IN RAISING STANDARDS ACROSS THE 'ROUP DONATIONS GIFTS IN KIND AND STAFF TIME SPENT DELIVERING COMMUNITY BENEäT PROGRAMMES $URING THE #OMPANYÓS NEW SOCIAL MANAGEMENT STANDARDS WERE APPROVED AND )N THE GEOGRAPHICAL DISTRIBUTION OF SOCIAL WERE PUBLISHED IN THE !NGLO 3OCIAL 7AY 4HE INVESTMENT WAS IN !FRICA IN THE 25.1 3OCIAL 7AY COMPLETES THE SUITE OF FOUR Ò7AYÓ !MERICAS IN THE 5+ AND %UROPE AND DOCUMENTS INCLUDING THE 3AFETY /CCUPATIONAL IN !USTRALIA !SIA AND OTHER COUNTRIES (EALTH AND %NVIRONMENT 7AYS TO FORM A 0.2 4HE MAJORITY OF THE #OMPANYÓS SOCIAL COMPREHENSIVE SUITE OF SUSTAINABLE DEVELOPMENT INVESTMENT IS UNDERTAKEN AT SITE LEVEL AND IS 2.4 STANDARDS 4HE 3OCIAL 7AY SETS OUT DEMANDING INFORMED BY STAKEHOLDER INPUTS THROUGH THE MINIMUM STANDARDS ACROSS MORE THAN 34.8 IMPLEMENTATION OF THE 3%!4 PROCESS DIMENSIONS OF SOCIAL PERFORMANCE 4HROUGH
Health/HIV IMPLEMENTATION OF THE 3OCIAL 7AY !NGLO .ATIONAL FOUNDATIONS OR FUNDS HAVE BEEN Education and youth !MERICAN WILL MEET OR EXCEED A NUMBER OF BEST ESTABLISHED TO SUPPORT COMMUNITY DEVELOPMENT Environment PRACTICE BENCHMARKS INCLUDING THE )NTERNATIONAL AND OTHER CHARITABLE CAUSES IN "RAZIL #HILE Community development Arts, culture and heritage &INANCE #ORPORATIONÓS ENVIRONMENTAL AND SOCIAL .AMIBIA AND 3OUTH !FRICA ! NEW FOUNDATION Housing 0ERFORMANCE 3TANDARDS AND THE RECOMMENDATIONS WILL ALSO BE ESTABLISHED IN 0ERU IN )N Other FOR COMPANIES ARISING FROM THE 5. 3PECIAL 3OUTH !FRICA THE !NGLO !MERICAN #HAIRMANÓS 2EPRESENTATIVE ON "USINESS AND (UMAN 2IGHTSÓ &UND HAS IMPLEMENTED A NEW STRATEGY AND IS WORK ! SELF ASSESSMENT PROCESS WAS COMPLETED REFOCUSING ITS GIVING TO PROJECTS WITH NATIONAL ACROSS ALL CURRENT MINING OPERATIONS AT THE END IMPACT INCLUDING LARGE PROJECTS AND INNOVATIVE 2009 Global social investment OF A PROCESS THAT WILL BE REPEATED FOR DEMONSTRATION PROJECTS #ONTRIBUTIONS TO THE expenditure by region EXPLORATION AND DEVELOPMENT PROJECTS DURING #HAIRMANÓS &UND TOTALLED MILLION IN $ m !T THE END OF THE PERFORMANCE !NGLO !MERICAN HAS ALSO ESTABLISHED THE AGAINST THE 3OCIAL 7AY REQUIREMENTS WAS !NGLO !MERICAN 'ROUP &OUNDATION WHICH 0.1 ASSESSED AS SIGNIäCANT GAPS TO CLOSE DISTRIBUTES GRANTS TO CHARITIES AROUND THE 0.3 MINOR GAPS TO CLOSE FULLY COMPLIANT WORLD WHERE !NGLO !MERICAN HAS A PRESENCE GOOD PRACTICE AND BEST PRACTICE 16.7 4HE PURPOSE OF THE &OUNDATION IS TO DEVELOP $URING THE OBJECTIVE IS TO ELIMINATE ALL 0.9 SUSTAINABLE LIVELIHOODS THROUGH THE PROJECTS NON COMPLIANCES 1.8 THAT IT SUPPORTS WITH PARTICULAR AREAS OF 1.8 4HE #OMPANY CONTINUES TO INVEST HEAVILY IN INTEREST BEING EDUCATION HEALTH ()6!)$3 TRAINING AND EDUCATION ON SOCIAL PERFORMANCE LOCAL COMMUNITY INTERNATIONAL DEVELOPMENT ISSUES BOTH FOR COMMUNITY RELATIONS STAFF AND AND THE ENVIRONMENT FOR OTHER SENIOR MANAGERS $URING THE 60.9 NUMBER OF MANAGERS TRAINED IN THE USE OF 3%!4 Enterprise development EXCEEDED 4HE #OMPANY ALSO SUPPORTED ! CORNERSTONE OF !NGLO !MERICANÓS APPROACH THE ESTABLISHMENT OF A NEW POSTGRADUATE TO DELIVERING SUSTAINABLE DEVELOPMENT IS TO South Africa DIPLOMA FOR SITE BASED PRACTITIONERS AT THE BUILD THE CAPACITIES AND LIFE CHANCES OF THE Rest of Africa United Kingdom 5NIVERSITY OF #APE 4OWNÓS 'RADUATE 3CHOOL COMMUNITIES WHERE THE #OMPANY OPERATES Rest of Europe OF "USINESS )N PARTNERSHIP WITH THE 5NIVERSITY %XPERIENCE SHOWS THAT ONE OF THE MOST EFFECTIVE The Americas OF #AMBRIDGE AND THE 5NIVERSITY OF 1UEENSLAND AND DURABLE WAYS OF ACHIEVING THIS IS THROUGH Australia/Asia A UNIQUE SENIOR MANAGEMENT PROGRAMME WAS Other TARGETED ENTERPRISE DEVELOPMENT PROGRAMMES DEVELOPED THAT WAS DELIVERED TO SENIOR STAFF FROM !NGLO !MERICAN AND AN .'/ PARTNER %NTERPRISE DEVELOPMENT CAN INVOLVE POTENTIAL DURING SUPPLIERS AND COMPANIES OUTSIDE THE MINING VALUE CHAIN !NGLO !MERICAN ESTABLISHED A SMALL )MPLEMENTATION OF THE SECOND VERSION OF 3%!4 AND MEDIUM ENTERPRISE 3-% DEVELOPMENT HAS CONTINUED WITH SEVERAL SITES COMPLETING AND EMPOWERMENT INITIATIVE KNOWN AS THEIR REPORTS DURING 4HE #OMPANY !NGLO :IMELE IN 3OUTH !FRICA YEARS AGO REMAINS ON TRACK TO äNALISE THE ROLL OUT OF TO EMPOWER BLACK ENTREPRENEURS THROUGH THE 3%!4 IN CREATION AND TRANSFORMATION OF 3-%S
24 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 !NGLO :IMELE IS DIVIDED INTO THREE SEPARATE FUNDS Representatives from Anglo American and the Ð THE 3UPPLY #HAIN &UND THE !NGLO +HULA -INING NGO, CARE Brazil, meet with a local community &UND AND THE 3MALL "USINESS 3TART UP &UND close to the Barro Alto mine to discuss a rural 4HE FUNDS OPERATE ON A COMMERCIAL BASIS ALBEIT development programme.
WITH THE SOCIAL PURPOSE OF CREATING SUSTAINABLE Operating and financial review AND ECONOMICALLY VIABLE ENTERPRISES BY PROVIDING EQUITYLOANS MENTORING AND ACCESS TO VALUE ENHANCING OPPORTUNITIES !NGLO :IMELE MANAGEMENT SERVICES PROVIDES HANDS ON SUPPORT TO ALL THREE FUNDS AND DELIVERS STRATEGIC INPUT IN AREAS SUCH AS CORPORATE GOVERNANCE MANAGEMENT LEGAL ACCOUNTING COMPANY SECRETARIAL PUBLIC RELATIONS SAFETY HEALTH AND THE ENVIRONMENT )N THE BUSINESSES IN !NGLO !MERICANÓS VARIOUS ENTERPRISE DEVELOPMENT INITIATIVES IN 3OUTH !FRICA WERE COLLECTIVELY RESPONSIBLE FOR EMPLOYING STAFF MEMBERS 4URNOVER FOR THE YEAR REACHED 2 BILLION MILLION Ð A GROWTH FROM 2 BILLION MILLION IN !NGLO :IMELE INVESTED 2 MILLION MILLION IN THESE BUSINESSES )NSPIRED BY !NGLO :IMELE !NGLO !MERICANÓS %MERGE PROGRAMME WAS LAUNCHED IN TO CONTRIBUTE TO ECONOMIC DEVELOPMENT AND THE Barro Alto Project Social Programme WELL BEING OF COMMUNITIES NEAR THE #OMPANYÓS OPERATIONS IN #HILE 4HE %MERGE PROGRAMME HAS DEVELOPED A Located in rural Goiás state in Brazil, the The programme is a long term one, but early TWO TIERED APPROACH IT HELPS MEDIUM SIZED Barro Alto nickel project is one of Anglo results are already encouraging. To date, ENTERPRISES TO GROW THEIR BUSINESSES BY American’s four strategic growth projects. more than 260 entrepreneurs have been trained both in rural and urban areas through OFFERING TRAINING TECHNICAL SUPPORT äNANCIAL The development of the project poses both CARE’s support programmes and hundreds ASSISTANCE AND MENTORING AND IT HAS ENTERED challenges to the local community as the local of schoolchildren have been given additional INTO AN ALLIANCE WITH &ONDO %SPERANZA AN population and economy grows rapidly, but also help with reading skills and supported to take INSTITUTION THAT GRANTS MICRO CREDIT AND unprecedented opportunities to build lasting part in cultural activities. BUSINESS EDUCATION TO SMALL BUSINESSES capacity for self-sustainability. In addition to this partnership, Anglo American -ORE THAN MEDIUM SIZED BUSINESS Supporting the development of host is also working with other NGOs in helping the ENTREPRENEURS HAVE ALREADY COMPLETED THE communities has been a key priority for the municipality to build public sector capacity using %MERGE PROGRAMME AND OBTAINED THEIR CERTIäCATE Barro Alto team. A comprehensive package of a methodology known as ‘School of Government’, FROM 5NIVERSIDAD !DOLFO )B¬EZ AND OVER assistance to the town of Barro Alto is being and also to share a strategic plan for meeting the implemented. Much of the support focuses on SMALL BUSINESS ENTREPRENEURS ARE TAKING United Nations Millennium Development Goals improving the infrastructure of the town, so that together with the community. PART IN THE PROGRAMME !NGLO !MERICANÓS GOAL it becomes a safe and attractive community. IS TO SUPPORT ENTREPRENEURS BY Anglo American has made major investments !NGLO !MERICANÓS "ARRO !LTO PROJECT IN "RAZIL in: upgrading roads; building a technical training institute; improving water and sanitation; schools HAS COMPLETED THE äRST YEAR OF A THREE YEAR and providing a new hospital. SOCIAL IMPROVEMENT PLAN WITH .'/ #!2% "RAZIL 4HE PARTNERSHIP ESTABLISHED IN /CTOBER To complement these infrastructure WAS DEVELOPED WITH THE AIM OF ENHANCING improvements, Anglo American has worked LOCAL ECONOMIC åOWS IMPROVING THE QUALITY with government and NGOs, including the OF PUBLIC EDUCATION AND STRENGTHENING SOCIAL Company’s global partner CARE, to deliver CAPITAL IN THE COMMUNITIES SURROUNDING THE refresher training for teachers, micro-credit loans, capacity building for the local municipality OPERATION IN THE STATE OF 'OIS and support to hundreds of local entrepreneurs. 4HROUGH #!2% "RAZIL LOCAL RESIDENTS HAVE BEEN ENCOURAGED TO TAKE PART IN A FREE ENTREPRENEURIAL MANAGEMENT COURSE IN AN EFFORT TO DEVELOP BUSINESS IDEAS AND OPPORTUNITIES IN THE REGION 4HE äRST GROUP OF SMALL BUSINESS OWNERS HAS NOW COMPLETED THE COURSE AND #!2% HAS SUPPORTED BUSINESSES AND ASSOCIATIONS IN THE AREA RANGING FROM AGRIBUSINESS AND THE PRODUCTION OF MILK AND HONEY TO THE SALE OF BREAD AND PROVIDING ACCESS TO INTERNET RADIO IN RURAL AREAS SEE CASE STUDY OPPOSITE
Anglo American plc Annual Report 2009 25 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Performance against KPIs continued
Lost time injury frequency Employer of choice TO OPERATION AND ARE ADDRESSED THROUGH rate (LTIFR) and fatal injury OPERATIONAL SAFETY IMPROVEMENT PLANS frequency rate (FIFR)* Safety 4HE !NGLO 3AFETY 7AY DETAILS THE #OMPANYÓS 3AFETY REMAINS !NGLO !MERICANÓS NUMBER ONE SAFETY VISION PRINCIPLES POLICY AND SAFETY LTIFR FIFR PRIORITY %VERYONE WHO WORKS AT !NGLO !MERICAN MANAGEMENT SYSTEM STANDARDS )T IS 1.2 0.03 HAS THE RIGHT TO RETURN HOME INJURY FREE AND COMPLEMENTED BY A CONCISE SET OF SAFETY THE #OMPANYÓS ROLE IS TO MAKE THIS A CONSISTENT 1.0 0.025 GOLDEN RULES AND FATAL RISK STANDARDS AND OUTLINES REALITY 4HE 'ROUPÓS VISION IS TO ELIMINATE FATAL WHAT IS EXPECTED OF THE 'ROUPÓS LEADERSHIP AND 0.8 0.02 AND OTHER INJURIES IN THE WORKPLACE THUS ITS OPERATIONS %ACH SITE IMPLEMENTS OPERATION 0.6 0.015 ACHIEVING ZERO HARM SPECIäC SAFETY IMPROVEMENT PLANS WITH PROGRESS 0.4 0.01 #ERTAIN MINING ACTIVITIES ARE OF SIGNIäCANTLY TRACKED VIA INTER ALIA THE 'ROUP SAFETY AND 0.2 0.005 HIGHER RISK THAN OTHERS WHILE MANY ON SITE SUSTAINABLE DEVELOPMENT ASSURANCE PROGRAMME EMPLOYEES WORK UNDER CHALLENGING CONDITIONS $URING SOME PEOPLE RECEIVED 0 0 !NGLO !MERICAN HAS WORKED CONSISTENTLY TO TRAINING ON THE #OMPANYÓS AWARD WINNING Year05 06 07 08 09 UNDERSTAND THESE RISKS LEARN FROM PREVIOUS SAFETY RISK MANAGEMENT PROGRAMME BRINGING INCIDENTS AND IMPLEMENT RISK MITIGATING THE TOTAL SINCE INCEPTION TO LTIFR FIFR STRATEGIES INCLUDING SYSTEMS PROCESSES *See KPI table on page 17 for definitions !NGLO !MERICAN WILL CONTINUE TO DRIVE FURTHER of LTIFR and FIFR INFRASTRUCTURE AND BEHAVIOUR STANDARDISATION AND CONSISTENCY OF SYSTEMS Note: The basis for reporting LTIs became more inclusive in 2003, when Anglo American began $URING PEOPLE LOST THEIR LIVES ON PROCESSES AND PROCEDURES WITH THE AIM OF to include restricted work cases as LTIs. This #OMPANY BUSINESS 7HILE ANY LOSS OF LIFE CONSOLIDATING THEM ALL INTO A SINGLE INTEGRATED was fully implemented by 2006. IS UNACCEPTABLE THIS NEVERTHELESS REPRESENTS GLOBAL SAFETY HEALTH AND ENVIRONMENT AN ENCOURAGING IMPROVEMENT ON MANAGEMENT SYSTEM BY THE END OF 4HE 'ROUPÓS FATAL INJURY FREQUENCY RATE 4O CHECK THE EFFECTIVENESS OF MANAGEMENT &)&2 ALSO SHOWED A IMPROVEMENT FROM CONTROLS PUT IN PLACE TO REDUCE SAFETY RISKS Anglo American voluntary IN TO IN THE 'ROUP SUSTAINABLE DEVELOPMENT RISK labour turnover AND ASSURANCE TEAM WILL CONDUCT AUDITS % )N THERE WERE LONGER PERIODS OF SAFE THROUGHOUT ACROSS ALL BUSINESS UNITS OPERATION THROUGHOUT THE 'ROUP 4HE #OPPER Year ON FALLS OF GROUND CONTRACTOR MANAGEMENT .ICKEL -ETALLURGICAL #OAL +UMBA )RON /RE AND AND ELECTRICITY ISOLATION 05 4.9 %XPLORATION BUSINESS UNITS REMAINED FATALITY )N ADDITION TO THE RECORDED FATALITIES A FURTHER INCIDENT FREE FATALITIES AT THE 4HERMAL #OAL BUSINESS WAS RECORDED AT +UMBA )RON /REÓS 3ISHEN -INE AND IS PENDING 06 5.4 DROPPED BY YEAR ON YEAR AND !NGLO äNAL CLASSIäCATION )N !NGLO !MERICAN REPORTED FATAL INCIDENTS AND INDICATED 07 4.3 0LATINUM RECORDED ITS äRST EVER FATALITY FREE FOUR THAT ONE SECURITY RELATED FATALITY WAS STILL PENDING INVESTIGATION MONTHS FROM /CTOBER TO *ANUARY AT THE TIME OF GOING TO PRINT 4HAT INCIDENT HAS SINCE BEEN FORMALLY 08 3.9 RECORDED BRINGING THE TOTAL TO AND THE &)&2 TO $ESPITE REDUCTIONS IN THE TOTAL NUMBER OF 09 6.8 ALL LEADING CAUSES OF DEATHS TRANSPORTATION People 012 3 4567 SIX AND FALLS OF GROUND äVE )N AN EARLY RESPONSE TO THE GLOBAL ECONOMIC WERE ONCE AGAIN THE PRIMARY CAUSES OF MOST DOWNTURN THE 'ROUP CONDUCTED A GLOBAL REVIEW FATAL INJURIES "OTH THESE HIGH RISK AREAS ARE OF ITS OPERATIONS IN LATE AND INITIATED A RECEIVING PRIORITY ATTENTION SUBSTANTIAL RATIONALISATION PROGRAMME WITH THE ANTICIPATED REDUCTION OF EMPLOYEES $URING THE YEAR !NGLO !MERICAN CONDUCTED A THROUGH TO THE END OF Anglo American diversity GLOBAL TRANSPORTATION SAFETY AUDIT AT MINES % Female ACROSS ALL BUSINESS UNITS IN ORDER TO GAIN A )N ADDITION IN EARLY THE 'ROUP DETAILED UNDERSTANDING OF THE RELATED CHALLENGES COMMENCED AN EXTENSIVE OPERATING MODEL Year 4HE äNDINGS AND RECOMMENDATIONS FROM THE REVIEW TO OPTIMISE THE EFFECTIVENESS AND 12.5 AUDIT HAVE PROVIDED A CLEAR UNDERSTANDING AND EFäCIENCY OF ITS ORGANISATIONAL STRUCTURE TO 05 13. 0 DEäNITION OF THE NATURE AND SCALE OF THE ATTENDANT DELIVER ITS STRATEGIC OBJECTIVES 14.2 RISKS ! TASK FORCE IS BEING ESTABLISHED WITH THE 06 15.2 4HE OPERATIONAL HEADCOUNT REDUCTIONS AIM OF ACHIEVING LASTING IMPROVEMENTS TO THE TOGETHER WITH THE ORGANISATIONAL RESTRUCTURES 10.6 OVERALL MANAGEMENT OF TRANSPORT RISKS 07 15.3 AND THE DECISION TO DIVEST A NUMBER OF ASSETS
12.0 !NGLO 0LATINUM HAS IDENTIäED FALLS OF GROUND CONSTITUTED A PRIMARY FOCUS FOR THE 'ROUPÓS 08 17. 0 MANAGEMENT AS A MAJOR STRATEGIC FOCUS AND (UMAN 2ESOURCE ACTIVITIES DURING THE YEAR 12.0 A SYSTEM HAS BEEN DEVELOPED TO INTEGRATE 09 19.0 AND REäNE EXISTING EFFORTS TO ELIMINATE FALLS Organisational development OF GROUND 4HE SYSTEM IS SUPPORTED BY A 4HE OPERATING MODEL REVIEW WAS COMPLETED IN 0510 15 20 ÒNO ROCK WILL FALL UNCONTROLLEDÓ POLICY AND /CTOBER AND RESULTED IN AN ORGANISATIONAL CONSISTS OF SIX PILLARS DESIGNED TO CATER FOR SIMPLIäCATION AND DELAYERING ACROSS THE % Female managers % Females THE DIFFERENT ASPECTS AND PHASES OF RISKS 'ROUP WITH THE DIVISIONAL CO ORDINATING ASSOCIATED WITH FALLS OF GROUND LEVEL ACROSS "ASE -ETALS #OAL AND &ERROUS -ETALS BEING REMOVED 4HIS HAS RESULTED IN !NGLO !MERICANÓS LOST TIME INJURY A LEANER ORGANISATION WITH SHORTER LINES OF FREQUENCY RATE ,4)&2 OF HAS CONTINUED ITS COMMUNICATION AND CLEARER ACCOUNTABILITIES DOWNWARD TREND SHOWING A YEAR ON YEAR 0ROäT ACCOUNTABLE BUSINESS UNITS ARE IMPROVEMENT 4HE MOST FREQUENT COMPLEMENTED BY A LEAN CORPORATE CENTRE RISKS ASSOCIATED WITH ,4)S VARY FROM OPERATION FOCUSED ON ESSENTIAL GOVERNANCE ACTIVITIES
26 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 AND THE CAPTURE OF SYNERGIES ACROSS THE 'ROUP &IXED COSTS HAVE BEEN TIGHTLY CONTROLLED THROUGH 4HE SYSTEM IS BASED ON INTENSIVE MONITORING THROUGH COLLABORATIVE WORKING AND BEST PRACTICE THE EXERCISE OF GENERAL PAY RESTRAINT APPROPRIATE OF THE WORKING ENVIRONMENT BY ALL LEVELS OF SHARING IN THE AREAS OF ASSET OPTIMISATION TO THE ECONOMIC CLIMATE PREVAILING ACROSS DIFFERENT EMPLOYEE AND THE REPORTING OF INCIDENTS PROJECT MANAGEMENT PROCUREMENT AND SUPPLY GEOGRAPHIES !S A RESULT OF THE RESTRUCTURING !LL INCIDENTS WILL BE FOLLOWED UP AND THE
CHAIN AND SHARED SERVICES ACTIVITIES THE 'ROUP DELAYED THE INTRODUCTION CONTROL MEASURE THAT HAS FAILED REINSTATED Operating and financial review OF A NEW PERFORMANCE MEASUREMENT AND 4HE OBJECTIVE IS TO ENSURE THAT EXPOSURE TO !S PART OF THE OPERATING MODEL REVIEW AN MANAGEMENT SYSTEM DURING THIS WILL HEALTH HAZARDS DOES NOT EXCEED THE TARGET OVERALL REDUCTION IN OVERHEAD SUPPORT NOW BE TAILORED TO THE NEW ORGANISATION LEVEL 4HE DEäNITION OF AN INCIDENT RANGES FROM HEADCOUNT WAS TARGETED AT THE CORPORATE STRUCTURE AND IMPLEMENTED IN EMPLOYEE OBSERVATIONS THROUGH TO MEDICAL AND CENTRE AND IN THE BUSINESS UNITS "Y THE END OCCUPATIONAL HYGIENE MEASUREMENTS 4HIS IS OF $ECEMBER ALMOST OF THE TARGETED Transformation PART OF A WIDER APPROACH TO OCCUPATIONAL HEALTH REDUCTION HAD ALREADY BEEN ACHIEVED MARKED A YEAR OF CONTINUED STEADY PROGRESS RISK MANAGEMENT SO THAT CONSISTENT STANDARDS -AINTAINING PROGRESS TOWARDS THE AMBITION OF IN TERMS OF TRANSFORMATION 4HE COMPOSITION OF FOR HAZARD MANAGEMENT ARE ROLLED OUT AND BECOMING THE EMPLOYER OF CHOICE BY ÒLIVINGÓ AND THE MANAGEMENT RANKS WITHIN 3OUTH !FRICA WITH AUDITED ACROSS THE 'ROUP BEING SEEN BY EMPLOYEES TO ÒLIVE THE VALUESÓ RESPECT TO THE HISTORICALLY DISADVANTAGED SECTOR WAS CRITICAL #ONTINUING TO MOTIVATE AND ENGAGE GREW TO HIV/AIDS THE #OMPANYÓS PEOPLE THROUGHOUT THE CHANGE !NGLO !MERICAN CONTINUES TO BE A LEADER ON 4HE NUMBER OF WOMEN IN MANAGEMENT ROSE PROGRAMMES WITH A POSITIVE AND MOTIVATIONAL THE ()6!)$3 FRONT $URING THE 'LOBAL TO 4HE 'ROUP CONTINUES ENVIRONMENT FOR THOSE WHO REMAINED WAS A KEY "USINESS #OALITION ON ()6!)$3 4UBERCULOSIS TO GROW IN STRENGTH AND DIVERSITY AS IT SUPPORTS OBJECTIVE &URTHER PROGRESS ON TRANSFORMATION 4" AND -ALARIA RECOGNISED !NGLO 4HERMAL INITIATIVES SUCH Ò7OMEN IN -ININGÓ AND THE WAS ANOTHER KEY REQUIREMENT #OALÓS 3OUTH !FRICAN MINES WITH A BUSINESS OVERALL PROPORTION OF FEMALES INCREASED TO EXCELLENCE AWARD FOR THE BEST WORKPLACE !CCORDINGLY EXTENSIVE EMPLOYEE CONSULTATION AGAINST -INING #HARTER TARGET ()6!)$3 PROGRAMME REGULAR COMMUNICATION AND INDIVIDUAL SUPPORT WERE WHICH WAS RAISED FROM IN A CONSISTENT FEATURE THROUGHOUT THE RESTRUCTURING 4HE THRUST OF THE #OMPANYÓS ()6!)$3 RESPONSE !NGLO !MERICAN AS A 'ROUP HAS ACHIEVED GOOD AND EMPLOYEE DOWNSIZING PROGRAMMES CONTINUES TO BE EARLY DIAGNOSIS AND EARLY ACCESS TO SUCCESS WITH RESPECT TO THE -INING #HARTER TREATMENT COUPLED WITH INTENSIVE ()6 PREVENTION 4HE VAST MAJORITY OF THE TARGETED REDUCTIONS 4ARGETS WERE ACHIEVED IN SEVEN OF THE EIGHT CAMPAIGNS AND IN MANY INSTANCES COMPULSORY WERE PROGRESSED THROUGH VOLUNTARY SEVERANCE PILLARS OF THE -INING #HARTER EXCEPT IN THE AREA INDIVIDUAL ()6 COUNSELLING !NGLO !MERICAN BUT WHERE ADDITIONAL REDUCTIONS BEYOND THOSE OF BENEäCIATION WHERE THIS WAS NOT CLEARLY EXCEEDED ITS TARGET OF OF EMPLOYEES ACHIEVED THROUGH VOLUNTARY MEANS WAS NECESSARY DEäNED BY THE $EPARTMENT OF -INERAL 2ESOURCES UNDERGOING VOLUNTARY ()6 TESTING IN SOUTHERN A THOROUGH FAIR AND TRANSPARENT ASSESSMENT IN TERMS OF MEASUREMENT AND SELECTION PROCESS WAS UNDERTAKEN !FRICA DURING A SIGNIäCANT ACHIEVEMENT 4HE ORGANISATIONAL DELAYERING THAT WAS ANNOUNCED Health 4HE CHALLENGES REMAIN IN CONVERTING EARLY TOWARDS THE END OF /CTOBER IMPACTED DIRECTLY (EALTH IN !NGLO !MERICAN HAS A BROAD FOCUS DIAGNOSIS TO EARLY TREATMENT UPTAKE ENSURING UPON MORE THAN EMPLOYEES WITHIN THE AND DEPENDING ON THE COUNTRY OF OPERATION LONG TERM ADHERENCE TO ANTI RETROVIRAL THERAPY DIVISIONAL LAYERS AND THE 'ROUP FUNCTIONS MAINLY RANGES FROM COMPLETE MEDICAL CARE HOSPITALS PREVENTING NEW ()6 INFECTIONS AND ENCOURAGING BASED IN *OHANNESBURG AND ,ONDON WITH EXTENSIVE AND MEDICAL INSURANCE THROUGH TO ENGINEERING EMPLOYEES TO BRING THEIR SPOUSES OR PARTNERS TO REDEPLOYMENT AND OUTPLACEMENT SUPPORT AND DESIGN OF THE WORKPLACE !T ALL OPERATIONS PARTICIPATE IN THE #OMPANYÓS ()6!)$3 PREVENTION PROVIDED FOR THOSE ADVERSELY AFFECTED THERE ARE WELLNESS PROGRAMMES AIMED AT CARE AND TREATMENT PROGRAMMES !T THE END OF KEEPING PEOPLE HEALTHY AND IMPROVING HEALTH MORE THAN EMPLOYEES WERE RECEIVING Talent management ANTI RETROVIRAL THERAPY AND NEARLY ALL OF THEM WERE ABLE TO CONTINUE WITH THEIR NORMAL WORK $URING THE TALENT AUDIT AND 'ROUP WIDE Occupational health COLLABORATIVE DEVELOPMENT PROCESSES CONTINUED !NGLO !MERICANÓS OCCUPATIONAL HEALTH 4HE ESCALATING 4" EPIDEMIC IN 3OUTH !FRICA AS IN PARALLEL WITH CHANGE ACTIVITIES AND REFRESHED PROGRAMMES COVER ALL EMPLOYEES AND ARE A DIRECT CONSEQUENCE OF THE HIGH BURDEN OF ()6 ASSESSMENT TOOLS AND PROCESSES WHICH PLAYED AIMED AT PREVENTING OCCUPATIONAL DISEASE DISEASE IN THE COUNTRY IS A SOURCE OF ONGOING AN IMPORTANT ROLE IN PREPARING EMPLOYEES THROUGH PREVENTION OF EXPOSURE AT SOURCE CONCERN AT ALL !NGLO !MERICAN OPERATIONS THERE FOR NEW RESPONSIBILITIES AND IN INFORMING 4HIS INVOLVES INPUT FROM A NUMBER OF EXPERTS 4HE 'ROUPÓS 4" CONTROL PROGRAMMES BASED ON DECISIONS AROUND STAFäNG THE NEW ORGANISATION INCLUDING OCCUPATIONAL HYGIENISTS ENGINEERS SIMILAR PRINCIPLES TO THE ()6!)$3 PROGRAMMES 5PGRADING AND RETAINING KEY TALENT REMAINED A AND MEDICAL DOCTORS $ESPITE A DECLINING ARE BEING STEPPED UP TO ENSURE THAT THIS MAJOR FOCUS DURING THE CHANGE INITIATIVES TREND IN OCCUPATIONAL DISEASE STATISTICS EMERGING THREAT IS ACTIVELY MANAGED AND !NGLO !MERICAN CONTINUES TO REPORT CASES OF PROPERLY CONTROLLED Reward and performance NOISE INDUCED HEARING LOSS AND OCCUPATIONAL 4HE 'ROUPÓS COMPREHENSIVE REWARD STRATEGIES LUNG DISEASE EACH YEAR ! NEW APPROACH IS THUS HAVE ASSISTED IN ATTRACTING AND RETAINING REQUIRED !S OCCUPATIONAL DISEASE MOSTLY HAS A TALENTED AND SKILLED EMPLOYEES IN SPECIäC LONG LATENT PERIOD THE USE OF CURRENT STATISTICS SECTORS OF THE SPECIALIST LABOUR MARKET TO MEASURE THE EFFECTIVENESS OF THE PREVENTION THAT HAS REMAINED COMPETITIVE DESPITE THE CONTROL STRATEGY IS QUESTIONABLE &OR THIS REASON ECONOMIC DOWNTURN 4HE 'ROUP WIDE REWARD A NEW SYSTEM OF MONITORING BASED ON THE AND EVALUATION FRAMEWORK HAS ALSO ENABLED EFFECTIVENESS AND AVAILABILITY OF CONTROLS THE CALIBRATION AND INTEGRATION OF NEW ROLES IS BEING INTRODUCED AND FACILITATED THE DEPARTURE OF EMPLOYEES THROUGH THE RECENT DOWNSIZING AND RESTRUCTURING PROGRAMMES LARGELY THROUGH A SUCCESSFUL VOLUNTARY SEPARATION PROCESS
Anglo American plc Annual Report 2009 27 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Resources
The resources Anglo American Knowledge and expertise -INING AND 4ECHNOLOGY HAS DEVELOPED AND IMPLEMENTED A COMPREHENSIVE AND INDUSTRY considers critical to achieving Technology capability LEADING STRUCTURAL INSPECTION AND MAINTENANCE its strategic aims include: !NGLO !MERICANÓS STRONG IN HOUSE TECHNOLOGY MANAGEMENT PROGRAMME 3)-- TO ENSURE ,OPXMFEHFBOEFYQFSUJTF CAPABILITY CONTINUES TO PROVIDE WORLD CLASS EMPLOYEE SAFETY AND PREVENT ASSET VALUE 1SPWFEBOEQSPCBCMFSFTFSWFT SOLUTIONS TO THE 'ROUP AND ITS OPERATIONS DESTRUCTION 3)-- ACCURATELY ASSESSES THE GLOBALLY -INING AND 4ECHNOLOGY IS THE CUSTODIAN CONDITION OF CRITICAL STRUCTURES INCLUDING Full details of the Group’s OF SPECIALISED ENGINEERING SKILLS EMPLOYED SHAFT STEELWORK AND RECOMMENDS APPROPRIATE THROUGHOUT THE 'ROUP WHILE !NGLO 2ESEARCH INTERVENTION STRATEGIES 4HIS IS OF PARTICULAR Ore Reserves and Mineral IDENTIäES AND DEVELOPS EMERGING TECHNOLOGIES IMPORTANCE TO LONG LIFE ASSETS Resources estimates are !NGLO !MERICANÓS TECHNOLOGY STRATEGY IS 4HE NOVEL METALLURGICAL PROCESS DEVELOPED FOR found on pages 148 to 170 REGULARLY REVIEWED TO MEET THE 'ROUPÓS THE 3KORPION :INC REäNERY IN .AMIBIA IS JUST CHANGING NEEDS WITH THE FOCUS ON SAFETY ONE EXAMPLE IN !NGLO !MERICANÒS LONG HISTORY SUSTAINABLE DEVELOPMENT ASSET OPTIMISATION OF TAKING NEW IDEAS AND DEVELOPING THEM INTO THE DEVELOPMENT OF VALUE ADDING TECHNOLOGIES WORKING SOLUTIONS #URRENTLY !NGLO 2ESEARCH IS AND ON NURTURING TECHNICAL TALENT DEVELOPING A PROCESS FOR ATMOSPHERIC LEACHING -INING AND 4ECHNOLOGY HAS DEVELOPED THE OF NICKEL LATERITE ORES 4HE CONCEPT HAS BEEN !NGLO &ATAL 2ISK 3TANDARDS AND 'UIDELINES AND REäNED TESTED AT LABORATORY SCALE AND PILOTED PROVIDES TECHNICAL SUPPORT TO 'ROUP OPERATIONS AT MINI PLANT SCALE ! FULLY INTEGRATED PILOT TO ENSURE THEIR OPTIMAL APPLICATION AND PLANT IS CURRENTLY UNDER CONSTRUCTION AND WILL IMPLEMENTATION !NGLO -AJOR 2ISK 3TANDARDS BE IN OPERATION TOWARDS THE END OF AND 'UIDELINES ARE CURRENTLY BEING äNALISED TO ! DEMONSTRATION PLANT WILL BE DEVELOPED BASED ADDRESS HIGH CONSEQUENCE LOW PROBABILITY RISKS ON THE OUTCOME OF A SUCCESSFUL PILOT CAMPAIGN FOR DIVERSE AREAS SUCH AS SHAFTS åOODING AND 4HE STATE OF THE ART !NGLO !MERICAN DEVELOPED STRUCTURES 4HE QUALITY OF THE ORGANISATIONÓS 3PECTREM AIRBORNE ELECTROMAGNETIC SYSTEM IS TECHNICAL SUPPORT IS EXEMPLIäED BY -INING AND BEING DEPLOYED IN !USTRALIA FOLLOWING A SERIES 4ECHNOLOGY BECOMING A LEADER IN THE äELD OF OF SUCCESSFUL SURVEYS IN #ANADA AND !LASKA ROLL OVER PROTECTION STRUCTURES 2/03 THROUGH NUMERICAL CRASH SIMULATION AND PHYSICAL TESTING -INING AND 4ECHNOLOGY CONTINUES TO IMPROVE AND IT HAS DEVELOPED THE äRST 2/03 STANDARD OTHER TECHNOLOGIES AIMED AT ENSURING THE SAFETY FOR LIGHT VEHICLES EMPLOYED IN MINING OF VERTICAL TRANSPORT THROUGH THE DEVELOPMENT OPERATIONS GLOBALLY OF SIGNIäCANTLY IMPROVED DIGITAL ELECTRONIC AND DETECTION ALGORITHMS IN ORDER TO IDENTIFY -INING AND 4ECHNOLOGY PLAYS AN INTEGRAL ROLE DEFECTS IN STEEL WIRE ROPES AND THROUGH THE IN SUSTAINABLE DEVELOPMENT RELATED WORK ADAPTATION OF LEADING EDGE NON DESTRUCTIVE WITHIN THE 'ROUP HAVING DEVELOPED THE !NGLO TESTING TECHNOLOGIES FOR SHAFT WINDING SYSTEMS %NVIRONMENTAL 7AY WITH ITS ASSOCIATED GUIDELINES !N UNDERGROUND RAIL INSPECTION SYSTEM HAS AND PERFORMANCE STANDARDS 4HE TECHNICAL TEAM ALSO BEEN DEVELOPED AND IMPLEMENTED AIMED PLAYED A KEY ROLE IN THE FORMATION OF A PARTNERSHIP AT IMPROVING THE SAFETY AND EFäCIENCY OF WITH THE .'/ &AUNA AND &LORA )NTERNATIONAL SUCH FACILITIES AND IN ITS PARTICIPATION IN !NGLO !MERICANÓS "IODIVERSITY !CTION 0LAN 0EER 2EVIEW PROGRAMME 4HE -INING AND 4ECHNOLOGY DEVELOPED BEST WHICH SERVES TO ASSIST OPERATIONS TO IDENTIFY KEY PRACTICE GUIDELINE FOR SHAFT DESIGN BASED ON BIODIVERSITY RISKS AND OPPORTUNITIES )N ADDITION THE EXPERIENCE AND EXPERTISE BUILT UP OVER -INING AND 4ECHNOLOGY DEVELOPED THE -INE DECADES IN 'ROUP DESIGN OFäCES AND OPERATIONS #LOSURE 4OOLBOX WHICH FOCUSES ON THE LONG TERM IS AIMED AT ENHANCING THE EFFECTIVENESS OF PLANNING AND MANAGEMENT OF ENVIRONMENTAL AND FUTURE SHAFTS AND AT OPTIMISING THEIR LIFE CLOSURE LIABILITIES THUS INåUENCING AND GUIDING CYCLE COST AND EFFECTIVENESS 4HE DOCUMENT THE WAY OPERATIONS ARE DESIGNED PLANNED AND WILL ASSIST DESIGNERS BY MEANS OF GUIDELINES MANAGED 4HE TOOLBOX IS BEING IMPLEMENTED AT SPECIäCATIONS EXAMPLES AND CHECKLISTS MORE THAN OPERATIONS ACROSS THE GLOBE 4HE FOCUS ON OPTIMISING !NGLO !MERICANÓS 4HE ORGANISATION IS EQUIPPED WITH A WORLD CLASS PROJECT STRUCTURES AND PROCESSES IS CONTINUING MEASUREMENT AND TESTING LABORATORY AS WELL AS WITH THE IMPLEMENTATION OF THE 'ROUP !SSET HIGHLY SKILLED ENGINEERS TO SUPPORT THE 'ROUP $EVELOPMENT 3TANDARD AND ASSOCIATED ON FAILURE ANALYSIS AND VIBRATION ISSUES WHICH GUIDELINES AND TOOLS INCLUDE STRUCTURAL AND HUMAN VIBRATION MATTERS 4HE MEASURED DATA IS USED INTER ALIA FOR THE PREDICTION OR ANTICIPATION OF FAILURES OF CRITICAL MACHINES FOR PROCESS OPTIMISATIONS AND TO MEASURE AND ADDRESS EXPOSURE LIMITS TO PREVENT OPERATOR FATIGUE WHICH CONTRIBUTES TO SAFER AND MORE EFFECTIVE OPERATIONS )NPUT IS ALSO PROVIDED TO ORIGINAL EQUIPMENT MANUFACTURERS IN ORDER TO ADDRESS CERTAIN DESIGN ISSUES THUS ENHANCING THE äNAL PRODUCT
28 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Exploration In the open pit of Thermal Coal’s New Vaal !NGLO !MERICAN CONTINUED ITS EXPLORATION colliery in South Africa, a dragline removes overburden to expose the near-surface ACTIVITIES IN A RANGE OF FRONTIER AREAS TO MORE coal deposits. MATURE GREENäELD LOCATIONS GLOBALLY AS WELL AS
IN BROWNäELD ENVIRONMENTS IN CLOSE PROXIMITY TO Operating and financial review THE 'ROUPÓS EXISTING OPERATIONS 4HE #OMPANYÓS EXPLORATION GEOSCIENTISTS ARE ALSO INVOLVED IN THE IDENTIäCATION AND EVALUATION OF PROPERTIES FOR POTENTIAL ACQUISITION OR ALLIANCE OPPORTUNITIES !NGLO !MERICAN TEAMS CONTINUED TO ADVANCE EXPLORATION ON RECENT DISCOVERIES SOLE FUNDED PROJECTS AND ALLIANCES WITH OTHER COMPANIES 4HROUGH THE 'ROUP EXCLUDING $E "EERS SPENT MILLION MILLION ON EXPLORATION IN COUNTRIES $E "EERSÓ OWN EXPLORATION EXPENDITURE AMOUNTED TO MILLION MILLION !NGLO 0LATINUM EXPLORATION COSTS OF MILLION WERE INCURRED DURING WITH A SPECIäC FOCUS An integrated geospatial solution ON SUPPLYING GEOLOGICAL INFORMATION AND MITIGATING RESOURCE RISK ON CURRENT OPERATIONS Mining and metals professionals strive to cycle was created by a team comprising mine !LTHOUGH PARTLY CURTAILED OWING TO THE CURRENT shorten project schedules and lower operating and Mining and Technology experts as well as ECONOMIC DOWNTURN EXPLORATION ACTIVITIES costs through improved access to mission- a software solutions provider. An information INCLUDED CONSIDERABLE SURFACE DIAMOND DRILLING critical information. Effectively managing and repository and manipulation tool with a primary $ SEISMIC SURVEYS CONTINUE TO PROVIDE controlling the costs of a 20 Mtpa coal mining focus on linking production data with spatial EXCEPTIONAL DETAIL ON THE STRUCTURAL DEFORMATION operation requires statistical evaluation of referencing was identified and tested. Thereafter, OF THE OREBODIES WHICH IS NOT DISCERNIBLE FROM multiple databases. fixed and dynamic reporting was integrated with BOREHOLE DATA ALONE !EROMAGNETIC SURVEYS a web publisher to web-enable the solution. Thermal Coal’s New Vaal colliery required a GEOPHYSICAL LOGGING AND BOREHOLE RADAR ARE ALSO system to link spatial information to various The tool will be expanded to other functional USED TO SUPPLEMENT GEOLOGICAL KNOWLEDGE databases to allow analysis of possible outcomes areas in due course. The integrated geospatial &OREIGN EXPLORATION CONTINUED IN WITH based on changing variables. Because most of solution will ultimately enable management PROJECTS IN "RAZIL #ANADA 2USSIA AND :IMBABWE this information is inextricably linked to the to have immediate access through the web to %XPLORATION OPERATIONS IN #HINA WERE SHUT DOWN Survey Department, an integrated geospatial multiple databases and imagery which would DURING WHILE OPTIONS TO DISPOSE OF THE solution that encompassed the entire mining otherwise have been inaccessible. ORGANISATIONÓS INTEREST IN THE #ANADIAN PROJECTS WERE BEING REVIEWED AT YEAR END %XTENSIVE EXPLORATION CONTINUES ON THE 'REAT $YKE IN FORMERLY 3ISHEN 3OUTH PROJECT IN THE .ORTHERN FROM GAS YIELD TESTING AND REGIONAL EXPLORATION :IMBABWE TO SUPPLY RESOURCE INFORMATION #APE 0ROVINCE WERE CONCLUDED WITH MINE DRILLING 4HE PROJECT IS CURRENTLY GENERATING ESPECIALLY IN THE 5NKI AREA CONSTRUCTION COMMENCING IN ! NUMBER APPROXIMATELY K7 OF ELECTRICITY FROM A OF BROWNäELD TARGETS BETWEEN THE 3ISHEN AND FUEL CELL PILOT PROJECT WHICH REPRESENTS A CLEAN #OPPER EXPLORATION ACROSS THE 'ROUP TOTALLED +OLOMELA MINES WERE EXPLORED AS PART OF THE ENERGY TECHNOLOGY INITIATIVE BETWEEN 4HERMAL MILLION WITH FOCUSED EXPLORATION AROUND &ALCON3IBELO PROJECT 0RE FEASIBILITY DRILLING AND #OAL AND !NGLO 0LATINUM #"- EXPLORATION ITS #HILEAN COPPER MINES !DVANCED PROJECT EXPLORATION ACTIVITIES ON THE 0HOENIX PROJECT AT ACTIVITIES IN "OTSWANA CONTINUED TO EVALUATE THE WORK FURTHER EVALUATED THE 7EST 7ALL AND THE 4HABAZIMBI -INE IN THE .ORTH 7EST 0ROVINCE PROSPECTIVITY OF THE %ASTERN +AROO "ASIN THROUGH -ICHIQUILLAY COPPER PROJECTS IN #HILE AND 0ERU COMMENCED AT THE END OF THE THIRD QUARTER OF A RECONNAISSANCE DRILLING PROGRAMME WHICH HAS RESPECTIVELY .EAR MINE EXPLORATION EFFORTS 'REENäELD EXPLORATION ACTIVITIES ON THE IDENTIäED AREAS FOR FUTURE EXPLORATION CENTRED ON THE 3AN %NRIQUE -ONOLITO AND PROJECT IN 'UINEA CEASED IN EARLY AND THE )N !USTRALIA EXPLORATION TARGETED COKING COAL ,OS 3ULFATOS COPPER PROJECTS IN #HILE AS WELL PROJECT WAS TERMINATED AS OTHER NEAR MINE OPPORTUNITIES AND EXPORT THERMAL COAL IN THE $RAYTON 3OUTH #OAL EXPLORATION EXPENDITURE OF MILLION 3ADDLERS #REEK -ORANBAH 3OUTH 'ROSVENOR .ICKEL EXPLORATION OF MILLION WAS WAS CONCENTRATED ON EVALUATING ASSESSING 2OLFE AND #ARLO #REEK 0ROJECTS INCURRED STRENGTHENING THE PROJECT PIPELINE AND EXTENDING RESOURCES FOR EXPORT THERMAL )N #ANADA 0EACE 2IVER #OAL REMAINED FOCUSED WITH CONTINUED WORK AROUND A NICKEL COPPER AND COKING COAL DOMESTIC THERMAL COAL AND ON DEäNING HARD COKING COAL IN THE 2OMAN DISCOVERY IN &INLAND WHILE ADVANCED PROJECT COAL BED METHANE #"- WORKS FURTHER EVALUATED THE *ACAR¤ PROJECT IN -OUNTAIN PROJECT ADJACENT TO THE EXISTING "RAZIL AND 7EST 2AGLAN IN #ANADA )N 3OUTH !FRICA FURTHER EXPLORATION WAS 4REND COLLIERY !DDITIONAL RESOURCE DEäNITION UNDERTAKEN ON THE 3OUTH 2AND 3TANDERTON EXPLORATION WAS CARRIED OUT ON THE "ELSAX )RON /RE EXPLORATION EXPENDITURE WAS PRINCIPALLY %AST AND +RIEL %AST PROJECTS WITH NEW PROJECT PROJECT SOUTH EAST OF THE COLLIERY AT THE -INAS 2IO PROJECT IN "RAZIL AND THE +UMBA DRILLING COMMENCING ON THE %LDERS 5NDERGROUND :INC EXPLORATION EXPENDITURE OF MILLION )RON /RE PROJECTS IN 3OUTH !FRICA )N "RAZIL %XTENSION AND 6AAL "ASIN PROJECTS &EASIBILITY RELATED TO EXPLORATION CONDUCTED ON A RECENT PROGRAMMES TESTED IRON ORE TARGETS CLOSE TO THE RELATED DRILLING WAS CARRIED OUT ON THE .EW DISCOVERY IN .AMIBIA AS WELL AS WORKS ADJACENT PRINCIPAL RESOURCES AS WELL AS EVALUATION TARGETS ,ARGO RESOURCE PLANNED TO SUPPLY %SKOMÓS TO OPERATIONS IN )RELAND AND ADVANCED PROJECT WITHIN THE PROJECTÓS INFRASTRUCTURE CORRIDOR +USILE POWER STATION %XPLORATION DRILLING WAS WORKS AT THE 'AMSBERG %AST ZINC PROJECT IN ALSO INTENSIäED IN 4HERMAL #OALÓS ,IMPOPO AREA )N 3OUTH !FRICA PRE FEASIBILITY RESOURCE 3OUTH !FRICA EVALUATION DRILLING OF THE :ANDRIVIERSPOORT FOR COKING COAL AS WELL AS IN THE 7ATERBERG PROJECT IN THE ,IMPOPO 0ROVINCE WAS COMPLETED #OAL PROJECT AREA 4HE ,EPHALALE #"- RESOURCE /THER ACTIVITY INCLUDED EXPLORATION AROUND THE AND EXPLORATION ACTIVITIES FOR THE +OLOMELA CONTINUED TO BE EVALUATED UTILISING RESULTS "RAZILIAN PHOSPHATE MINES
Anglo American plc Annual Report 2009 29 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Group financial performance
Group operating profit was Financial review of Group results PRODUCTS /THER -INING AND )NDUSTRIALÓS OPERATING PROäT IN RELATIVE TO WAS 'ROUP OPERATING PROäT WAS MILLION $4,957 million, with operating LOWER FOLLOWING THE SALE OF 4ONGAAT (ULETT AND WITH OPERATING PROäT FROM CORE OPERATIONS profit from core operations of (ULAMIN IN THE THIRD QUARTER OF AND ALSO OF MILLION LOWER THAN THE SALE OF .AMAKWA 3ANDS IN /CTOBER $4,451 million 4HIS DECLINE IN OPERATING PROäT WAS DRIVEN BY SIGNIäCANT DECREASES IN REALISED PRICES OF 'ROUP UNDERLYING EARNINGS WERE MILLION ALL COMMODITIES WITH THE EXCEPTION OF COPPER LOWER THAN WHICH REåECTED THE 0RICE DECREASES INCLUDED A REDUCTION IN OPERATIONAL RESULTS DISCUSSED ABOVE 4HE NET THE PLATINUM BASKET AN AVERAGE REDUCTION äNANCE COSTS CHARGE BEFORE REMEASUREMENTS IN BENCHMARK EXPORT IRON ORE A DECLINE IN OF MILLION WAS MILLION LOWER THAN AVERAGE NICKEL AND A MORE THAN DECLINE IN 4HE EFFECTIVE TAX RATE BEFORE SPECIAL EXPORT METALLURGICAL COAL ITEMS AND REMEASUREMENTS AND INCLUDING ATTRIBUTABLE SHARE OF ASSOCIATESÓ TAX REDUCED #OPPER OPERATING PROäT WAS HIGHER THAN IN THE YEAR FROM TO FOR WITH RECORD PRODUCTION AND A INCREASE IN THE REALISED PRICE OF COPPER PARTIALLY 'ROUP UNDERLYING EARNINGS PER SHARE WERE DUE TO FAVOURABLE äNAL SETTLEMENTS OF SALES INTO COMPARED WITH IN A REDUCTION A RISING MARKET .ICKEL PROäTS DECLINED DUE TO A 4HE 'ROUPÓS RESULTS ARE INåUENCED BY A VARIETY COMBINATION OF THE LOWER PRICE WITH DESTOCKING OF CURRENCIES OWING TO THE GEOGRAPHIC DIVERSITY IN THE STAINLESS STEEL SECTOR AND A INåATION OF THE 'ROUP )N THERE WAS A NEGATIVE RATE IN 6ENEZUELA 0LATINUM WAS IMPACTED BY EXCHANGE VARIANCE IN UNDERLYING EARNINGS OF SIGNIäCANTLY LOWER AVERAGE PRICES COMPARED MILLION 4HE 'ROUPÓS RESULTS BENEäTED FROM WITH +UMBA )RON /RE MAINTAINED A STRONG THE WEAKER !USTRALIAN DOLLAR #HILEAN PESO AND OPERATING PROäT MARGIN DESPITE A DECLINE "RAZILIAN REAL $ESPITE THE AVERAGE RAND RATE IN IN AVERAGE BENCHMARK EXPORT IRON ORE PRICES BEING WEAKER THAN THERE WAS ACHIEVED THROUGH INCREASED VOLUMES PRINCIPALLY A NEGATIVE RAND EXCHANGE IMPACT ON UNDERLYING SOLD TO #HINA 3AMANCORÓS PROäT DECLINED EARNINGS 4HIS REåECTED A SIGNIäCANTLY STRONGER DUE TO THE DECREASE IN GLOBAL STEEL DEMAND RAND IN THE SECOND HALF OF THE YEAR WHEN -ETALLURGICAL #OAL AND 4HERMAL #OAL PROäTS OPERATING ACTIVITIES INCREASED WITH STRONGER WERE IMPACTED BY THE DECLINE IN EXPORT DEMAND DEMAND 4HERE WAS A NEGATIVE IMPACT ON AND PRICES PARTIALLY OFFSET BY COST REDUCTION UNDERLYING EARNINGS FROM A SIGNIäCANT DECLINE PROGRAMMES $IAMONDS SAW $IAMOND 4RADING IN PRICES AMOUNTING TO MILLION REåECTING #OMPANY $4# REVENUES FALL BY BILLION AND LOWER PRICES ACROSS ALMOST ALL COMMODITIES THROUGH PRODUCTION HOLIDAYS AND RESTRUCTURING $E "EERS CUT ITS PRODUCTION AND OPERATING COSTS Special items and remeasurements BY MILLION (OWEVER DESPITE THESE MEASURES OPERATING PROäT FELL BY /PERATING SPECIAL ITEMS AND REMEASUREMENTS INCLUDING ASSOCIATES AMOUNTED TO A CHARGE OF /THER -INING AND )NDUSTRIALÓS OPERATING PROäT MILLION )NCLUDED IN OPERATING SPECIAL INCREASED IN THE ZINC AND NIOBIUM BUSINESSES ITEMS INCLUDING ASSOCIATES WERE IMPAIRMENTS WITH GROWTH IN SALES VOLUMES 4HIS WAS MORE TOTALLING MILLION 4HIS INCLUDED AN THAN OFFSET BY LOWER PROäTS FROM 4ARMAC DUE IMPAIRMENT CHARGE AGAINST THE !MAP IRON ORE TO THE HOUSING MARKET DECLINE IN %UROPE AND SYSTEM !MAP WAS ACQUIRED IN AS AN SIGNIäCANT VOLUME DECLINE FOR 3CAW -ETALSÓ OPERATING ASSET AS PART OF THE ACQUISITION OF
5NDERLYING EARNINGS 9EAR ENDED 9EAR ENDED MILLION $EC $EC 0ROäT FOR THE äNANCIAL YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY /PERATING SPECIAL ITEMS INCLUDING ASSOCIATES /PERATING REMEASUREMENTS INCLUDING ASSOCIATES .ET PROäT ON DISPOSALS INCLUDING ASSOCIATES &INANCING SPECIAL ITEMS INCLUDING ASSOCIATES Ð &INANCING REMEASUREMENTS INCLUDING ASSOCIATES %XCHANGE LOSSGAIN ON $E "EERS PREFERENCE SHARES 5NREALISED NET LOSSESGAINS ON NON HEDGE DERIVATIVES RELATED TO NET DEBT /THER äNANCING REMEASUREMENTS Ð 4AX SPECIAL ITEMS INCLUDING ASSOCIATES Ð 4AX REMEASUREMENTS 4AX ON SPECIAL ITEMS AND REMEASUREMENTS INCLUDING ASSOCIATES -INORITY INTERESTS ON SPECIAL ITEMS AND REMEASUREMENTS INCLUDING ASSOCIATES 5NDERLYING EARNINGS 5NDERLYING EARNINGS PER SHARE
30 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 THE -INAS 2IO PROJECT $URING !MAP 3UMMARY INCOME STATEMENT EXPERIENCED SIGNIäCANT OPERATIONAL CHALLENGES 9EAR ENDED 9EAR ENDED ACROSS ITS MINE PLANT AND LOGISTICS CHAIN MILLION $EC $EC PRODUCING -T COMPARED WITH THE DESIGN /PERATING PROäT BEFORE SPECIAL ITEMS AND REMEASUREMENTS
CAPACITY OF -TPA -ANAGEMENTÓS FOCUS HAS /PERATING SPECIAL ITEMS Operating and financial review BEEN AND REMAINS ON SEEKING TO MARKEDLY /PERATING REMEASUREMENTS IMPROVE PERFORMANCE FROM THE EXISTING OPERATIONS RATHER THAN INVESTING TO EXPAND THE OPERATION /PERATING PROäT FROM SUBSIDIARIES AND JOINT VENTURES 4HE !MAP SYSTEM IS CURRENTLY BELIEVED TO HAVE .ET PROäT ON DISPOSALS CAPACITY TO INCREASE PRODUCTION TO -TPA WITHOUT 3HARE OF NET INCOME FROM ASSOCIATES SIGNIäCANT FURTHER CAPITAL EXPENDITURE $UE TO 4OTAL PROäT FROM OPERATIONS AND ASSOCIATES THE FOCUS ON IMPROVING OPERATIONAL PERFORMANCE .ET äNANCE COSTS BEFORE REMEASUREMENTS AND PRESERVING CASH LIMITED EXPLORATION DRILLING &INANCING REMEASUREMENTS WAS UNDERTAKEN IN AND THE ANTICIPATED GROWTH POTENTIAL OF SURROUNDING LICENCE AREAS 0ROäT BEFORE TAX REMAINS UNTESTED 'IVEN THESE OPERATIONAL )NCOME TAX EXPENSE DIFäCULTIES AND DELAYS IN INCREASING PRODUCTION 0ROäT FOR THE äNANCIAL YEAR THE 'ROUP RECORDED AN IMPAIRMENT CHARGE -INORITY INTERESTS OF BILLION AFTER TAX AND MINORITY INTEREST 0ROäT FOR THE äNANCIAL YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS AGAINST THE CARRYING VALUE OF THE ASSET "ASIC EARNINGS PER SHARE )N *ANUARY THE 6ENEZUELAN -INISTRY OF 'ROUP OPERATING PROäT INCLUDING ASSOCIATES BEFORE SPECIAL ITEMS "ASIC )NDUSTRIES AND -INING -)"!- PUBLISHED AND REMEASUREMENTS A RESOLUTION CANCELLING OF -INERA ,OMA DE /PERATING PROäT FROM ASSOCIATES BEFORE SPECIAL ITEMS AND REMEASUREMENTS .¨QUELÓS -,D. EXPLORATION AND EXPLOITATION /PERATING SPECIAL ITEMS AND REMEASUREMENTS CONCESSIONS DUE TO -,D.ÓS ALLEGED FAILURE TO .ET PROäT ON DISPOSALS FULäL CERTAIN CONDITIONS OF THE CONCESSIONS .ET äNANCE COSTS BEFORE SPECIAL ITEMS AND REMEASUREMENTS 4HE CURRENT MINING AND METALLURGICAL FACILITIES &INANCING SPECIAL ITEMS Ð ARE LOCATED ON THE THREE CONCESSIONS THAT &INANCING REMEASUREMENTS HAVE NOT BEEN CANCELLED -,D. BELIEVES THAT )NCOME TAX EXPENSE AFTER SPECIAL ITEMS AND REMEASUREMENTS -INORITY INTERESTS AFTER SPECIAL ITEMS AND REMEASUREMENTS IT HAS COMPLIED WITH THE CONDITIONS OF THESE 3HARE OF NET INCOME FROM ASSOCIATES CONCESSIONS AND HAS LODGED ADMINISTRATIVE /PERATING PROäT BEFORE SPECIAL ITEMS AND REMEASUREMENTS FROM SUBSIDIARIES AND JOINT VENTURES WAS MILLION AND ATTRIBUTABLE SHARE FROM APPEALS AGAINST THE NOTICES OF TERMINATION AND ASSOCIATES WAS MILLION IS WAITING FOR A RESPONSE FROM -)"!- -,D. &OR SPECIAL ITEMS AND REMEASUREMENTS SEE NOTE TO THE &INANCIAL STATEMENTS MAY IN THE FUTURE UNDERTAKE FURTHER APPEALS INCLUDING WITH 6ENEZUELAÓS 3UPREME #OURT 3PECIAL ITEMS AND REMEASUREMENTS IF THE -)"!-ÓS RULING DOES NOT ADEQUATELY 9EAR ENDED $EC 9EAR ENDED $EC PROTECT ITS INTERESTS %XCLUDING %XCLUDING !N IMPAIRMENT AND ASSOCIATED ADJUSTMENTS OF MILLION ASSOCIATES !SSOCIATES 4OTAL ASSOCIATES !SSOCIATES 4OTAL MILLION HAVE BEEN RECORDED DUE TO INCREASED /PERATING UNCERTAINTY OVER THE RENEWAL OF THE THREE SPECIAL ITEMS CONCESSIONS THAT HAVE NOT BEEN CANCELLED BUT /PERATING THAT EXPIRE IN AND OVER THE RESTORATION OF REMEASUREMENTS THE CONCESSIONS THAT WERE CANCELLED /PERATING SPECIAL ITEMS AND REMEASUREMENTS !T $ECEMBER !NGLO !MERICANÓS INTEREST IN THE BOOK VALUE OF -,D. INCLUDING ITS MINERAL /PERATING PROäT BY BUSINESS UNIT RIGHTS WAS MILLION AS INCLUDED IN THE 9EAR ENDED 9EAR ENDED 'ROUPÓS BALANCE SHEET )N THE MONTHS TO MILLION $EC $EC $ECEMBER -,D.ÓS PRODUCTION AND 0LATINUM CONTRIBUTION TO 'ROUP OPERATING PROäT WERE RESPECTIVELY TONNES OF NICKEL IN FERRONICKEL $IAMONDS AND A MILLION LOSS 4HE AVERAGE PRICE OF NICKEL #OPPER IN WAS CLB !S OF &EBRUARY .ICKEL THE PRICE OF NICKEL WAS CLB )RON /RE AND -ANGANESE $UE TO THE NATURE OF THE ASSETS THE EFFECTS -ETALLURGICAL #OAL OF THE STRENGTHENING #ANADIAN DOLLAR AND THE 4HERMAL #OAL IMPACT OF THE GLOBAL RECESSION ON PRICING AND %XPLORATION PRODUCTION LEVELS $E "EERS RECORDED AN #ORPORATE ACTIVITIES AND UNALLOCATED COSTS IMPAIRMENT OF MILLION ATTRIBUTABLE SHARE /PERATING PROäT INCLUDING ASSOCIATES BEFORE SPECIAL MILLION IN RESPECT OF ITS #ANADIAN ASSET ITEMS AND REMEASUREMENTS Ð CORE OPERATIONS PORTFOLIO AND HAS WRITTEN OFF MILLION /THER -INING AND )NDUSTRIAL ATTRIBUTABLE SHARE MILLION OF #ANADIAN /PERATING PROäT INCLUDING ASSOCIATES BEFORE SPECIAL DEFERRED TAX ASSETS ITEMS AND REMEASUREMENTS !LSO INCLUDED IN SPECIAL ITEMS AND REMEASUREMENTS WERE ONE OFF REDUNDANCY 5NDERLYING EARNINGS Ð CORE OPERATIONS COSTS AT THE CORPORATE CENTRE OF MILLION 3EE NOTE TO THE &INANCIAL STATEMENTS
Anglo American plc Annual Report 2009 31 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Group financial performance continued
4AXATION 9EAR ENDED $EC 9EAR ENDED $EC "EFORE SPECIAL !SSOCIATESÓ "EFORE SPECIAL !SSOCIATESÓ ITEMS AND TAX AND ITEMS AND TAX AND MILLION UNLESS REMEASURE MINORITY )NCLUDING REMEASURE MINORITY )NCLUDING OTHERWISE STATED MENTS INTERESTS ASSOCIATES MENTS INTERESTS ASSOCIATES 0ROäT BEFORE TAX 4AX 0ROäT FOR THE äNANCIAL YEAR %FFECTIVE TAX RATE INCLUDING ASSOCIATES
AND WITHIN !NGLO 0LATINUM -ETALLURGICAL #OAL THE EQUIVALENT EFFECTIVE RATE OF FOR THE AND 4HERMAL #OAL OF MILLION 4HERE WERE YEAR ENDED $ECEMBER )N FUTURE OPERATING REMEASUREMENT GAINS OF MILLION PERIODS IT IS EXPECTED THAT THE EFFECTIVE TAX WHICH PRINCIPALLY RELATED TO NET GAINS ON NON HEDGE RATE INCLUDING ASSOCIATESÓ TAX WILL REMAIN CAPITAL EXPENDITURE DERIVATIVES HELD BY )RON /RE ABOVE THE 5NITED +INGDOM STATUTORY TAX RATE "RAZIL AND ,OS "RONCES AND AN UNREALISED GAIN ON AN EMBEDDED DERIVATIVE AT -,D. Balance sheet .ET PROäT ON DISPOSALS OF MILLION %QUITY ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF INCLUDING ASSOCIATES COMPRISED A PROäT ON THE #OMPANY WAS MILLION COMPARED THE DISPOSAL OF THE RESIDUAL SHAREHOLDINGS WITH MILLION AT $ECEMBER IN !NGLO'OLD !SHANTI OF MILLION 4HIS INCREASE REåECTED ADDITIONAL TANGIBLE MILLION ON !NGLO 0LATINUMÓS DISPOSAL ASSETS OF MILLION WITH CAPITAL OF ITS SHARE IN "OOYSENDAL AND MILLION INVESTMENT PRINCIPALLY IN THE 'ROUPÓS CORE RELATING TO THE DISPOSAL OF OF !NGLO 0LATINUMÓS COMMODITY ASSETS #ASH AT THE END OF SHARE IN ,EBOWA 0LATINUM -INES WAS MILLION HIGHER THAN WHICH INCLUDED A MILLION BENEäT OF A WEAK DOLLAR &INANCING REMEASUREMENTS INCLUDING ASSOCIATES ON NON 53 CASH HOLDINGS ! WEAKER DOLLAR WERE MADE UP OF AN UNREALISED NET LOSS OF HIGHER COMMODITY PRICES THAN AT $ECEMBER MILLION ON NON HEDGE DERIVATIVES AND AS WELL AS A STRONGER TRADING PERFORMANCE A MILLION FOREIGN EXCHANGE LOSS ON IN THE LATER STAGES OF COMPARED WITH THE RETRANSLATING $E "EERS 53 DOLLAR PREFERENCE PRIOR YEAR HAVE CONTRIBUTED TO A MILLION SHARES HELD BY A RAND DENOMINATED ENTITY INCREASE TO INVENTORIES AND CURRENT RECEIVABLES 4AX REMEASUREMENTS AMOUNTED TO A GAIN 4HIS WAS OFFSET BY AN INCREASE IN SHORT OF MILLION RELATED TO FOREIGN CURRENCY MEDIUM AND LONG TERM BORROWINGS WHICH WERE TRANSLATION OF DEFERRED TAX BALANCES MILLION GREATER THAN REåECTING REäNANCING IN AND THE IMPACT OF A STRONGER Net finance costs RAND ON RAND DENOMINATED DEBT $EFERRED .ET äNANCE COSTS EXCLUDING A NET REMEASUREMENT TAX LIABILITIES ALSO INCREASED IN THE YEAR BY LOSS OF MILLION GAIN OF MILLION MILLION )NVESTMENTS IN ASSOCIATES WERE DECREASED TO MILLION MILLION MILLION LOWER AS A RESULT OF $E "EERS 4HIS WAS DUE TO A MILLION REDUCTION IN THE IMPAIRING ITS #ANADIAN ASSETS A DEMAND TOTAL INTEREST EXPENSE AND A MILLION DRIVEN DECLINE IN EARNINGS AT 3AMANCOR AND REDUCTION IN OTHER äNANCING LOSSES PRINCIPALLY THE DISPOSAL OF 4ONGAAT (ULETT AND (ULAMIN EXCHANGE LOSSES PARTIALLY OFFSET BY A MILLION REDUCTION IN TOTAL INVESTMENT INCOME Cash flow .ET CASH INåOWS FROM OPERATING ACTIVITIES WERE Taxation MILLION COMPARED WITH MILLION IN )!3 0RESENTATION OF &INANCIAL 3TATEMENTS %")4$! WAS MILLION A DECREASE REQUIRES INCOME FROM ASSOCIATES TO BE PRESENTED OF FROM MILLION IN NET OF TAX ON THE FACE OF THE INCOME STATEMENT 0ROCEEDS FROM THE SALE OF äNANCIAL ASSET !SSOCIATESÓ TAX IS THEREFORE NOT INCLUDED WITHIN INVESTMENTS TOTALLED MILLION INCLUDING THE 'ROUPÓS INCOME TAX EXPENSE !SSOCIATESÓ NET CASH INåOWS ON THE SALE OF THE 'ROUPÓS TAX INCLUDED WITHIN Ò3HARE OF NET INCOME FROM RESIDUAL INTEREST IN THE SHARES OF !NGLO'OLD ASSOCIATESÓ FOR THE YEAR ENDED $ECEMBER !SHANTI AND PROCEEDS RECEIVED ON THE SALE WAS MILLION MILLION OF PREFERENCE SHARES AS PART OF THE DISPOSAL %XCLUDING SPECIAL ITEMS AND REMEASUREMENTS THIS OF THE "OOYSENDAL JOINT VENTURE AMOUNTED TO MILLION MILLION 0URCHASES OF TANGIBLE ASSETS AMOUNTED TO 4HE EFFECTIVE RATE OF TAX BEFORE SPECIAL ITEMS AND MILLION A DECREASE OF MILLION REMEASUREMENTS INCLUDING ATTRIBUTABLE SHARE OF 4HIS SPEND WAS FOCUSED ON THE FOUR KEY NEAR ASSOCIATESÓ TAX FOR THE YEAR ENDED $ECEMBER TERM STRATEGIC GROWTH PROJECTS ,OS "RONCES WAS 4HIS WAS BROADLY IN LINE WITH "ARRO !LTO -INAS 2IO AND +OLOMELA 4HE OVERALL
32 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 REDUCTION REåECTED THE PLANNED REDUCTION ON 4HE 'ROUPÓS FORECASTS AND PROJECTIONS TAKING !NALYSIS OF DEPRECIATION AND AMORTISATION CAPITAL INVESTMENT OUTSIDE THESE KEY PROJECTS ACCOUNT OF REASONABLY POSSIBLE CHANGES IN BY SEGMENT SUBSIDIARIES AND JOINT VENTURES TRADING PERFORMANCE AND THE REäNANCING OF .ET CASH USED IN äNANCING ACTIVITIES WAS 9EAR ENDED 9EAR ENDED THE FACILITIES ABOVE SHOW THAT THE 'ROUP MILLION $EC $EC MILLION COMPARED WITH NET CASH INåOWS
WILL BE ABLE TO OPERATE WITHIN THE LEVEL OF ITS 0LATINUM Operating and financial review IN OF MILLION $URING THE YEAR CURRENT FACILITIES FOR THE FORESEEABLE FUTURE THE 'ROUP USED CASH TO REPAY MILLION #OPPER OF SHORT TERM BORROWINGS AND THE PAYMENT .ICKEL Dividends OF MILLION OF INTEREST 4HIS WAS PARTIALLY )RON /RE AND -ANGANESE 4HE RESUMPTION OF THE DIVIDEND AT THE EARLIEST OFFSET BY THE PROCEEDS FROM FOUR BOND ISSUANCES -ETALLURGICAL #OAL COMPLETED IN THE YEAR TOTALLING MILLION POSSIBLE TIME REMAINS A KEY PRIORITY FOR THE "OARD !SSUMING THAT THE COMMODITY PRICE 4HERMAL #OAL /THER -INING Liquidity and funding ENVIRONMENT AND OUTLOOK CONTINUE TO IMPROVE AND THE BUSINESS PERFORMANCE REMAINS ROBUST AND )NDUSTRIAL .ET DEBT EXCLUDING HEDGES WAS MILLION THE "OARD WOULD EXPECT TO BE ABLE TO ANNOUNCE %XPLORATION Ð Ð A DECREASE OF MILLION FROM $ECEMBER THE RESUMPTION OF A DIVIDEND IN RESPECT OF THE #ORPORATE ACTIVITIES #ASH AND CASH EQUIVALENTS EXCLUDING THE IMPACT CURRENT äNANCIAL YEAR AND UNALLOCATED COSTS OF EXCHANGE INCREASED BY MILLION 4HIS REåECTED OPERATING CASH åOWS THE SALE OF Return on capital employed (ROCE) äNANCIAL ASSET INVESTMENTS AND INVESTMENT IN ASSOCIATES PURCHASE OF TANGIBLE ASSETS AND 2/#% IN WAS COMPARED WITH MOVEMENT IN äNANCING ACTIVITIES AS DETAILED IN IN 4HE DECREASE WAS MAINLY THE CASH åOW SECTION DUE TO THE OPERATING RESULTS DISCUSSED IN THIS !NALYSIS OF CAPITAL EXPENDITURE ON A CASH äNANCIAL REVIEW OF 'ROUP RESULTS AND IN THE åOW BASIS BY SEGMENT SUBSIDIARIES AND .ET DEBT AT $ECEMBER COMPRISED BUSINESS UNIT OVERVIEWS ON PAGES TO JOINT VENTURES MILLION OF DEBT PARTLY OFFSET BY 9EAR ENDED 9EAR ENDED MILLION $EC $EC MILLION OF CASH AND CASH EQUIVALENTS Group corporate cost allocation NET OF BANK OVERDRAFTS AND MILLION CURRENT 0LATINUM !S A RESULT OF THE 'ROUP ANNOUNCEMENT ON äNANCIAL ASSET INVESTMENTS !S A RESULT OF #OPPER /CTOBER TO STREAMLINE ITS MANAGEMENT REäNANCING ACTIVITIES OUTLINED BELOW THE DEBT STRUCTURE AND REMOVE A LAYER OF GLOBAL .ICKEL AGING PROäLE CHANGED WITH OF THE TOTAL DEBT MANAGEMENT CERTAIN ACTIVITIES PREVIOUSLY )RON /RE AND -ANGANESE BEING DUE AFTER MORE THAN ONE YEAR COMPARED PERFORMED WITHIN THE DIVISIONS ARE NOW TO BE -ETALLURGICAL #OAL WITH AT $ECEMBER .ET DEBT UNDERTAKEN AT THE CORPORATE CENTRE CERTAIN 4HERMAL #OAL TO TOTAL CAPITAL AT $ECEMBER WILL BE UNDERTAKEN IN THE NEW BUSINESS UNITS WAS COMPARED WITH AT /THER -INING AND THE REMAINDER WILL NO LONGER BE PERFORMED AND )NDUSTRIAL $ECEMBER !T THE SAME TIME IT HAS BEEN DECIDED THAT THE %XPLORATION Ð äGURE PRESENTED EXTERNALLY AS 'ROUP CORPORATE )N !NGLO !MERICAN CONDUCTED FOUR MAJOR #ORPORATE ACTIVITIES BOND TRANSACTIONS RAISING A TOTAL OF BILLION COSTS WILL ONLY COMPRISE COSTS ASSOCIATED WITH AND UNALLOCATED COSTS PARENTAL OR DIRECT SHAREHOLDER RELATED ACTIVITIES WHICH REäNANCED THE 'ROUPÓS SHORT TERM DEBT POSITION )N !PRIL BILLION WAS RAISED IN A DUAL AND THAT COSTS ASSOCIATED WITH ACTIVITIES WHICH #ASH CAPITAL EXPENDITURE EXCLUDES CASH åOW ON RELATED DERIVATIVES TRANCHE ISSUANCE WITH BILLION MATURING ARE VALUE ADDING TO THE BUSINESS UNITS WILL IN AND BILLION IN )N -AY BE REPORTED WITHIN THE BUSINESS UNITS !S A A CONVERTIBLE BOND WAS ISSUED MATURING IN RESULT A PROPORTION OF CORPORATE COSTS WHICH WHICH RAISED BILLION )N 3EPTEMBER ARE BELIEVED TO BE VALUE ADDING TO THE BUSINESS AND $ECEMBER TWO SEPARATE %UROBONDS WERE UNITS WILL BE ALLOCATED TO EACH BUSINESS UNIT ISSUED EACH RAISING Ñ MILLION BILLION 4HE 'ROUP CORPORATE COSTS AS INCLUDED WITHIN MATURING IN AND RESPECTIVELY THE NOTES TO THE ACCOUNTS CAN BE RECONCILED TO THE HISTORICAL BASIS FOR PRESENTATION AS IN THE !T $ECEMBER !NGLO !MERICAN TABLE BELOW HAD UNDRAWN BANK FACILITIES OF BILLION CASH DEPOSITS OF BILLION AND COMMERCIAL #ORPORATE COSTS ON A CONSISTENT BASIS WITH PAPER MATURING THROUGHOUT OF MILLION THOSE REPORTED IN THE !NNUAL 2EPORT !NGLO !MERICANÓS ONLY SIGNIäCANT FACILITIES OF MILLION MILLION WERE MATURING IN ARE A a MILLION INCURRED IN A REDUCTION OF MILLION MILLION %UROBOND WHICH MATURES IN 4HE REDUCTION WAS DUE IN PART TO THE $ECEMBER AS WELL AS THE !MAP FACILITIES STRENGTHENING DOLLAR BUT PRINCIPALLY RESULTED OF MILLION )N ADDITION THE 'ROUP HAS FROM STRINGENT COST REDUCTION MEASURES UNDRAWN RAND FACILITIES EQUIVALENT TO BILLION ACROSS THE CORPORATE OFäCES WITH DAY MATURITIES WHICH ROLL AUTOMATICALLY ON A DAILY BASIS UNLESS NOTICE IS SERVED 'ROUP CORPORATE COSTS MILLION #ORPORATE COSTS AS PREVIOUSLY REPORTED #OSTS PREVIOUSLY REPORTED WITHIN DIVISIONAL RESULTS #ORPORATE COSTS ALLOCATED TO BUSINESS UNITS #ORPORATE COSTS AS REPORTED UNDER NEW STRUCTURE
.ET DEBT TO TOTAL CAPITAL IS CALCULATED AS NET DEBT DIVIDED BY TOTAL CAPITAL LESS INVESTMENTS IN ASSOCIATES 4OTAL CAPITAL IS NET ASSETS EXCLUDING NET DEBT
Anglo American plc Annual Report 2009 33 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Platinum
Neville Nicolau CEO Platinum
No 1 9 2.5 m primary producer wholly owned platinum ounces of platinum in mining operations production target the world in South Africa, with for 2010 three smelters and two refineries
&INANCIAL HIGHLIGHTS 0LATINUM MILLION UNLESS OTHERWISE STATED
/PERATING PROäT %")4$! .ET OPERATING ASSETS #APITAL EXPENDITURE
3HARE OF 'ROUP OPERATING PROäT 3HARE OF 'ROUP NET OPERATING ASSETS
Platinum demand (koz)
2009 2008 610 555
1,160 1,685
2,340 1,365
1,890 2,580
Autocatalyst: net* Jewellery Industrial† Investment Source: Anglo Platinum
* Autocatalyst net represents gross autocatalyst demand less recovered autocatalyst volumes † Industrial includes chemical, electrical, glass, petroleum refining and other industrial demand
34 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating profit Share of Group operating profit EBITDA (2008: $2,169 m) (2008: 22%) (2008: $2,675 m) $32 m 1% $677 m
Business overview $URING !NGLO 0LATINUM SUCCESSFULLY 0ALLADIUMÓS PRINCIPAL APPLICATION IS IN COMPLETED THREE "%% TRANSACTIONS AUTOCATALYSTS AROUND OF NET DEMAND !NGLO 0LATINUM BASED IN 3OUTH !FRICA IS THE )T IS ALSO USED IN ELECTRONIC COMPONENTS IN WORLDÓS LEADING PRIMARY PRODUCER OF PLATINUM -VELA !LL OF THE CONDITIONS PRECEDENT IN RESPECT DENTAL ALLOYS AND MORE RECENTLY AS AN EMERGING ACCOUNTING FOR AROUND OF GLOBAL OUTPUT OF THE DISPOSAL OF !NGLO 0LATINUMÓS INTEREST
JEWELLERY METAL IN MARKETS SUCH AS #HINA Operating and financial review )T MINES PROCESSES AND REäNES THE ENTIRE RANGE IN THE "OOYSENDAL PROJECT AND OF ITS 0ALLADIUM DEMAND IS EXPECTED TO REBOUND IN OF PLATINUM GROUP METALS 0'-S PLATINUM INTEREST IN .ORTHAM 0LATINUM ,IMITED TO -VELA TOGETHER WITH SUPPLY THAT IS EXPECTED TO PALLADIUM RHODIUM RUTHENIUM IRIDIUM AND FOR A TOTAL CONSIDERATION OF 2 BILLION WERE INCREASE FROM RECYCLING OF SPENT AUTOCATALYSTS OSMIUM )N ADDITION TO THE 0'-S BASE METALS FULäLLED WITH THE äNAL PART OF THE TRANSACTION SUCH AS NICKEL COPPER AND COBALT SULPHATE BECOMING EFFECTIVE IN *UNE 2HODIUM IS AN IMPORTANT METAL IN AUTOCATALYTIC ARE IMPORTANT SECONDARY PRODUCTS AND ARE ACTIVITY WHICH ACCOUNTS FOR NEARLY OF NET !NOORAQ !LL OF THE CONDITIONS PRECEDENT TO THE SIGNIäCANT CONTRIBUTORS TO EARNINGS DEMAND 7ITH THE GLOBAL ECONOMIC SLOWDOWN ACQUISITION BY !NOORAQ OF AN EFFECTIVE DEPRESSING PRODUCTION OF NEW VEHICLES DEMAND !NGLO 0LATINUMÓS OPERATIONS EXPLOIT THE WORLDÓS INTEREST IN ,EBOWA 0LATINUM -INE AND FOR RHODIUM DECLINED IN $ECLINING DEMAND RICHEST RESERVE OF 0'-S KNOWN AS THE "USHVELD INTEREST IN THE 'A 0HASHA "OIKGANTSHO AND IN THE AUTOCATALYST SECTOR COUPLED WITH INCREASED #OMPLEX WHICH CONTAINS 0'- BEARING -ERENSKY +WANDA PROJECTS HAVE BEEN FULäLLED AND THE SUPPLIES FROM 3OUTH !FRICA ARE LIKELY TO KEEP THE 5' AND 0LATREEF ORES 4HE COMPANYÓS ACCESS TO TRANSACTION BECAME EFFECTIVE ON *UNE MARKET IN SURPLUS IN THE SHORT TO MEDIUM TERM AN EXCELLENT PORTFOLIO OF ORE RESERVES ENSURES 4HE TRANSACTION FACILITATED !NOORAQÓS STRATEGY THAT IT IS WELL PLACED TO BE THE WORLDÓS MAJOR OF BECOMING A MAJOR HISTORICALLY DISADVANTAGED PLATINUM PRODUCER FOR MANY YEARS TO COME 3OUTH !FRICAN ($3! MANAGED AND CONTROLLED Strategy and growth 0'- PRODUCER AND ILLUSTRATES !NGLO 0LATINUMÓS !NGLO 0LATINUMÓS OBJECTIVE IS TO MAINTAIN ITS !NGLO 0LATINUM WHOLLY OWNS NINE MINING COMMITMENT TO BROAD BASED "%% AS A STRATEGIC POSITION AS THE LEADING PRIMARY PRODUCER OF OPERATIONS CURRENTLY IN PRODUCTION A TAILINGS TRANSFORMATION INITIATIVE !NOORAQ NOW CONTROLS PLATINUM )N ORDER TO DO THIS THE COMPANY RE TREATMENT FACILITY THREE SMELTERS A BASE THE THIRD LARGEST 0'- RESOURCE BASE IN 3OUTH AIMS TO BE A HIGHLY COST EFFECTIVE PRODUCER METALS REäNERY AND A PRECIOUS METALS REäNERY !FRICA WITH A COMBINATION OF HIGH QUALITY TO DEVELOP THE MARKET FOR 0'-S AND TO EXPAND )T ALSO HAS OWNERSHIP OF THE 5NKI PROJECT EXPLORATION DEVELOPMENT AND PRODUCTION PRODUCTION INTO THAT GROWTH OPPORTUNITY IN :IMBABWE %ACH OF ITS MINES OPERATES ITS OWN MINERAL PROPERTIES CONCENTRATOR FACILITIES WITH SMELTING AND REäNING )N THE SECOND HALF OF AND IN IN OF THE OUTPUT BEING UNDERTAKEN AT 2USTENBURG 2OYAL "AFOKENG 2ESOURCES 2"2 4HE RESPONSE TO THE UNPRECEDENTED RAPID DECLINE 0LATINUM -INESÓ METALLURGICAL FACILITIES TRANSACTION WHEREBY 2"2 OBTAINED A MAJORITY IN 0'- PRICES CAUSED CHIEåY BY RAPIDLY SLOWING INTEREST IN THE "AFOKENG 2ASIMONE 0LATINUM VEHICLE SALES IN .ORTH !MERICA %UROPE AND ! RESTRUCTURING OF MINING OPERATIONS INTO -INE *OINT 6ENTURE BECAME UNCONDITIONAL AND *APAN THE COMPANY IMPLEMENTED A NUMBER MORE EFäCIENT STAND ALONE UNITS INVOLVED THE THEREFORE EFFECTIVE $ECEMBER OF INITIATIVES TO REDUCE COSTS AND IMPROVE SPLITTING OF THE LARGEST MINES INTO SMALLER NEW OPERATIONAL PRODUCTIVITY AND ALSO UNDERTOOK MINING ENTITIES SO AS TO ENSURE A SUSTAINABLE A CRITICAL EXAMINATION OF CAPITAL EXPENDITURE REDUCTION IN THE UNIT COST OF PRODUCTION AND Industry overview 0ROJECT CAPITAL SPEND IS NOW DIRECTLY RELATED TO TO EXTRACT MAXIMUM VALUE FROM THE ASSETS 0'-S HAVE A WIDE RANGE OF INDUSTRIAL AND HIGH !NGLO 0LATINUMÓS LONG TERM OUNCE REQUIREMENTS EMPLOYED 2USTENBURG 3ECTION WAS DIVIDED TECHNOLOGY APPLICATIONS $EMAND FOR PLATINUM AND THE REDUCTION IN THE RATE OF SPEND RESULTED INTO äVE NEW MINES Ð +HOMANANI "ATHOPELE IS DRIVEN BY ITS USE IN AUTOCATALYSTS TO CONTROL IN A NUMBER OF PROJECTS BEING DELAYED INCLUDING 3IPHUMELELE 4HEMBELANI AND +HUSELEKA Ð EMISSIONS FROM BOTH PETROL AND DIESEL ENGINE 4UMELA !MANDELBULT 3HAFT 4WICKENHAM WHILE !MANDELBULT 3ECTION WAS SPLIT INTO THE VEHICLES AND IN JEWELLERY 4HESE USES ARE 0LATINUM -INE AND THE 3TYLDRIFT -ERENSKY PHASE 4UMELA AND $ISHABA MINES 4HREE HIGH COST RESPONSIBLE FOR OF NET TOTAL PLATINUM PROJECT (OWEVER THE 4HEMBELANI 3HAFT SHAFTS NAMELY 3IPHUMELELE AND SHAFTS CONSUMPTION 0LATINUM HOWEVER ALSO HAS AN FORMERLY 0AARDEKRAAL $ISHABA FORMERLY FORMERLY KNOWN AS "LESKOP AND "RAKSPRUIT ENORMOUS RANGE OF LESSER KNOWN APPLICATIONS !MANDELBULT %AST 5PPER 5' AND +HUSELEKA AND +HUSELEKA SHAFT FORMERLY KNOWN AS PREDOMINANTLY IN THE CHEMICAL ELECTRICAL 3HAFT FORMERLY 4OWNLANDS /RE 2EPLACEMENT "OSCHFONTEIN WERE ALSO PLACED ON CARE AND MEDICAL GLASS AND PETROLEUM INDUSTRIES PROJECTS ARE ALL PROGRESSING WITHOUT DELAY MAINTENANCE 4HE COMPANYÓS OWNED 4HE PLATINUM JEWELLERY MARKET REQUIRES CONSTANT MINING OPERATIONS NOW CONSIST OF THE äVE MINES !NGLO 0LATINUM IS INVOLVED IN DEVELOPING PROMOTION AND DEVELOPMENT !NGLO 0LATINUM AT 2USTENBURG 3ECTION AND THE TWO MINES AT MINING ACTIVITY FOR 0'-S ON THE 'REAT $YKE IS THE MAJOR SUPPORTER OF THE 0LATINUM 'UILD !MANDELBULT 3ECTION AS WELL AS -OGALAKWENA OF :IMBABWE THE SECOND LARGEST KNOWN )NTERNATIONAL 0') WHICH PLAYS A KEY ROLE AND 4WICKENHAM MINES 5NION -INE IS REPOSITORY OF PLATINUM AFTER THE "USHVELD IN ENCOURAGING DEMAND FOR PLATINUM AND IN HELD WITH A BLACK ECONOMIC EMPOWERMENT #OMPLEX $EVELOPMENT AND EXPLORATION WORK ESTABLISHING NEW PLATINUM JEWELLERY MARKETS "%% PARTNER THE "AKGATLA "A +GAFELA IS FOCUSED ON NEW PROJECTS IN THE AREA INCLUDING #HINA HAS BEEN THE LEADING PLATINUM JEWELLERY TRADITIONAL COMMUNITY HOLDING THE REMAINDER 5NKI AS WELL AS ESTABLISHING EXTENSIONS TO THE MARKET SINCE FOLLOWED BY %UROPE *APAN RESOURCE BASE FOR FUTURE PROJECTS !NGLO 0LATINUM ALSO HAS JOINT VENTURES AND .ORTH !MERICA WITH A "%% CONSORTIUM LED BY !FRICAN 2AINBOW )N &EBRUARY !NGLO 0LATINUM ANNOUNCED )NDUSTRIAL APPLICATIONS FOR PLATINUM ARE DRIVEN -INERALS AT -ODIKWA PLATINUM MINE "%% A RIGHTS OFFER OF 2 BILLION APPROXIMATELY BY TECHNOLOGY AND ESPECIALLY IN THE CASE OF PARTNER 2OYAL "AFOKENG 2ESOURCES OVER THE BILLION WHICH WILL BE USED TO REPAY LONG AUTOCATALYSTS BY LEGISLATION 7ITH THE RAPID COMBINED "AFOKENG 2ASIMONE PLATINUM MINE TERM DEBT THEREFORE SECURING FUTURE äNANCIAL SPREAD OF EXHAUST EMISSIONS LEGISLATION "20- AND 3TYLDRIFT PROPERTIES AND 8+ 0LATINUM AND OPERATIONAL åEXIBILITY AND CREATING CAPACITY MORE THAN OF NEW VEHICLES NOW HAVE 0ARTNERSHIP IN RESPECT OF THE -OTOTOLO MINE FOR GROWTH !NGLO !MERICAN ANNOUNCED ITS AUTOCATALYSTS äTTED 4HE INTENSIFYING STRINGENCY )N ADDITION !NGLO 0LATINUM HAS POOLING INTENTION TO SUBSCRIBE IN FULL TO ITS ENTITLEMENT OF EMISSIONS LEGISLATION WILL DRIVE GROWTH IN AND SHARING AGREEMENTS WITH !QUARIUS 0LATINUM TO THE RIGHTS OFFER 0'- DEMAND COVERING THE SHALLOW RESERVES OF THE +ROONDAL AND -ARIKANA MINES AND PORTIONS OF THE RESERVES AT !NGLO 0LATINUMÓS 4HEMBELANI AND +HUSELEKA MINES
Anglo American plc Annual Report 2009 35 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Platinum continued
Financial overview THE SALE OF SMALLER GASOLINE VEHICLES AND A AND 3IPHUMELELE SHAFT IN !PRIL AND !UGUST CONSEQUENT REDUCTION IN DIESEL VEHICLE DEMAND RESPECTIVELY AND +HUSELEKA SHAFT AT +HUSELEKA !NGLO 0LATINUM GENERATED AN OPERATING PROäT IN %UROPE -INE IN !UGUST 5NION AND -OGALAKWENA REMAIN OF MILLION A DECREASE COMPARED UNTOUCHED BY THESE CHANGES WITH +EY CONTRIBUTORY FACTORS INCLUDED Industrial A REDUCTION IN THE DOLLAR PRICE REALISED ON Production THE BASKET OF METALS SOLD OFFSET BY HIGHER SALES $EMAND FOR PLATINUM IN THE INDUSTRIAL SECTOR VOLUMES AND PROCEEDS RECEIVED FROM A BUSINESS REDUCED IN LINE WITH THE GLOBAL ECONOMIC DECLINE 2EäNED PLATINUM PRODUCTION FOR THE YEAR WAS INTERRUPTION INSURANCE CLAIM AT !MANDELBULT IN ,OW UTILISATION RATES IN THE CHEMICAL HIGHER AT MILLION OUNCES IN LINE WITH AND PETROLEUM SECTORS FURTHER REDUCED DEMAND THE COMPANYÓS TARGET %QUIVALENT REäNED 4HE AVERAGE DOLLAR PRICE ACHIEVED FOR PLATINUM FOR NEW METAL AS COMPANIES REDUCED INVENTORY PLATINUM PRODUCTION EQUIVALENT OUNCES ARE WAS PER OUNCE FOR THE YEAR A LEVELS 'LASS DEMAND WAS NEGATIVELY AFFECTED MINED OUNCES EXPRESSED AS REäNED OUNCES WAS DECREASE COMPARED WITH IN BY EXCESS CAPACITY AND A RETURN OF METAL FROM MILLION OUNCES 3ALES OF REäNED PLATINUM 4HE AVERAGE PRICES ACHIEVED FOR PALLADIUM DECOMMISSIONED PLANTS FOR THE YEAR WERE MILLION OUNCES COMPARED AND RHODIUM SALES FOR THE YEAR WERE PER WITH MILLION OUNCES IN AN INCREASE OUNCE AND PER OUNCE Jewellery OF 4HIS INCREASE WAS DUE TO UNSOLD METAL RESPECTIVELY 4HE AVERAGE !S EXPECTED DEMAND FOR PLATINUM JEWELLERY AT THE END OF BEING AVAILABLE FOR SALE IN PRICE ACHIEVED ON NICKEL SALES FOR WAS FABRICATION RESPONDED QUICKLY AND STRONGLY TO AND THE ACHIEVEMENT OF HIGHER REäNED PER POUND 4HE OVERALL THE LOWER PLATINUM PRICES IN THE LATTER PART OF PRODUCTION VOLUMES BASKET PRICE ACHIEVED FOR THE YEAR OF AND THE äRST HALF OF 4HE INCREASED PER PLATINUM OUNCE SOLD COMPARED DEMAND WAS MOST NOTABLE IN THE UNSATURATED Costs WITH ACHIEVED IN #HINESE MARKET 4OTAL DEMAND FOR JEWELLERY IN #OSTS WERE TIGHTLY CONTROLLED DURING WAS HIGHER THAN IN 4HE FOCUS ON COST MANAGEMENT INBOUND SUPPLY Markets CHAIN PROJECTS AND ASSET OPTIMISATION INITIATIVES !VERAGE MARKET PRICES OZ Investment BEGAN TO BEAR FRUIT AND RESULTED IN THE CASH 0LATINUM )NVESTOR INåOW INTO THE PLATINUM AND PALLADIUM OPERATING COST PER EQUIVALENT REäNED PLATINUM OUNCE REMAINING åAT AT 2 4HIS WAS 0ALLADIUM %XCHANGE 4RADED &UNDS %4&S CONTINUED STRONGLY THROUGHOUT THE YEAR 0LATINUM HOLDINGS ACHIEVED DESPITE UPWARD INåATIONARY PRESSURE 2HODIUM INCREASED BY JUST OVER KOZ TO KOZ AND CAUSED BY WAGE AND ELECTRICITY TARIFF INCREASES PALLADIUM BY JUST OVER KOZ TO KOZ IN IN EXCESS OF CONSUMER PRICE INåATION 4HE UNPRECEDENTED VOLATILITY IN PLATINUM 4HE EXPECTED LAUNCH OF THE 53 BASED DEMAND AND PRICE EXPERIENCED IN WAS #OST INCREASES WERE CURBED THROUGH IMPROVED %4&S SUPPORTED äRM INVESTMENT DEMAND FOLLOWED BY A PERIOD OF CONSOLIDATION IN PRODUCTIVITY AND NUMEROUS COST MANAGEMENT TOWARDS THE END OF 4HE INHERENT STRENGTH IN THE STRUCTURE OF THE INITIATIVES INCLUDING PLATINUM BUSINESS SAW THE PLATINUM MARKET !NGLO 0LATINUM MAKES USE OF ITS EXTENSIVE > 0LACING THE HIGH COST 3IPHUMELELE "LESKOP RETURN TO BALANCE DURING AS JEWELLERY AND KNOWLEDGE OF THE 0'- MARKET TO FORM THE 3IPHUMELELE "RAKSPRUIT AND +HUSELEKA INVESTMENT DEMAND INCREASED REACTING TO LOWER BASIS OF ITS OPERATING STRATEGY THEREBY "OSCHFONTEIN SHAFTS ON TO CARE AND PRICE LEVELS IN THE äRST HALF OF THE YEAR AND AS ENHANCING THE COMPANYÓS ABILITY TO FORECAST MAINTENANCE INVESTOR SENTIMENT IMPROVED 4HESE INCREASES THE MARKETÓS NEEDS AND CONSEQUENTLY THE > %ARLY RENEGOTIATION WITH SUPPLIERS FOR REDUCED OFFSET LOWER DEMAND FOR USE IN AUTOCATALYSTS LEVEL OF PRODUCTION REQUIRED TO ENSURE LONG PRICES ON KEY INPUT COMMODITIES SUCH AS AND FROM THE INDUSTRIAL SECTOR TERM MARKET SUSTAINABILITY DIESEL STEEL TYRES AND REAGENTS $EVELOPMENTS IN AGAIN HIGHLIGHT THE Operating performance > #HANGING -OGALAKWENAÓS MINING PRODUCTION IMPORTANCE OF !NGLO 0LATINUMÓS CONTINUED !NGLO 0LATINUM ACHIEVED A SIGNIäCANT MILESTONE LEVELS WITHOUT SACRIäCING CONCENTRATOR COMMITMENT TO MARKET DEVELOPMENT WHICH THROUGHPUT SUPPORTS THE MAINTENANCE OF EXISTING AND IN *ANUARY WHEN IT RECORDED FOUR CONSECUTIVE THE DEVELOPMENT OF NEW INDUSTRIAL INCLUDING MONTHS WITHOUT A FATAL INCIDENT AT ITS OPERATIONS > #OMPLETING THE RESTRUCTURING PROCESSES AT AUTOCATALYST APPLICATIONS AND THE MAINTENANCE INCLUDING THE ENTIRE FOURTH QUARTER OF THE 2USTENBURG AND !MANDELBULT MINES AND OF HEALTHY JEWELLERY MARKETS -ARKET DEVELOPMENT !NGLO 0LATINUMÓS CONTINUED FOCUS ON SAFETY > 2EDUCING OVERHEAD COSTS AT THE CORPORATE FOR BY PRODUCT METALS MOST SPECIäCALLY ALSO RESULTED IN A FURTHER IMPROVEMENT IN AND REGIONAL OFäCES PALLADIUM AND RHODIUM MAXIMISES THE ITS LOST TIME INJURY FREQUENCY RATE TO FROM !NGLO 0LATINUM REDUCED ITS HEAD OFäCE AND CONTRIBUTION TO THE TOTAL REVENUE FROM THE IN $ESPITE THESE IMPROVEMENTS REGIONAL OFäCE HEADCOUNT BY PEOPLE IN BASKET OF METALS SOLD SADLY EMPLOYEES LOST THEIR LIVES AT !NGLO BRINGING THE TOTAL REDUCTION SINCE *ULY TO 0LATINUMÓS MANAGED OPERATIONS DURING THE YEAR /VERALL HEADCOUNT WAS REDUCED BY Autocatalysts 4HE MAJOR RESTRUCTURING OF MINING OPERATIONS DURING THE YEAR AND BY SINCE $EMAND FOR 0'-S IN THE AUTOCATALYST ANNOUNCED EARLY IN WAS COMPLETED BY /CTOBER 0RODUCTIVITY LEVELS INCREASED BY INDUSTRY DECLINED IN DUE TO LOWER LEVELS THE END OF THE YEAR 4HE TWO LARGEST OPERATIONS COMPARED WITH TO M PER TOTAL OF AUTOMOBILE PRODUCTION 4HE REDUCTION IN 2USTENBURG AND !MANDELBULT WERE SPLIT INTO OPERATING EMPLOYEE ON AVERAGE PER MONTH METAL PURCHASED BY AUTO MANUFACTURERS WAS MORE EFäCIENT STAND ALONE UNITS OF äVE AND EXACERBATED IN THE äRST HALF OF THE YEAR TWO MINES RESPECTIVELY 4HIS NEW STRUCTURE Projects BY THEIR NEED TO DECREASE VEHICLE INVENTORY ENSURES A SUSTAINABLE REDUCTION IN THE UNIT COST #APITAL EXPENDITURE FOR EXCLUDING CAPITALISED LEVELS THEREFORE RESTRICTING PRODUCTION AND OF PRODUCTION AND UNDERPINS THE COMMITMENT INTEREST WAS LOWER AT MILLION OF SELLING FROM AVAILABLE STOCK 3OME REBUILDING TO EXTRACTING MAXIMUM VALUE FROM THE ASSETS WHICH MILLION WAS SPENT ON PROJECTS AND OF THESE INVENTORIES TOGETHER WITH WIDESPREAD !S PART OF THE RESTRUCTURING PROCESS THE SOURCE MILLION ON STAY IN BUSINESS CAPITAL GOVERNMENT INCENTIVE SCHEMES SAW A äRMING OF OUNCES ACROSS THE PORTFOLIO WAS OPTIMISED 4OTAL EXPECTED CAPITAL EXPENDITURE FOR IN 0'- DEMAND IN THE SECOND HALF OF INCLUDING PLACING THREE HIGH COST SHAFTS ON TO CARE HAS BEEN REDUCED TO APPROXIMATELY BILLION )NCENTIVE SCHEMES RESULTED IN AN INCREASE IN AND MAINTENANCE INDEäNITELY 3IPHUMELELE SHAFT EXCLUDING CAPITALISED INTEREST
36 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 4HE KOZPA 5NKI PLATINUM PROJECT IN :IMBABWE IS PROGRESSING TOWARDS THE COMMISSIONING OF ITS CONCENTRATOR IN THE FOURTH QUARTER OF 4HE DEVELOPMENT OF THE UNDERGROUND DECLINES IS
COMPLETE AND THE SUPPORTING INFRASTRUCTURE Operating and financial review IS COMPLETE
Outlook !NGLO 0LATINUM EXPECTS THE PLATINUM MARKET IN TO RETURN TO A POSITION OF DEäCIT AS A RESULT OF A MODERATE INCREASE IN SUPPLY BUT A SIGNIäCANT RECOVERY IN DEMAND 3OUTH !FRICAN PRODUCTION IS EXPECTED TO REMAIN CONSTRAINED AS PRODUCERS ADAPT TO A SAFER WORKING ENVIRONMENT AND BECAUSE LOWER RAND METAL PRICES RESULTED IN PRODUCTION IN BEING RESTRICTED AT HIGH COST OPERATIONS ACROSS THE INDUSTRY 6EHICLE SALES IN ARE EXPECTED TO BE SIMILAR TO THOSE SEEN IN THOUGH PRODUCTION IS LIKELY TO INCREASE AS FEWER SALES FROM STOCK ARE EXPECTED IN (IGHER SALES OF LARGER SEDAN VEHICLES ARE EXPECTED AS DIESEL åEET PURCHASES RECOVER
7HILE DEMAND FOR INDUSTRIAL PRODUCTS IS Hydropower equipment (HPE) EXPECTED TO RECOVER SLOWLY PLATINUM DEMAND raise rig drill at Twickenham Mine. IS EXPECTED TO BE ENHANCED BY A SUBSTANTIAL HPE forms part of Anglo Platinum’s mechanisation programme which ELEMENT OF RESTOCKING is leading to higher quality raise development than through using !NOTHER GOOD YEAR IS EXPECTED FROM THE conventional drilling and blasting, INVESTMENT SEGMENT PARTICULARLY FOLLOWING and faster rates of development, THE LAUNCH OF THE 53 %4& as well as safety benefits as fewer employees are needed in the critical *EWELLERY DEMAND IS EXPECTED TO DECREASE IN drilling areas. IN THE ABSENCE OF THE EXTRA DEMAND THAT REBUILT SUPPLY CHAIN INVENTORY LEVELS IN 7HILE THE HIGHER PRICE MAY DISCOURAGE NEW JEWELLERY DEMAND IN MATURE MARKETS THE #HINESE JEWELLERY MARKET CONTINUES TO REACT POSITIVELY TO GRADUAL PRICE INCREASES AND REMAINS THE LARGEST MARKET FOR PLATINUM JEWELLERY 4HE PLATINUM PRICE IN IS EXPECTED TO REMAIN ABOVE PER OUNCE ON AVERAGE AS IMPROVEMENTS IN THE GLOBAL ECONOMIC RECOVERY AND RESTOCKING ARE LIKELY TO FURTHER INCREASE THE EXPECTED DEMAND RECOVERY IN &IRM INVESTMENT DEMAND FOR PALLADIUM AND THE STRONG RELIANCE BY GASOLINE ENGINES MORE TYPICAL IN SMALLER ENGINES AND IN THE GROWING #HINESE MARKET ARE LIKELY TO SEE THE PRICE Monthly average basket price OF METAL STRENGTHEN 2HODIUM REMAINS IN DEMAND FOR ITS PARTICULAR CATALYTIC PROPERTIES BUT SUFFERED A REDUCTION IN DEMAND OWING TO THRIFTING AT THE VERY HIGH PRICES DURING Rand basket price per Pt ounce US$ basket price per Pt ounce 'IVEN THE PREVAILING MARKET CONDITIONS THE 40,000 5,000 COMPANY HAS TARGETED PRODUCTION OF 35,000 4,000 MILLION OUNCES OF REäNED PLATINUM AND TO 30,000
PRODUCE THIS VOLUME AT A UNIT COST MARGINALLY 25,000 3,000 ABOVE 2 PER PLATINUM OUNCE THE SAME 20,000 LEVEL AS IN THE PRECEDING TWO YEARS 15,000 2,000 10,000 1,000 5,000 0 0 Year2007 H1 H2 H1 H2 2008 2008 2009 2009
US$ Rand Source: Anglo Platinum
Anglo American plc Annual Report 2009 37 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Diamonds
Gareth Penny MD De Beers
No 1 17 15 name in the world mining operations years – mine diamond industry in three southern life extension African countries at Jwaneng, the and in Canada world’s flagship diamond mine
&INANCIAL HIGHLIGHTS $IAMONDS MILLION UNLESS OTHERWISE STATED
3HARE OF ASSOCIATEÓS OPERATING PROäT %")4$! 'ROUPÓS ASSOCIATE INVESTMENT IN $E "EERS
3HARE OF 'ROUP OPERATING PROäT
%XCLUDES SHAREHOLDER LOANS OF MILLION AND PREFERENCE SHARES OF MILLION MILLION AND MILLION RESPECTIVELY
De Beers annual operating costs 2003-09 Demand by region ($ m) (%)
2008 2016 F
1,200 14% 18% 1,142 1,013 2% 1,000 1,035 2% 4% 2% 35% 983 2% 40% 800 817 11% 866 2% 600 7% 9% 400 402 11% 9% 8% 8% 200 16%
0 Year 030405 06 07 08 09
USA Gulf China Japan India Taiwan Hong Kong Italy Rest of world Source: De Beers Source: De Beers
38 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Share of associate’s operating profit Share of Group operating profit EBITDA (2008: $508 m) (2008: 5%) (2008: $665 m) $64 m 1% $215 m
Business overview Industry overview )N CONSEQUENCE DIAMOND PRODUCTION WAS REDUCED BY OR MILLION CARATS IN !NGLO !MERICANÓS DIAMOND INTERESTS ARE 5P TO TWO THIRDS OF THE WORLDÓS DIAMONDS COMPARISON WITH 4HIS REDUCTION WAS REPRESENTED BY ITS SHAREHOLDING IN $E "EERS BY VALUE ORIGINATE FROM SOUTHERN AND CENTRAL ACHIEVED THROUGH A SERIES OF PRODUCTION 4HE OTHER SHAREHOLDERS IN $E "EERS ARE #ENTRAL !FRICA WHILE SIGNIäCANT SOURCES HAVE BEEN
HOLIDAYS AND EXTENDED MAINTENANCE SHIFTS AT Operating and financial review (OLDINGS OWNED BY THE /PPENHEIMER FAMILY DISCOVERED IN 2USSIA !USTRALIA AND #ANADA THE COMPANYÓS MINES IN "OTSWANA 3OUTH !FRICA WITH AN EFFECTIVE AND THE 'OVERNMENT OF -OST DIAMONDS COME FROM THE MINING OF AND #ANADA THROUGH THE äRST HALF OF THE YEAR THE 2EPUBLIC OF "OTSWANA '2" WITH KIMBERLITE DEPOSITS !NOTHER IMPORTANT SOURCE OF GEM DIAMONDS HOWEVER HAS BEEN SECONDARY $E "EERS CONTINUED TO DRIVE DEMAND IN $E "EERS IS THE WORLDÓS LEADING DIAMOND ALLUVIAL DEPOSITS FORMED BY THE WEATHERING THROUGH ITS HIGHLY REGARDED MARKETING BUSINESS AND WITH ITS JOINT VENTURE PARTNERS OF PRIMARY KIMBERLITES AND THE SUBSEQUENT CAMPAIGNS IN THE 53 AND !SIA )N THE 53 OPERATES IN MORE THAN COUNTRIES ACROSS DEPOSITION OF RELEASED DIAMONDS IN RIVERS AND $E "EERS DEVELOPED ITS LATEST "IG )DEA CONCEPT äVE CONTINENTS EMPLOYING OVER PEOPLE BEACH GRAVELS CREATING A NEW MODEL IN WHICH IT LAUNCHED THE $E "EERS PRODUCES AROUND OF THE WORLDÓS %VERLON $IAMOND +NOT #OLLECTION ALONG WITH ROUGH DIAMONDS BY VALUE FROM ITS MINES IN 2OUGH OR UNCUT DIAMONDS ARE BROADLY CLASSIäED A FULL SCALE INTEGRATED MARKETING CAMPAIGN "OTSWANA #ANADA .AMIBIA AND 3OUTH !FRICA EITHER AS GEM OR INDUSTRIAL QUALITY DIAMONDS &OR THE äRST TIME WITH SUCH A PROGRAMME WITH GEM BEING OVERWHELMINGLY $E "EERS HOLDS A INTEREST IN $EBSWANA FUNDING IS ALSO BEING UNDERTAKEN WITH A SELECT THE LARGER OF THE TWO MARKETS BY VALUE 4HE $IAMOND #OMPANY AND IN .AMDEB $IAMOND SET OF PARTICIPATING SIGHTHOLDERS AND RETAILERS PRIMARY WORLD MARKET FOR GEM DIAMONDS IS IN #ORPORATION OWNED JOINTLY WITH THE '2" AND RETAIL JEWELLERY WHERE ASPECTS SUCH AS SIZE )N &EBRUARY THE SHAREHOLDERS OF $E "EERS THE 'OVERNMENT OF THE 2EPUBLIC OF .AMIBIA COLOUR SHAPE AND CLARITY HAVE A LARGE IMPACT AGREED AS PART OF THE $E "EERS GROUPÓS '2. RESPECTIVELY AND A SHAREHOLDING ON VALUATION $E "EERS THROUGH THE $4# REäNANCING THAT ADDITIONAL EQUITY WAS REQUIRED IN $E "EERS -ARINE .AMIBIA AND ITS PARTNERS IN "OTSWANA 3OUTH !FRICA BY $E "EERS 4HE SHAREHOLDERS OF $E "EERS HAVE )N ADDITION $E "EERS HAS A SHAREHOLDING AND .AMIBIA SUPPLIES ITS CLIENTS Ð KNOWN AS ACCORDINGLY ALL AGREED TO SUBSCRIBE IN PROPORTION IN 3OUTH !FRICAN BASED $E "EERS #ONSOLIDATED Ò3IGHTHOLDERSÓ Ð WITH PARCELS OF ROUGH DIAMONDS TO THEIR CURRENT SHAREHOLDING FOR BILLION OF -INES ,IMITED WITH A BROAD BASED BLACK THAT ARE SPECIäCALLY ALIGNED TO THEIR RESPECTIVE ADDITIONAL EQUITY IN $E "EERS 4HE 'ROUPÓS SHARE ECONOMIC EMPOWERMENT CONSORTIUM THE CUTTING AND POLISHING NEEDS OF SUCH ADDITIONAL EQUITY IN LINE WITH ITS EQUITY 0ONAHALO GROUP HOLDING THE BALANCE HOLDING IN $E "EERS AMOUNTS TO MILLION $E "EERS OWNS OF 4HE $IAMOND 4RADING Strategy and growth #OMPANY $4# THE SALES AND ROUGH DIAMONDS $URING $E "EERS IN ORDER TO WITHSTAND DISTRIBUTION ARM OF $E "EERS )T ALSO HAS A THE MOST SEVERE AND PROLONGED DOWNTURN IN THE INTEREST WITH THE '2" IN $IAMOND 4RADING DIAMOND INDUSTRY FOR DECADES TOOK BOLD ACTION #OMPANY "OTSWANA AND A OWNERSHIP TO REMAIN PROäTABLE AT A FAR LOWER LEVEL OF SALES ALONG WITH THE '2.ÓS MATCHING SHAREHOLDING AND TO PLACE ITSELF IN A ROBUST POSITION TO BENEäT IN .AMIBIA $IAMOND 4RADING #OMPANY FROM THE EVENTUAL RECOVERY 4HE STRATEGY FOCUSED ON LOWERING PRODUCTION LEVELS TO MATCH $E "EERS AND -O¦T (ENNESSY ,OUIS 6UITTON SHARPLY REDUCED SIGHTHOLDER DEMAND IDENTIFYING HAVE ESTABLISHED A HIGH END RETAIL JEWELLERY COST SAVINGS AND OPERATING EFäCIENCIES ACROSS JOINT VENTURE THROUGH $E "EERS $IAMOND THE BUSINESS AND SEEKING WAYS TO STIMULATE *EWELLERS WITH STORES IN THE MOST FASHIONABLE CONSUMER DEMAND AREAS OF SOME OF THE WORLDÓS GREAT CITIES INCLUDING .EW 9ORK ,OS !NGELES ,ONDON 0ARIS 4OKYO AND $UBAI $E "EERS OWNERSHIP STRUCTURE $E "EERS THROUGH %LEMENT 3IX IS THE WORLDÓS LEADING SUPPLIER OF INDUSTRIAL DIAMOND SUPERMATERIALS %LEMENT 3IX OPERATES 'OVERNMENT OF THE !NGLO !MERICAN 'ROUP #ENTRAL (OLDINGS 'ROUP INTERNATIONALLY WITH MANUFACTURING SITES 2EPUBLIC OF "OTSWANA WORLDWIDE AND A COMPREHENSIVE GLOBAL SALES NETWORK )T IS THE LEADING PLAYER IN THE MARKETS $" )NVESTMENTS ,UX IN WHICH IT OPERATES
$E "EERS $IAMOND *EWELLERS
$E "EERS SA ,UX
%LEMENT 3IX
$EBSWANA .AMDEB $E "EERS $E "EERS $E "EERS $E "EERS $IAMDEL $IAMOND $IAMOND #ONSOLIDATED 'ROUP 3ERVICES #ANADA 5+ OPERATIONS #OMPANY #ORPORATION -INES 23!
$4# $4# "OTSWANA .AMIBIA $4# $4# &OREVERMARK 3OUTH !FRICA
$E "EERS AND SHAREHOLDERS /WNED AND CONTROLLED SUBSIDIARIES AND DIVISIONS *OINT VENTURES AND INDEPENDENTLY MANAGED SUBSIDIARIES
Anglo American plc Annual Report 2009 39 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Diamonds continued
Financial overview !T THE RETAIL LEVEL THE HOLIDAY PERIOD TOOK PLACE AMIDST CONTINUED ECONOMIC WEAKNESS !NGLO !MERICANÓS SHARE OF OPERATING PROäT FROM WITH !MERICAN CONSUMERS CONTINUING TO SPEND $E "EERS DECREASED BY TO MILLION LESS THAN PREVIOUS YEARS 4HE LUXURY GOODS AND Rough demand and $4# SALES TOTALLED BILLION SIGNIäCANTLY HIGH END JEWELLERY SECTOR APPEARED TO PERFORM BELOW THE PREVIOUS YEAR BILLION SLIGHTLY ABOVE EXPECTATIONS OUTPERFORMING market sentiment OWING TO THE IMPACT OF THE GLOBAL ECONOMIC OTHER CATEGORIES )N THE EMERGING MARKETS OF began to improve DOWNTURN 4HE $4# EMPLOYED A åEXIBLE )NDIA AND #HINA DEMAND FOR DIAMOND JEWELLERY APPROACH IN RESPONSE TO THE VOLATILE LEVELS OF REMAINED POSITIVE IN THE FACE OF A WEAKER during the year. CLIENT DEMAND FOR ROUGH DIAMONDS DURING THE ECONOMIC CLIMATE YEAR 4HIS AGILITY ENABLED THE $4# TO CONTINUE )N ACCORDANCE WITH THE STRATEGY TO STIMULATE MAKING SALES ALBEIT AT A REDUCED LEVEL DEMAND THE &OREVERMARK PROGRAMME CONTINUED THROUGHOUT THE YEAR AND TO STEADILY INCREASE TO EXPAND IN #HINA (ONG +ONG *APAN AND LEVELS OF SUPPLY AS ROUGH DEMAND AND MARKET -ACAU 4HE BRAND IS NOW AVAILABLE IN STORES SENTIMENT BEGAN TO IMPROVE DURING THE YEAR ACROSS !SIA AND ACHIEVED OVER MILLION IN Markets RETAIL SALES IN ITS äRST MONTHS )N LINE WITH MOST PRODUCTS IN THE LUXURY SECTOR )N THE 53 $E "EERS PARTNERED WITH 3IGHTHOLDERS THE DIAMOND INDUSTRY WAS SEVERELY AFFECTED AND RETAILERS TO ROLL OUT AN INTEGRATED MARKETING IN BY THE GLOBAL RECESSION 4HE IMPACT CAMPAIGN FOR THE HOLIDAY SHOPPING SEASON 4HE OF HIGH STOCK LEVELS THROUGHOUT THE DIAMOND %VERLON $IAMOND +NOT #OLLECTION WAS MARKETED BY PIPELINE CONSTRICTED LIQUIDITY IN THE CUTTING LEADING MAJOR RETAILERS AND OVER INDEPENDENT CENTRES AND LOWER CONSUMER DEMAND LED TO OUTLETS IN THE 53 !LTHOUGH SALES äGURES HAVE LOWER DEMAND FOR ROUGH DIAMONDS FROM THE $4# YET TO BE RELEASED ANECDOTAL REPORTS FROM 3IGHTHOLDERS 4HE MARKET WAS HIT MOST ACUTELY PARTICIPATING RETAILERS AND 3IGHTHOLDERS DESCRIBED IN THE äRST QUARTER AND AS THE YEAR PROGRESSED THE CAMPAIGN AS BEING ONE OF THE FEW SUCCESSES INDUSTRY SENTIMENT IMPROVED WHICH ALLOWED IN AN OTHERWISE DIFäCULT MARKETPLACE THE $4# TO INCREASE PRICES AND SALES VOLUMES THROUGHOUT THE SECOND HALF OF THE YEAR Operating performance !T THE BEGINNING OF AND IN RESPONSE TO REDUCED DEMAND FROM $4# 3IGHTHOLDERS $E "EERS REDUCED PRODUCTION ACROSS ITS PORTFOLIO OF MINES 4HROUGH PRODUCTION HOLIDAYS AND EXTENDED MAINTENANCE SHIFTS OUTPUT WAS SIGNIäCANTLY REDUCED IN THE äRST QUARTER RESULTING IN A REDUCTION IN CARATS PRODUCED COMPARED WITH THE SAME PERIOD IN !S 3IGHTHOLDER DEMAND INCREASED GRADUALLY IN THE SECOND QUARTER WHICH CONTINUED THROUGHOUT THE REST OF THE YEAR $E "EERS INCREASED PRODUCTION TO MILLION CARATS IN THE SECOND HALF MILLION CARATS AN INCREASE OF COMPARED WITH THE äRST SIX MONTHS AND A REDUCTION OF YEAR ON YEAR &OR AS A WHOLE $E "EERS PRODUCED MILLION CARATS MILLION CARATS 0RODUCTION FROM $EBSWANA TOTALLED MILLION CARATS MILLION CARATS .AMDEB PRODUCED MILLION CARATS FROM LAND AND SEA OPERATIONS MILLION CARATS WHILE THE OUTPUT FROM 3OUTH !FRICAN OPERATIONS ALSO DECREASED TO MILLION CARATS MILLION CARATS 4HE #ANADIAN MINES PRODUCED MILLION CARATS MILLION CARATS
Debswana’s flagship Jwaneng $E "EERS TACKLED COSTS AGGRESSIVELY ACHIEVING mine. A recently announced A BILLION REDUCTION IN OPERATING AND CAPITAL expansion project will extend the EXPENDITURE A REDUCTION IN PRODUCTION mine’s life to at least 2025 and will create access to an estimated AND OPERATING COSTS AND A REDUCTION IN 95 million carats of diamonds. ITS GLOBAL WORKFORCE 4HE EFFECTS OF THE STRENGTHENING #ANADIAN DOLLAR THE IMPACT OF GLOBAL RECESSION ON PRICING AND PRODUCTION LEVELS AT 3NAP ,AKE HAVE LED TO A NON CASH IMPAIRMENT CHARGE OF MILLION ATTRIBUTABLE MILLION AGAINST THE VALUE OF $E "EERSÓ #ANADIAN ASSETS AND WRITTEN OFF MILLION ATTRIBUTABLE MILLION OF DEFERRED TAX ASSETS
40 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Projects !T THE END OF $EBSWANA ANNOUNCED A MAJOR EXPANSION PROJECT AT *WANENG THE WORLDÓS åAGSHIP DIAMOND MINE IN "OTSWANA
4HIS PROJECT ALSO KNOWN AS #UT WILL EXTEND Operating and financial review THE MINE LIFE TO $EBSWANA WILL INVEST MILLION IN CAPITAL EXPENDITURE WHILE THE ESTIMATED PROJECT INVESTMENT IS LIKELY TO TOTAL BILLION OVER THE NEXT YEARS !T ITS PEAK THE PROJECT WILL CREATE MORE THAN JOBS AND CREATE ACCESS TO A FURTHER MILLION CARATS WHICH COULD BE WORTH IN EXCESS OF BILLION OVER THE LIFE OF THE MINE
Outlook $E "EERS WILL CONTINUE TO TAKE A CAUTIOUS APPROACH TO PRODUCTION SALES AND COST MANAGEMENT IN WHILST ANTICIPATING A STEADY RECOVERY OF THE INDUSTRY !S THE WORLD ECONOMY RECOVERS THE GLOBAL MARKET FOR POLISHED DIAMONDS HAS STABILISED AND IS ALSO RECOVERING $E "EERS IS ENCOURAGED BY INITIAL STRONGER LEVELS OF DEMAND COMPARED WITH THOSE IT WITNESSED AT THE SAME STAGE IN AND HISTORY HAS SHOWN THAT DEMAND GENERALLY REBOUNDS STRONGLY IN POST RECESSIONARY PERIODS De Beers’ exploration maintained AS MANUFACTURERS AND RETAILERS LOOK TO REBUILD a high discovery rate in 2009, adding 45 kimberlites, up from THEIR INVENTORIES $E "EERS REMAINS CAUTIOUS AS the 37 discoveries in 2008. THE GLOBAL CONSUMER DEMAND FOR LUXURY GOODS IS YET TO FULLY RECOVER TO PRE CRISIS LEVELS AND WILL CONTINUE THEREFORE TO TAKE A PRUDENT APPROACH TO PRODUCTION DURING 7HILE PRODUCTION IS PLANNED TO INCREASE ABOVE LEVELS IT IS NOT EXPECTED TO RETURN TO HISTORICAL HIGHS FOR THE FORESEEABLE FUTURE $E "EERS WILL CONTINUE TO FOCUS ON COST AND CAPITAL MANAGEMENT FURTHER INCREASING EFäCIENCIES AND REDUCING COSTS #HINA AND )NDIA ARE THE TWO PRIORITY GROWTH MARKETS FOR DIAMONDS AND ARE EXPECTED TO COLLECTIVELY ACCOUNT FOR ONE THIRD OF GLOBAL DEMAND BY THE MIDDLE OF THE DECADE $E "EERS LAUNCHED THE &OREVERMARK PROGRAMME IN BOTH THE #HINESE AND )NDIAN MARKETS TO SUPPORT ITS PARTNERS IN DRIVING DEMAND FOR DIAMONDS )N THE 53 CONSUMERS WERE PARTICULARLY HARD HIT BY THE ECONOMIC DOWNTURN (OWEVER THE FOURTH QUARTER %VERLON MARKETING INITIATIVE WAS RECEIVED WELL AND TRENDS INDICATE THE DOWNTURN HAS BOTTOMED OUT WITH GROWTH OVER THE #HRISTMAS SEASON PROVIDING ENCOURAGEMENT FOR THE WORLDÓS LARGEST DIAMOND CONSUMER MARKET
Anglo American plc Annual Report 2009 41 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Copper
John MacKenzie CEO Copper
670 6 400 kt – record copper operations ktpa copper attributable copper (five wholly owned) from an expanded production in 2009 in Chile Los Bronces
&INANCIAL HIGHLIGHTS #OPPER MILLION UNLESS OTHERWISE STATED
/PERATING PROäT %")4$! .ET OPERATING ASSETS #APITAL EXPENDITURE
3HARE OF 'ROUP OPERATING PROäT 3HARE OF 'ROUP NET OPERATING ASSETS
Group potential copper production* Refined copper consumption per capita (first use) (kt) (kg/capita by US$ GDP (PPP)/capita)
1,200 18 16 1,000 14 800 12 10 600 8 400 6 4 200 2 0 0 Year 0910 11 12 13 F 02468 10 12141618
Existing and approved Major unapproved growth pipeline F Forecast conceptual production 10+ year outlook Germany USA Japan S Korea China Source: Anglo American *From the Copper business unit Source: Anglo American analysis
42 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating profit Share of Group operating profit EBITDA (2008: $1,892 m) (2008: 19%) (2008: $2,104 m) $2,010 m 41% $2,254 m
Business overview IN ORDER TO BE COMMERCIALLY VIABLE 3CARCITY OF Strategy and growth WATER IN SOME GEOGRAPHIES IS ALSO ENFORCING THE #OPPER HAS INTERESTS IN SIX OPERATIONS IN #OPPERÓS STRATEGY IS TO äND OR ACQUIRE DEVELOP CONSTRUCTION OF CAPITAL AND ENERGY INTENSIVE #HILE 4HESE OPERATIONS COMPRISE THE WHOLLY AND OPERATE LONG LIFE LOW COST MINES IN A DESALINATION PLANTS OWNED ,OS "RONCES %L 3OLDADO -ANTOS SOCIALLY AND ENVIRONMENTALLY RESPONSIBLE "LANCOS AND -ANTOVERDE MINES THE #HAGRES #HINA HAS INCREASED ITS SHARE OF äRST USE REäNED MANNER WITH A STRONG FOCUS ON EFäCIENT Operating and financial review SMELTER AND A INTEREST IN THE #OLLAHUASI METAL CONSUMPTION FROM IN TO AN RESOURCE ALLOCATION CONTINUOUS IMPROVEMENT MINE 4HE MINES ALSO PRODUCE ASSOCIATED ESTIMATED IN AND CAPITAL AND OPERATING EXCELLENCE BY PRODUCTS SUCH AS MOLYBDENUM AND SILVER #OPPER PRICES INCREASED VERY STRONGLY THROUGH 4HE BUSINESS IS CONSTANTLY DEVELOPING AND )N ADDITION THE BUSINESS UNIT HAS CONTROLLING Ð EVEN AS REäNED METAL INVENTORIES EVALUATING GROWTH OPTIONS FROM A COMBINATION INTERESTS IN TWO PROJECTS IN 0ERU 1UELLAVECO TRENDED HIGHER AND GLOBAL DEMAND LOOKED WEAK OF SOURCES INCLUDING GREENäELD AND BROWNäELD AND -ICHIQUILLAY AND A INTEREST IN THE (OWEVER SPECULATIVE AND INVESTMENT FUNDS PROJECTS ACQUISITIONS EXPLORATION TECHNOLOGY 0EBBLE PROJECT IN !LASKA MOVED AGGRESSIVELY INTO COMMODITIES THEREBY DEVELOPMENT AND ASSET OPTIMISATION PROGRAMMES PROPELLING PRICES HIGHER AND THIS WAS FURTHER 3IGNIäCANT FUTURE GROWTH WILL COME FROM Industry overview SUPPORTED BY A CAUTIOUS BUT GROWING CONäDENCE APPROVED EXPANSIONS AT ,OS "RONCES WHILE 4HE MAJORITY OF COPPER PRODUCED IS USED BY IN THE SECOND HALF OF THE YEAR THAT THE GLOBAL STUDIES ARE AT AN ADVANCED STAGE INTO FURTHER THE WIRE AND CABLE MARKETS ON ACCOUNT OF THE ECONOMY WAS SHOWING SIGNS OF RECOVERY GROWTH POTENTIAL AT 1UELLAVECO IN 0ERU AND METALÓS ELECTRICAL CONDUCTIVITY AND CORROSION 3TRONG #HINESE IMPORTS ALSO PLAYED A POWERFUL #OLLAHUASI IN #HILE )N ADDITION WORK CONTINUES RESISTANCE !PPLICATIONS THAT MAKE USE OF ROLE WHILE THE NUMEROUS INCIDENTS OF INDUSTRIAL ON EVALUATING THE POTENTIAL AND DEVELOPMENT COPPERÓS ELECTRICAL CONDUCTIVITY SUCH AS WIRES ACTION AND TECHNICAL DIFäCULTIES LEADING TO OPTIONS FOR THE RESOURCES ACQUIRED IN AT INCLUDING WIRING USED IN BUILDINGS CABLES OUTPUT LOSSES ALSO HELPED SUPPORT THE PRICE -ICHIQUILLAY IN 0ERU AND 0EBBLE IN !LASKA AND ELECTRICAL CONNECTORS MAKE UP AROUND )N !UGUST !NGLO !MERICAN ANNOUNCED OF TOTAL DEMAND !BOUT OF DEMAND THE DISCOVERIES OF TWO HIGH QUALITY COPPER COMES PRINCIPALLY FROM THE CONSTRUCTION PROSPECTS AT ,OS 3ULFATOS AND 3AN %NRIQUE INDUSTRY WHICH USES COPPER TO PRODUCE PLUMBING -ONOLITO IN #HILE 4HESE TWO PROSPECTS PIPE AND ROOF SHEETING OWING TO THE METALÓS TOGETHER INCREASE THE 'ROUPÓS COPPER RESOURCES CORROSION RESISTANCE QUALITIES #OPPERÓS EXCLUDING RESERVES BY APPROXIMATELY THERMAL CONDUCTIVITY ALSO MAKES IT SUITABLE FOR USE IN HEAT TRANSFER APPLICATIONS SUCH AS AIR CONDITIONING AND REFRIGERATION WHICH CONSTITUTE SOME OF TOTAL DEMAND /THER APPLICATIONS INCLUDE STRUCTURAL AND AESTHETIC USES #OPPER IS AN ATTRACTIVE INDUSTRY WITH MODERATE CONCENTRATION OF CUSTOMERS AND SUPPLIERS RELATIVELY HIGH BARRIERS TO ENTRY AND A TRACK RECORD OF GOOD AVERAGE PROäTABILITY OVER THE LONG TERM 4HE APPROXIMATE GLOBAL MARKET SHARE OF THE äVE LARGEST COPPER PRODUCERS IS 0RODUCERS ARE PRICE TAKERS AND THERE ARE RELATIVELY FEW OPPORTUNITIES FOR PRODUCT DIFFERENTIATION .O FUNDAMENTAL TECHNOLOGICAL SHIFTS ARE EXPECTED IN THE SHORT TO MEDIUM TERM WITH ACCESS TO QUALITY OREBODIES CONTINUING TO BE THE KEY DISTINGUISHING FACTOR &ORECAST LONG TERM DEMAND IS UNDERPINNED BY ROBUST GROWTH IN COPPERÓS ELECTRICAL USES PARTICULARLY WIRE AND CABLE IN CONSTRUCTION AUTOMOBILES AND ELECTRICITY INFRASTRUCTURE 4HE KEY GROWTH AREA WILL CONTINUE TO BE THE DEVELOPING WORLD LED BY #HINA AND )NDIA WITH THEIR MASSIVE INDUSTRIALISATION AND URBANISATION PROGRAMMES AND WHERE PER CAPITA COPPER CONSUMPTION REMAINS SUBSTANTIALLY LOWER THAN THAT OF THE ADVANCED ECONOMIES OF THE 53 Development work at the Los Bronces *APAN AND %UROPE expansion project. The expansion is due to come on stream in late 2011, with #OPPERÓS TIGHTENING FUNDAMENTALS ARE ALSO production increasing to an average of DEäNED BY PERENNIAL CONSTRAINTS ON THE SUPPLY over 400 ktpa of copper during the first SIDE DRIVEN BY CONTINUING DECLINES IN ORE 10 years of its expected 30 year life. GRADES AT BOTH MATURING EXISTING OPERATIONS AND NEW PROJECTS IN THE PIPELINE A LACK OF CAPITAL INVESTMENT AND UNDER EXPLORATION IN THE INDUSTRY AND POLITICAL AND ENVIRONMENTAL CHALLENGES IN NEW COPPER AREAS 4HE INDUSTRY IS CAPITAL INTENSIVE AND IS LIKELY TO BECOME MORE SO AS HIGH GRADE SURFACE DEPOSITS ARE EXHAUSTED AND DEEPER ANDOR LOWER GRADE DEPOSITS ARE DEVELOPED REQUIRING GREATER ECONOMIES OF SCALE
Anglo American plc Annual Report 2009 43 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Copper continued
Financial overview Projects #OPPER GENERATED AN OPERATING PROäT OF #ONSTRUCTION OF THE ,OS "RONCES EXPANSION MILLION AN INCREASE OF UNDERPINNED PROJECT IS PROGRESSING ACCORDING TO SCHEDULE Record total PRINCIPALLY BY RECORD PRODUCTION AND LOWER WITH ITS TARGET DATE FOR COMMISSIONING IN LATE OPERATING COSTS AS WELL AS THE BENEäT OF A %NGINEERING DESIGN WAS SUBSTANTIALLY copper production MARGINALLY HIGHER REALISED COPPER PRICE AND THE COMPLETED BY THE END OF AND CONSTRUCTION WEAKER #HILEAN PESO 4HIS WAS PARTLY OFFSET BY WORK ON THE VARIOUS SITES IS ON SCHEDULE of 669.8 kt was THE IMPACT OF A LOWER MOLYBDENUM PRICE ! SIGNIäCANT MILESTONE THE OPENING OF THE ,OS "RONCES SECTION OF THE CONVEYOR TUNNEL achieved in 2009. Markets FROM THE MINE THROUGH TO THE GRINDING PLANT AT #ONåUENCIA WAS ACHIEVED IN .OVEMBER !VERAGE MARKET PRICE CLB 0RODUCTION AT ,OS "RONCES IS SCHEDULED TO #OPPER INCREASE TO KTPA OVER THE äRST THREE YEARS OF FULL PRODUCTION AN AVERAGE OF OVER KTPA #OPPER PRICES ROSE STEADILY DURING THE YEAR OVER THE äRST YEARS !T PEAK PRODUCTION REåECTING IMPROVING GLOBAL ECONOMIC CONDITIONS LEVELS ,OS "RONCES IS EXPECTED TO BE THE äFTH AND ENDED THE YEAR AT A HIGH OF CLB 4HIS LARGEST PRODUCING COPPER MINE IN THE WORLD PRICE INCREASE WAS DRIVEN INITIALLY BY SPECULATIVE WITH HIGHLY ATTRACTIVE CASH OPERATING COSTS AND AND INVESTMENT FUND INåOWS AND #HINESE STOCK RESERVES THAT SUPPORT A MINE LIFE OF YEARS BUILDING BEFORE GAINING FURTHER GROUND IN THE 2ESOURCE AND MINERALISATION STUDIES CARRIED OUT SECOND HALF AS A NUMBER OF OPERATING INCIDENTS BY !NGLO !MERICANÓS TECHNICAL TEAMS SUPPORT AND INDUSTRIAL ACTION IMPACTED GLOBAL SUPPLY FURTHER POTENTIAL EXPANSION $ESPITE THE PRICE INCREASE FROM CLB AT !T #OLLAHUASI AN EXPANSION PROJECT IS UNDER THE END OF THE AVERAGE PRICE FOR THE YEAR WAY TO INCREASE SULPHIDE PROCESSING CAPACITY WAS LOWER THAN IN ALTHOUGH TO KT PER DAY BY EARLY WHILE THE HIGHER ON A REALISED PRICE BASIS PARTIALLY DUE TO SIGNIäCANT POTENTIAL FOR SUBSEQUENT PHASED THE FAVOURABLE äNAL SETTLEMENTS OF SALES PRICES EXPANSIONS CONTINUES TO BE EVALUATED INTO A RISING MARKET !T -ANTOVERDE PRE FEASIBILITY STUDIES ARE Operating performance CURRENTLY UNDER WAY FOR A SULPHIDE ORE LIFE EXTENSION !TTRIBUTABLE PRODUCTION TONNES #OPPER )N 0ERU GOOD PROGRESS WAS MADE IN THE YEAR ON A REVISED FEASIBILITY STUDY FOR THE KTPA 2ECORD TOTAL COPPER PRODUCTION OF KT 1UELLAVECO PROJECT 4HIS STUDY IS TARGETED FOR WAS ACHIEVED IN THE YEAR AN INCREASE OF COMPLETION DURING DRIVEN BY ANNUAL PRODUCTION RECORDS AT BOTH 4HE FOCUS AT THE -ICHIQUILLAY PROJECT ALSO IN ,OS "RONCES AND #OLLAHUASI ,OS "RONCES 0ERU HAS BEEN ON BUILDING RELATIONSHIPS WITH PRODUCTION WAS AFFECTED IN THE äRST HALF BY THE LOCAL COMMUNITIES AND IN THIS RESPECT LAND LOWER SULPHIDE GRADES AND RECOVERIES BEFORE ACCESS NEGOTIATIONS WERE COMPLETED IN *UNE IMPROVED OPERATING EFäCIENCIES AND ORE GRADES 4HE GEOLOGICAL EXPLORATION PROGRAMME THAT IN THE SECOND HALF LIFTED FULL YEAR PRODUCTION BEGAN IN *ULY HAD COMPLETED METRES TO A RECORD HIGH !T #OLLAHUASI DESPITE OF DRILLING BY THE END OF THE YEAR $RILLING WAS PRODUCTION HAVING BEEN IMPACTED FOR DAYS SUSPENDED IN LATE PENDING RESOLUTION FOLLOWING THE FAILURE OF A CONVEYOR ELECTRICAL OF ISSUES CURRENTLY UNDER DISCUSSION WITH LOCAL CONTROL CENTRE ATTRIBUTABLE PRODUCTION ROSE BY COMMUNITIES "ASELINE ENVIRONMENTAL AND TO KT HYDROLOGICAL STUDIES ALSO COMMENCED DURING THE /PERATING COSTS BENEäTED FROM IMPROVED SECOND HALF OF THE YEAR #ONCEPTUAL ENGINEERING OPERATIONAL EFäCIENCIES AND PRICE REDUCTIONS STUDIES HAVE BEEN COMPLETED AND A DECISION TO ACHIEVED FOR KEY CONSUMABLE ITEMS SUCH AS AWARD THE PRE FEASIBILITY ENGINEERING STUDIES SULPHURIC ACID DIESEL AND POWER ,OWER FREIGHT WILL BE TAKEN DURING COSTS WERE OFFSET BY HIGHER CONCENTRATE !CTIVITIES AT THE 0EBBLE PROJECT IN !LASKA TREATMENT AND REäNING CHARGES ADVANCED ON ALL FRONTS DURING )N THE PROJECT TEAM WILL WORK TOWARDS äNALISING THE ENGINEERING DESIGN COMPLETING THE ENVIRONMENTAL BASELINE DOCUMENT AND CARRY OUT ADDITIONAL EXPLORATION DRILLING WITHIN THE CLAIM AREA
44 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Outlook )NCREASED THROUGHPUT IS NOT EXPECTED TO FULLY COMPENSATE FOR LOWER ORE GRADES PUTTING PRESSURE ON PRODUCTION LEVELS IN PRIOR
TO THE COMMISSIONING OF THE ,OS "RONCES Operating and financial review EXPANSION PROJECT WHICH TOGETHER WITH TARGETED THROUGHPUT IMPROVEMENTS AT #OLLAHUASI AND %L 3OLDADO WILL DELIVER A STEP INCREASE IN ATTRIBUTABLE COPPER PRODUCTION IN 7HILE A CONTINUED STRONG COPPER PRICE THROUGH WOULD PUT PRESSURE ON THE #HILEAN PESO AND LABOUR COSTS FURTHER COST AND OPERATING EFäCIENCY BENEäTS ARE EXPECTED TO BE DELIVERED THROUGH THE 'ROUPÓS GLOBAL SUPPLY CHAIN AND ASSET OPTIMISATION INITIATIVES $EMAND FOR COPPER FROM #HINA IS EXPECTED TO CONTINUE GROWING AT A HEALTHY RATE WHILE DEMAND IN .ORTH !MERICA AND %UROPE IS ALSO SHOWING SIGNS OF RECOVERY /N THE SUPPLY SIDE PRODUCTION IS ANTICIPATED TO CONTINUE TO BE CONSTRAINED BY INDUSTRIAL ACTION DECLINING GRADES INCREASING SOCIAL AND ENVIRONMENTAL DEMANDS AND OTHER POLITICAL RISKS .OTWITHSTANDING Stacker/reclaimer in action #HINESE GOVERNMENT MEASURES TO RESTRICT SHORT at the Mantoverde mine, which produced over 60 kt of copper TERM CREDIT AND THE HIGH LEVEL OF RESTOCKING IN cathode in the year. GIVING RISE TO POTENTIAL PRICE VOLATILITY IN THE STRONG LONG TERM FUNDAMENTALS FOR COPPER REMAIN IN PLACE
Estimated global copper mine production (Excludes possible projects) (Mt copper)
20
15
10
5
0 Year09 10 11 121314 15 16 17 18 19 20
Base case production capability Highly probable BF* Highly probable GF† Probable BF Probable GF Source: Copyright Brook Hunt, a Wood Mackenzie company: Metals Market Service – Long Term Outlook Copper December 2009
*BF: Brownfield †GF: Greenfield
Anglo American plc Annual Report 2009 45 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Nickel
Walter De Simoni CEO Nickel
19.9 2 36 kt total nickel ferronickel ktpa average production operations and nickel output (excluding one approved of Barro Alto Anglo Platinum) ferronickel project from 2012
&INANCIAL HIGHLIGHTS .ICKEL MILLION UNLESS OTHERWISE STATED
/PERATING PROäT %")4$! .ET OPERATING ASSETS #APITAL EXPENDITURE
3HARE OF 'ROUP OPERATING PROäT 3HARE OF 'ROUP NET OPERATING ASSETS
Group potential nickel production* Estimated global primary nickel consumption (kt) (kt)
2,500 160 2009-2020 F CAGR 4.8% 12% [CAGR] 2,000 120 2003-2009 1,500 CAGR 0.6% 9.0% 80 18.5% 1,000 (0.2)% 2.7% 40 2.4% 500 (4.2)% 2.1% 0 0 (3.8)% Year 0910 11 12 13 F Year03 04 05 060708 09 10 11 121314 15 16 17 18 19 20
Existing and approved Major unapproved growth pipeline F Forecast conceptual production 10+ year outlook Asia excl. China Europe Rest of world China Source: Anglo American Source: Copyright Brook Hunt, a Wood Mackenzie company: Metals Market Service – Long Term Outlook Nickel December 2009 *Including nickel production from Anglo Platinum
46 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating profit Share of Group operating profit EBITDA (2008: $123 m) (2008: 1%) (2008: $150 m) $2 m 0.04% $28 m
Business overview /VER THE PAST DECADE NICKEL USAGE HAS GROWN Strategy and growth AS DEVELOPING NATIONS HAVE INCREASED THE PACE .ICKEL COMPRISES TWO FERRONICKEL OPERATIONS .ICKELÓS STRATEGY IS IN LINE WITH THE 'ROUPÓS OF THEIR INDUSTRIALISATION AND URBANISATION #ODEMIN IN "RAZIL AND ,OMA DE .¨QUEL IN OVERALL STRATEGY OF äNDING OR ACQUIRING PROGRAMMES $EMAND HAS RISEN FROM ABOUT -T 6ENEZUELA AS WELL AS THE WORLD CLASS "ARRO DEVELOPING AND OPERATING WORLD CLASS LOW
IN TO ABOUT -T IN A COMPOUND Operating and financial review !LTO FERRONICKEL PROJECT IN "RAZIL )N ADDITION COST MINES IN A SOCIALLY AND ENVIRONMENTALLY AVERAGE GROWTH RATE OF PER ANNUM WITHIN THE BUSINESS UNITÓS PORTFOLIO THERE RESPONSIBLE MANNER WITH AN INCREASING FOCUS ARE TWO PROMISING PROJECTS BOTH IN "RAZIL AT 4HIS GROWTH HOWEVER HAS NOT BEEN UNIFORM ON SAFETY AND ASSET OPTIMISATION THE UNAPPROVED STAGE *ACAR¤ AND -ORRO 3EM WITH SHORT LIVED PEAKS TYPICALLY BEING FOLLOWED !LTHOUGH PRONE TO ITS OWN PRICE VOLATILITY AND "ONE 4HESE HAVE THE POTENTIAL TO SIGNIäCANTLY BY EXTENDED PERIODS OF RELATIVE WEAKNESS 4HE METAL CYCLE MOVEMENTS GENERALLY NICKELÓS STRENGTHEN !NGLO !MERICANÓS POSITION IN THE NICKEL MARKET EXPERIENCED ITS HIGHEST OFFTAKE MEDIUM AND LONG TERM DEMAND FUNDAMENTALS WORLDWIDE NICKEL MARKET ADDING AT LEAST IN RECENT YEARS IN WHEN DEMAND REACHED ARE BEING DRIVEN BY THE ONGOING DEVELOPMENT OF KTPA TO THE 'ROUPÓS PRESENT ANNUAL TOTAL IN THE ORDER OF -T THEREAFTER DEMAND THE SO CALLED "2)# NATIONS "RAZIL 2USSIA )NDIA NICKEL PRODUCTION INCLUDING !NGLO 0LATINUMÓS DECLINED EVERY YEAR UP TO AND INCLUDING AND #HINA NICKEL OUTPUT OF KT WHEN IT WAS AN ESTIMATED -T ! RECOVERY IN THE NICKEL MARKET IS EXPECTED IN AND 4HE RESTRUCTURING OF THE !NGLO !MERICAN 'ROUP Industry overview FORECASTS ARE THAT CONSUMPTION COULD REACH HAS BROUGHT WITH IT THE OPPORTUNITY TO HAVE A APPROXIMATELY -T NEW MANAGEMENT TEAM DEDICATED TO THE NICKEL .ICKEL IS THE äFTH MOST COMMON ELEMENT FOUND BUSINESS 7ITH THIS TEAM NOW IN PLACE THERE IS ON EARTH )T IS FOUND IN ABOUT COUNTRIES /N THE PRODUCTION SIDE PRIMARY REäNED NICKEL A SHARPENED FOCUS ON OPTIMISATION INITIATIVES WITH KNOWN RESERVES ESTIMATED TO LAST AROUND OUTPUT IN RECENT YEARS HAS BEEN BROADLY IN LINE AT THE OPERATIONS AS WELL AS ON THE SUCCESSFUL YEARS AT THE PRESENT MINING RATE 4HE METAL WITH THE STRONG GROWTH OF THE WORLD ECONOMY EXECUTION OF THE "ARRO !LTO PROJECT "EYOND OCCURS AS TWO MAIN DEPOSITS SULPHIDES THAT ARE WITH AROUND -T OF THE METAL BEING PRODUCED "ARRO !LTO THE BUSINESS UNIT HAS SIGNIäCANT FOUND UNDERGROUND AND LATERITES THAT CAN BE IN 4HE ECONOMIC CRISIS IN LED TO OPTIONALITY TO DEVELOP THE *ACAR¤ AND -ORRO MINED BY OPEN PIT METHODS A PRODUCTION DECLINE TO JUST BELOW -T 3EM "ONE PROJECTS WHICH WOULD MAKE !NGLO WITH OUTPUT FALLING FURTHER IN TO AN .ICKEL IS A HARD DUCTILE METAL WITH HIGH !MERICAN A GROWING PLAYER IN THE NICKEL MARKET ESTIMATED -T RESISTANCE TO CORROSION AND OXIDATION .ICKELÓS AND ONE THAT IS WELL POSITIONED ON THE LOWER MAIN USE IS AS AN ALLOYING METAL ALONG WITH )N SPITE OF THE OVERALL FALL IN WORLD PRODUCTION IN HALF OF THE INDUSTRY COST CURVE CHROMIUM AND OTHER METALS IN THE PRODUCTION #HINA .ORWAY AND THE %UROPEAN 5NION OF STAINLESS AND HEAT RESISTING STEEL !BOUT ACHIEVED MODEST INCREASES IN OUTPUT THOUGH OF NICKEL IS USED TO MANUFACTURE STAINLESS DECLINES WERE EXPERIENCED IN 2USSIA !USTRALIA STEEL AND IN OTHER STEEL AND NON FERROUS AND .EW #ALEDONIA ALLOYS )N A MORE RECENT DEVELOPMENT THE 4HE SUPPLYDEMAND BALANCE HAS BEEN AFFECTED #HINESE STAINLESS STEEL INDUSTRY WHICH HAS BY THE VERY HIGH LEVELS OF #HINESE IMPORTS BEEN ABSORBING GROWING VOLUMES OF NICKEL DURING THE YEAR AND ALSO BY STRIKES AT 6ALE )NCO PIG IRON .0) IS LOOKING TO A POTENTIAL ANNUAL IN #ANADA $ESPITE CONTINUING STRIKE ACTION OFFTAKE OF KT OF NICKEL IN .0) FORM 0RIMARY DEMAND FROM THE STAINLESS STEEL SECTOR HAS NICKEL IS USED IN THE FORM OF PURE NICKEL METAL STARTED TO WEAKEN AND ,ONDON -ETAL %XCHANGE FERRONICKEL NICKEL OXIDE AND OTHER CHEMICALS ,-% STOCKS HAD RISEN SIGNIäCANTLY TO A FORECAST .ICKEL IS ALSO RECYCLED IN MANY OF ITS APPLICATIONS LEVEL OF AROUND NINE WEEKSÓ CONSUMPTION BY THE AND LARGE VOLUMES OF SCRAP NICKEL ARE USED TO END OF SUPPLY THE STEEL INDUSTRY
Anglo American plc Annual Report 2009 47 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Nickel continued
Financial overview Operating performance .ICKEL GENERATED AN OPERATING PROäT OF !TTRIBUTABLE PRODUCTION TONNES MILLION STRONGLY IMPACTED BY THE .ICKEL The Barro Alto DECREASE IN AVERAGE NICKEL PRICES FOR THE YEAR %XCLUDES !NGLO 0LATINUM NICKEL PRODUCTION AND 6ENEZUELAN INåATION OF APPROXIMATELY project in Brazil was 3ALES VOLUMES OF TONNES WERE .ICKEL PRODUCTION DECREASED MARGINALLY TO HIGHER MAINLY DUE TO THE DRAWING DOWN TONNES OWING TO LOWER PRODUCTION nearly 80% complete OF STOCKPILES AT ,OMA DE .¨QUEL AND #ODEMIN AT ,OMA DE .¨QUEL PARTIALLY OFFSET BY HIGHER at the year end and FOLLOWING THE WEAKENING IN THE NICKEL MARKET PRODUCTION AT #ODEMIN IN THE FOURTH QUARTER OF ,OMA DE .¨QUEL PRODUCED TONNES is on schedule. OF NICKEL A DECREASE OF 0RODUCTION WAS Markets IMPACTED IN *ANUARY BY THE NON RENEWAL OF !VERAGE MARKET PRICE CLB THE ENVIRONMENTAL PERMIT TO DISPOSE OF SLAG FROM THE SMELTING PROCESS WHILE STUDIES .ICKEL WERE äNALISED TO äND DISPOSAL ALTERNATIVES .ICKEL DEMAND INCREASED DURING THE SECOND AN ESTIMATED IMPACT OF TONNES )N -AY HALF OF THE YEAR MAINLY DUE TO HIGHER #HINESE A METAL RUN OUT FROM THE %& FURNACE RESULTED STAINLESS STEEL OUTPUT AND IMPORTS AFTER IN ITS CLOSURE FOR THE REST OF THE YEAR WITH A LOSS BEING NEGATIVELY AFFECTED IN THE äRST HALF OF APPROXIMATELY TONNES OF PRODUCTION BY PRICE LED SUBSTITUTION DESTOCKING IN THE DURING 2ECONSTRUCTION OF THE FURNACE WAS STAINLESS STEEL SECTOR AND WEAK GLOBAL ECONOMIC COMPLETED IN *ANUARY AND FULL PRODUCTION CONDITIONS 4HE NICKEL PRICE REACHED A LOW OF IS EXPECTED DURING THE SECOND QUARTER 7HILE CLB DURING -ARCH INCREASED TO CLB ONLY OF SMELTING CAPACITY WAS AVAILABLE IN !UGUST AND ENDED THE YEAR AT CLB BETWEEN *UNE AND $ECEMBER PRODUCTION ACHIEVED OF BUDGET THROUGH OPTIMISATION OF THE REMAINING PLANT PROCESSES Metal pour in the ferronickel smelter /PERATING COSTS WERE KEPT UNDER TIGHT CONTROL at Codemin, which DESPITE 6ENEZUELAN INåATION AND THE ARTIäCIALLY produced 9,500 tonnes of nickel in 2009. PEGGED EXCHANGE RATE 0ORT CONGESTION DIFäCULTIES FACED IN THE äRST HALF WERE OVERCOME THROUGH THE USE OF AN ALTERNATIVE PORT AND SHIPPING ROUTE )N *ANUARY THE 6ENEZUELAN -INISTRY OF "ASIC )NDUSTRIES AND -INING -)"!- PUBLISHED A RESOLUTION CANCELLING OF -INERA ,OMA DE .¨QUELÓS -,D. EXPLORATION AND EXPLOITATION CONCESSIONS DUE TO -,D.ÓS ALLEGED FAILURE TO FULäL CERTAIN CONDITIONS OF THE CONCESSIONS 4HE CURRENT MINING AND METALLURGICAL FACILITIES ARE LOCATED ON THE THREE CONCESSIONS THAT HAVE NOT BEEN CANCELLED -,D. BELIEVES THAT IT HAS COMPLIED WITH THE CONDITIONS OF THESE CONCESSIONS AND HAS LODGED ADMINISTRATIVE APPEALS AGAINST THE NOTICES OF TERMINATION AND IS WAITING FOR A RESPONSE FROM -)"!- -,D. MAY IN THE FUTURE UNDERTAKE FURTHER APPEALS INCLUDING WITH 6ENEZUELAÓS 3UPREME #OURT IF THE -)"!-ÓS RULING DOES NOT ADEQUATELY PROTECT ITS INTERESTS !N IMPAIRMENT AND ASSOCIATED ADJUSTMENTS OF MILLION HAVE BEEN RECORDED DUE TO INCREASED UNCERTAINTY OVER THE RENEWAL OF THE THREE CONCESSIONS THAT HAVE NOT BEEN CANCELLED BUT THAT EXPIRE IN AND OVER THE RESTORATION OF THE CONCESSIONS THAT WERE CANCELLED !T $ECEMBER !NGLO !MERICANÓS INTEREST IN THE BOOK VALUE OF -,D. INCLUDING ITS MINERAL RIGHTS WAS MILLION AS INCLUDED IN THE 'ROUPÓS BALANCE SHEET )N THE MONTHS TO $ECEMBER -,D.ÓS PRODUCTION AND CONTRIBUTION TO 'ROUP OPERATING PROäTS WERE RESPECTIVELY TONNES OF NICKEL IN FERRONICKEL AND A MILLION LOSS 4HE AVERAGE PRICE OF NICKEL IN WAS CLB !S OF &EBRUARY THE PRICE OF NICKEL WAS CLB
48 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 #ODEMINÓS PRODUCTION INCREASED BY TO TONNES PRIMARILY AS A RESULT OF IMPROVED EQUIPMENT AVAILABILITY #ASH OPERATING COSTS WERE REDUCED BY AIDED BY HIGHER
PRODUCTION AND LOWER FUEL OIL PRICES Operating and financial review
Projects 4HE "ARRO !LTO PROJECT WAS NEARLY COMPLETE AT THE YEAR END AND IS ON SCHEDULE TOWARDS PRODUCING ITS äRST METAL IN EARLY AND FULL PRODUCTION IN THE SECOND HALF OF 4HIS PROJECT MAKES USE OF AN EXISTING OPERATION AND PROVEN TECHNOLOGY AND WILL PRODUCE AN AVERAGE KTPA OF NICKEL IN FULL PRODUCTION KTPA OVER THE äRST äVE YEARS WITH A COST POSITION IN THE LOWER HALF OF THE CURVE &URTHER ASSET OPTIMISATION INITIATIVES ARE UNDER WAY WHICH ARE EXPECTED TO IMPROVE ITS COST POSITIONING FURTHER 7HEN "ARRO !LTO REACHES FULL PRODUCTION IN !NGLO !MERICANÓS NICKEL PRODUCTION EXCLUDING NICKEL PRODUCTION FROM !NGLO 0LATINUM WILL REACH KTPA WHILE ADDITIONAL POTENTIALLY WORLD CLASS PROJECTS IN THE PIPELINE COULD INCREASE PRODUCTION TO KTPA WITH Construction work on the ferronickel plant at the Barro Alto project, which FURTHER UPSIDE POTENTIAL LEVERAGING THE 'ROUPÓS is due to produce its first metal CONSIDERABLE NICKEL LATERITE TECHNICAL EXPERTISE in 2011, ramping up to an annual "ARRO !LTO HAS AN APPROVED LIFE OF MINE OF MORE production of 41 kt over the first five years of a forecast 25 year life. THAN YEARS FROM ITS EXTENSIVE RESOURCE BASE 4HE UNAPPROVED *ACAR¤ AND -ORRO 3EM "ONE PROJECTS SUBMITTED THEIR 0!% %CONOMIC %XPLOITATION 0LAN TO THE "RAZILIAN MINING AUTHORITIES DURING
Outlook )N ,OMA DE .¨QUELÓS PRODUCTION IS EXPECTED TO SUBSTANTIALLY INCREASE FOLLOWING THE START UP OF THE REBUILT %& FURNACE AND THE IMPLEMENTATION OF VARIOUS PROCESS IMPROVEMENTS 0RODUCTION AT #ODEMIN IS EXPECTED TO DECREASE TO APPROXIMATELY TONNES DUE TO ITS PLANNED FURNACE RELINING 4HE LONG TERM OUTLOOK FOR NICKEL IS FOR ROBUST GROWTH UNDERPINNED BY STAINLESS STEEL USES FOR APPLICATIONS WHERE CORROSION RESISTANCE HYGIENE AND STRENGTH ARE REQUIRED SUCH AS IN THE AUTOMOTIVE AND CONSTRUCTION INDUSTRIES NICKEL ALLOYS FOR THE ENERGY AND ELECTRONIC BATTERIES Estimated global nickel refinery production capability SECTORS AND THE BROADER INDUSTRIALISATION OF THE (Excludes possible projects) (kt nickel) EMERGING ECONOMIES LED BY #HINA
2,500
2,000
1,500
1,000
500
0 Year03 04 05 060708 09 10 11 121314 15 16 17 18 19 20
Mine production capability Highly probable projects Probable projects Source: Copyright Brook Hunt, a Wood Mackenzie company: Metals Market Service – Long Term Outlook Nickel December 2009
Anglo American plc Annual Report 2009 49 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Iron Ore and Manganese
Chris Griffith CEO Kumba Iron Ore
42 >80% 5.0 Mt – iron ore Proportion of Mt – Measured, Stephan Weber CEO Iron Ore Brazil output at Kumba iron ore for export Indicated and in 2009 at Kumba Inferred resources for Minas Rio phase 1
&INANCIAL HIGHLIGHTS )RON /RE AND -ANGANESE MILLION UNLESS OTHERWISE STATED
/PERATING PROäT +UMBA )RON /RE )RON /RE "RAZIL 3AMANCOR %")4$! .ET OPERATING ASSETS #APITAL EXPENDITURE
3HARE OF 'ROUP OPERATING PROäT 3HARE OF 'ROUP NET OPERATING ASSETS
Group potential iron ore production Estimated global seaborne iron ore demand by product (Mt) (Mt)
1,400 2009-2013 F [CAGR]
1,200 20.2%
150 1,000 20.5% 5.7% 120 800 7.4% 90 600
60 400
30 200
0 0 Year 0910 11 12 13 F Year00 01 02 03 04 05 06 07 08 09 1011 12 13
Existing and approved Major unapproved growth pipeline F Forecast conceptual production 10+ year outlook Fines Lump Pellets Pellet feed Source: Anglo American Source: Anglo American
50 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating profit Share of Group operating profit EBITDA (2008: $2,554 m) (2008: 25%) (2008: $2,625 m) $1,489 m 30% $1,593 m
Business overview Industry overview Strategy and growth )RON /RE INCLUDES A SHAREHOLDING IN 3TEEL IS THE MOST WIDELY USED OF ALL METALS 4HE CORE STRATEGY OF THE BUSINESS IS TO GROW +UMBA )RON /RE IN 3OUTH !FRICA )RON /RE "RAZIL )N DESPITE THE WORLD ECONOMIC SLOWDOWN !NGLO !MERICANÓS POSITION IN IRON ORE AND TO HAS A INTEREST IN THE -INAS 2IO IRON ORE WORLD CRUDE STEEL PRODUCTION REACHED BILLION SUPPLY PREMIUM HIGH QUALITY IRON ORE PRODUCTS PROJECT A SHAREHOLDING IN ,,8 -INAS TONNES A DECREASE OF ONLY ON AS IN THE FACE OF THE DECLINING QUALITY OF GLOBAL IRON Operating and financial review 2IO WHICH OWNS THE PORT OF !¢U CURRENTLY #HINA THE WORLDÓS PRINCIPAL STEELMAKER RATCHETED ORE SUPPLIES !NGLO !MERICAN HAS A UNIQUE IRON UNDER CONSTRUCTION FROM WHICH IRON ORE FROM UP CRUDE STEEL PRODUCTION ON THE BACK OF THE ORE RESOURCE FOOTPRINT WITH LARGE HIGH QUALITY THE -INAS 2IO PROJECT WILL BE EXPORTED AND A #HINESE GOVERNMENTÓS SUBSTANTIAL äSCAL RESOURCE BASES IN 3OUTH !FRICA AND "RAZIL INTEREST IN THE !MAP IRON ORE SYSTEM STIMULUS PACKAGE #HINESE CRUDE STEEL OUTPUT +UMBA PRODUCES A LEADING QUALITY LUMP AND FOR WAS -T AN INCREASE OF -T +UMBA LISTED ON THE *OHANNESBURG 3TOCK IS WELL POSITIONED TO SUPPLY THE HIGH GROWTH OR YEAR ON YEAR %XCHANGE OPERATES TWO MINES Ð 3ISHEN IN THE !SIA 0ACIäC AND -IDDLE %AST MARKETS )T IS .ORTHERN #APE WHICH PRODUCED -T OF IRON )N RESPONSE TO RETURNING DEMAND STEEL ALSO GEOGRAPHICALLY WELL POSITIONED TO SUPPLY ORE IN AND 4HABAZIMBI IN ,IMPOPO WHICH PRODUCERS ACROSS THE INDUSTRY BEGAN BRINGING %UROPEAN STEEL MARKETS IN THE LIGHT OF AN HAD A PRODUCTION OF -T IN +UMBA IS DORMANT PRODUCTION CAPACITY ONLINE WITH EXPECTED DECLINE IN LUMP SUPPLIES FROM OTHER A LEADING SUPPLIER OF SEABORNE IRON ORE AND MULTIPLE BLAST FURNACE RESTARTS BEING REPORTED SOURCES -INAS 2IO WILL CAPTURE A SIGNIäCANT EXPORTED MORE THAN OF ITS TOTAL IRON ORE IN THE SECOND HALF OF THE YEAR 'LOBAL STEEL PART OF THE HIGH GROWTH PELLET FEED MARKET WITH SALES VOLUMES IN WITH OF THESE CAPACITY UTILISATION REåECTED THESE TRENDS ITS PREMIUM PRODUCT FEATURING HIGH IRON CONTENT EXPORTS DESTINED FOR #HINA AND THE REMAINDER RISING FROM A LOW OF IN $ECEMBER AND LOW IMPURITIES TO %UROPE *APAN AND 3OUTH +OREA TO IN $ECEMBER Ð THOUGH STILL 3IGNIäCANT FUTURE GROWTH WILL COME FROM THE SIGNIäCANTLY BELOW THE PEAKS OF OVER 4HE -INAS 2IO IRON ORE PROJECT IS LOCATED IN THE EXPANSION PROJECTS AT -INAS 2IO AND +OLOMELA RECORDED IN EARLY STATES OF -INAS 'ERAIS AND 2IO DE *ANEIRO AND PREVIOUSLY 3ISHEN 3OUTH -INAS 2IO PHASE WILL INCLUDE OPEN PIT MINES AND A BENEäCIATION )N TOTAL SEABORNE IRON ORE SUPPLY WILL PRODUCE -TPA WITH äRST PRODUCTION PLANT IN -INAS 'ERAIS PRODUCING HIGH GRADE INCREASED BY FROM -T TO -T LARGELY SCHEDULED FOR THE SECOND HALF OF AND HAS PELLET FEED 4HE COMPLETION OF PHASE WILL DRIVEN BY STRONG #HINESE STEEL PRODUCTION WITH THE POTENTIAL TO BE EXPANDED TO UP TO -TPA SEE TRANSPORTATION OF ORE THROUGH A SLURRY #HINESE IMPORTS SHOWING A YEAR ON YEAR 2ESOURCES HAVE INCREASED FROM BILLION PIPELINE MORE THAN KILOMETRES TO THE PORT RISE TO -T )N THE EARLY PART OF THE YEAR TONNES IN TO BILLION TONNES -EASURED OF !¢U IN 2IO DE *ANEIRO STATE !MAP LOCATED #HINESE DOMESTIC STEEL PRODUCTION DROPPED OFF )NDICATED AND )NFERRED IN WITH FURTHER IN !MAP STATE IN NORTHERN "RAZIL IS IN THE DRASTICALLY FOR A TIME WHEN SPOT PRICES WERE RESOURCE POTENTIAL 3TUDIES FOR THE EXPANSION OF PROCESS OF RAMPING UP ITS PELLET FEED AND SINTER INSUFäCIENT TO SUPPORT THE HIGH COST LOW QUALITY THE PROJECT HAVE CONTINUED TO BE EVALUATED FEED PRODUCTION AND EXPECTS TO PRODUCE -T OUTPUT BUT RECOVERED IN THE SECOND HALF OF THE DURING 4HE +OLOMELA PROJECT IS EXPECTED IN !MAP PRODUCTION COULD INCREASE TO YEAR ON THE BACK OF HIGHER IRON ORE PRICES TO PRODUCE -TPA OF IRON ORE WITH INITIAL -TPA WITH FURTHER CAPITAL INVESTMENT PRODUCTION SCHEDULED FOR THE äRST HALF OF 3POT IRON ORE äNES PRICES RECOVERED FROM AND RAMPING UP TO FULL CAPACITY IN -ANGANESE COMPRISES A SHAREHOLDING THEIR LOWS OF LATE AND EARLY IN 3AMANCOR (OLDINGS WHICH OWNS (OTAZEL 0RICES REACHED THEIR HIGHEST LEVELS 4HE MANGANESE STRATEGY IS TO FOCUS ON -ANGANESE -INES AND -ETALLOYS BOTH SITUATED IN $ECEMBER OF T FOR COST AND UPSTREAM RESOURCES BUSINESSES DESPITE IN 3OUTH !FRICA AND A SHAREHOLDING FREIGHT #&2 &E DELIVERED #HINA THEIR LOW COST ALLOY SMELTERS HAVING BEEN IN EACH OF THE !USTRALIAN BASED OPERATIONS THUS APPLYING UPWARD PRESSURE ON THE SIGNIäCANT CONTRIBUTORS TO PROäT IN RECENT YEARS 'ROOTE %YLANDT -INING #OMPANY '%-#/ PENDING BENCHMARK PRICE NEGOTIATIONS )N ADDITION ALLOY SMELTERS ADD VALUE TO THE AND 4ASMANIAN %LECTRO -ETALLURGICAL #OMPANY OVERALL MANGANESE BUSINESS AS THEY ENABLE !S OF MANGANESE ORE IS SMELTED TO 4%-#/ WITH "(0 "ILLITON OWNING AND 3AMANCOR TO ACCESS MARKETS WITH AN OPTIMAL PRODUCE MANGANESE FERROALLOYS SUCH AS HAVING MANAGEMENT CONTROL 3AMANCOR IS THE MIX OF ORE AND ALLOY TO OPTIMISE PRODUCTION TO FERROMANGANESE AND SILICOMANGANESE WHICH WORLDÓS LARGEST PRODUCER OF SEABORNE MANGANESE BEST SUIT MARKET CONDITIONS AND PROVIDE ONGOING ARE USED IN STEEL ALLOYING APPLICATIONS THE ORE AND IS AMONG THE TOP THREE GLOBAL PRODUCERS INFORMATION ON THE PERFORMANCE OF THEIR ORES IN PERFORMANCE OF THE MANGANESE ALLOY INDUSTRY OF MANGANESE ALLOY )TS OPERATIONS PRODUCE A THE SMELTING PROCESS IS THE KEY DETERMINANT OF ORE DEMAND 4HE EARLY COMBINATION OF ORES ALLOYS AND METAL FROM SITES PART OF WAS CHARACTERISED BY SIGNIäCANT IN 3OUTH !FRICA AND !USTRALIA )N *ULY DEMAND CONTRACTION WITH UNDERLYING DEMAND 3AMANCOR SOLD OF (OTAZEL -ANGANESE TRENDS MASKED BY STOCKING AND DESTOCKING -INES IN A SERIES OF TRANSACTIONS DESIGNED TO ACTIVITIES ACROSS THE VALUE CHAIN -ARKET COMPLY WITH 3OUTH !FRICAÓS BLACK ECONOMIC CONDITIONS PROGRESSIVELY RECOVERED DURING EMPOWERMENT REQUIREMENTS THE THIRD QUARTER AND CONTINUED TO IMPROVE AS GLOBAL STEEL PRODUCTION MAINTAINED AN UPWARD TREND -ANGANESE ORE AND ALLOY PRICES DECLINED SIGNIäCANTLY DURING THE äRST HALF OF THE YEAR BUT INCREASED PROGRESSIVELY IN THE THIRD AND FOURTH QUARTER OWING TO IMPROVED MARKET CONDITIONS ALLIED WITH THE RESTOCKING PHASE -ANGANESE ALLOY PRICES HOWEVER WILL BE INåUENCED BY SUPPLY RESPONSES RESULTING FROM LATENT CAPACITY IN THE INDUSTRY AND BOTH ORE AND ALLOY PRICES WILL BE INåUENCED BY STEEL PRODUCTION TRENDS AND THE STOCKING AND DESTOCKING CYCLES
Anglo American plc Annual Report 2009 51 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Iron Ore and Manganese continued
Financial overview Operating performance Projects )RON /RE AND -ANGANESE GENERATED AN OPERATING +UMBA )RON /REÓS STRONG äNANCIAL PERFORMANCE 4HE DEVELOPMENT OF THE -TPA +OLOMELA PROäT OF MILLION SOME LOWER THAN FOR THE YEAR WAS UNDERPINNED BY A SOLID OPERATIONAL MINE CONTINUES AND REMAINS ON BUDGET AND ON 4HIS WAS AS A RESULT OF LOWER IRON ORE PERFORMANCE 4HE COMPANY REPORTED OPERATING SCHEDULE TO DELIVER äRST PRODUCTION DURING THE PRICES PARTLY OFFSET BY HIGHER IRON ORE SALES PROäT OF MILLION A DECREASE OF äRST HALF OF RAMPING UP TO FULL CAPACITY VOLUMES AND LOWER MANGANESE ORE AND ALLOY MAINLY AS A RESULT OF LOWER AVERAGE EXPORT SALES IN -INING OPERATIONS COMMENCED VOLUMES AND PRICES PRICES MOSTLY OFFSET BY HIGHER EXPORT SALES DURING THE YEAR WITH THE äRST BLAST CARRIED VOLUMES $ESPITE LOWER BENCHMARK IRON ORE OUT ON 3EPTEMBER 4O DATE -T OF Markets EXPORT PRICES WHICH DECREASED ON AVERAGE BY MATERIAL HAS BEEN MOVED 3INCE THE START OF 7ORLD CRUDE STEEL PRODUCTION CONTINUED TO FOR THE IRON ORE YEAR +UMBA CONSTRUCTION ACTIVITIES ON THE PROJECT IN INCREASE DURING THE SECOND HALF OF MAINTAINED A STRONG OPERATING PROäT MARGIN OF CAPITAL EXPENDITURE HAS TOTALLED MILLION COMPARED WITH BOTH THE äRST HALF OF 4OTAL SALES VOLUMES INCREASED BY OF WHICH MILLION WAS INCURRED DURING FROM -T TO -T %XPORT SALES VOLUMES AND THE SECOND HALF OF WITH MOST MAJOR 4HE PACE OF CONSTRUCTION AND PROJECT EXPENDITURE FROM 3ISHEN -INE INCREASED BY FROM STEEL PRODUCING COUNTRIES POSTING AN INCREASE AT -INAS 2IO IS IN LARGE PART DEPENDENT UPON -T TO -T AS VOLUMES RAMPED UP FROM IN OUTPUT 7ORLD CRUDE STEEL PRODUCTION OF RECEIVING A NUMBER OF ENVIRONMENTAL LICENCES AND THE JIG PLANT 3ISHEN EXPANSION THE SUCCESSFUL BILLION TONNES WAS HOWEVER MARKEDLY OTHER PERMITS ! TOTAL OF LICENCES AND PERMITS INTRODUCTION OF A NEW BLENDED äNES PRODUCT AND LOWER THAN THE BILLION TONNES PRODUCED WERE GRANTED IN THE YEAR KEY AMONG THESE WERE AN INCREASE IN DEMAND FROM #HINA 4OTAL DOMESTIC IN 3TEEL PRODUCTION IN #HINA IN THE äRST PART OF THE -INE AND "ENEäCIATION 0LANT SALES VOLUMES DECREASED BY OR -T INCREASED BY TO -T #HINAÓS )NSTALLATION ,ICENCE GRANTED IN $ECEMBER THE OWING TO LOWER DEMAND FROM !RCELOR-ITTAL 3! ECONOMIC GROWTH CONTINUES TO BE ROBUST ON THE FEDERAL PERMIT FOR LAND CLEARANCE AT THE MINE AND BACK OF STRONG DOMESTIC FOCUSED CONSUMPTION 4OTAL PRODUCTION AT 3ISHEN -INE INCREASED BY THE APPROVALS OF SPECIäC PERMITS FOR THE PORT AND INFRASTRUCTURE BASED STIMULUS SPENDING FROM -T TO -T PRINCIPALLY AS ROAD MODIäCATIONS 4HE SECOND PART OF THE 4HE INCREASE IN STEEL PRODUCTION COUPLED WITH A RESULT OF THE CONTINUED RAMP UP OF THE JIG )NSTALLATION ,ICENCE IS EXPECTED TO BE APPROVED LOWER #HINESE DOMESTIC IRON ORE PRODUCTION PLANT WHICH ACHIEVED PRODUCTION OF -T DURING THE EARLY PART OF !NGLO !MERICAN RESULTED IN RECORD SEABORNE IRON ORE IMPORTS IN AND REMAINS ON SCHEDULE TO ACHIEVE CONTINUES TO WORK WITH LOCAL STATE AND FEDERAL INTO #HINA )N THE SECOND HALF OF THE APPROXIMATELY -T DURING AUTHORITIES AND LANDOWNERS TO ENSURE THAT THE %UROPEAN *APANESE AND 3OUTH +OREAN MARKETS TIMING OF LICENCE AND PERMIT RECEIPTS AND LAND 4HE !MAP IRON ORE SYSTEM PRODUCED -T SAW A TENTATIVE RECOVERY WITH AN IMPROVEMENT ACQUISITIONS DOES NOT FURTHER IMPACT THE OVERALL DURING THE YEAR COMPARED WITH -T IN IN IRON ORE DEMAND FOLLOWING SOME PRODUCTION TIMING OF THE PROJECT INCREASES AND RESTOCKING BY THE STEEL INDUSTRY OF WHICH KT WAS PRODUCED AFTER THE 'ROUPÓS ACQUISITION IN !UGUST 4HE PRODUCTION 0ROJECT DEVELOPMENT ON THE PLANT AND PIPELINE 4HE MANGANESE ORE AND ALLOY MARKET REåECTED RATE RAMPED UP DURING THE SECOND HALF OF THE IN HAS BEEN FOCUSED ON THE AREAS OF THE DECLINE IN WORLD CRUDE STEEL PRODUCTION YEAR AND IN THE FOURTH QUARTER MONTHLY AVERAGE EARTHWORKS AND CIVIL WORKS &ILTRATION PLANT 4HE MARKET WAS CHARACTERISED BY UNCERTAINTY IN PRODUCTION WAS KT GROUND IMPROVEMENT WORKS WERE COMMENCED ORE AND ALLOY DEMAND MASKED BY STOCKING AND !T THE PORT OFFSHORE WORKS HAVE CONTINUED !MAP WAS ACQUIRED IN AS AN OPERATING DESTOCKING ACTIVITIES AND CONSEQUENTLY PRICES WITH THE CONSTRUCTION OF THE MAIN TRESTLE NOW ASSET AS PART OF THE ACQUISITION OF THE -INAS 2IO FOR ORE AND ALLOY DECLINED SIGNIäCANTLY DURING KM IN LENGTH AND DREDGING WORKS WHILE THE PROJECT $URING !MAP EXPERIENCED THE YEAR 3UPPLY CUTBACKS SWEPT THE MANGANESE TEMPORARY JETTY FOR BREAKWATER CONSTRUCTION IS SIGNIäCANT OPERATIONAL CHALLENGES ACROSS ITS SECTOR IN AN EFFORT TO MATCH THE REDUCED LEVELS NEARING COMPLETION /NSHORE THE QUARRY FOR MINE PLANT AND LOGISTICS CHAIN PRODUCING OF DEMAND WHICH WERE MAINTAINED INTO THE PRODUCTION OF THE BREAKWATER ROCK IS OPERATIONAL -T COMPARED WITH THE DESIGN CAPACITY THIRD QUARTER OF $EMAND BEGAN TO AND THE QUARRY TO PORT ROAD MODIäCATIONS AND OF -TPA -ANAGEMENTÓS FOCUS HAS BEEN IMPROVE DURING THE SECOND HALF OF THE YEAR CONSTRUCTION ARE PROGRESSING &IRST IRON ORE AND REMAINS ON SEEKING TO MARKEDLY IMPROVE WHEN PRODUCERS RESPONDED TO THE IMPROVED PRODUCTION IS SCHEDULED FOR THE SECOND HALF OF PERFORMANCE FROM THE EXISTING OPERATIONS ORDER LEVELS BY ANNOUNCING FURNACE RESTARTS WITH A PLANNED ANNUAL CAPACITY IN THE RATHER THAN INVESTING TO EXPAND THE OPERATION äRST PHASE OF -TPA OF IRON ORE PELLET FEED 4HE !MAP SYSTEM IS CURRENTLY BELIEVED TO HAVE CAPACITY TO INCREASE PRODUCTION TO -TPA !NGLO !MERICANÓS FORECAST ATTRIBUTABLE SHARE WITHOUT SIGNIäCANT FURTHER CAPITAL EXPENDITURE OF THE POST ACQUISITION CAPITAL EXPENDITURE FOR $UE TO THE FOCUS ON IMPROVING OPERATIONAL THE äRST PHASE OF THE PROJECT HAS INCREASED BY PERFORMANCE AND PRESERVING CASH LIMITED BILLION FROM BILLION TO BILLION EXPLORATION DRILLING HAS BEEN UNDERTAKEN IN OWING TO SCOPING CHANGES AT THE MINE PIPELINE AND THE ANTICIPATED GROWTH POTENTIAL OF AND PORT AS WELL AS FOREIGN EXCHANGE MOVEMENTS SURROUNDING LICENCE AREAS REMAINS UNTESTED 3TUDIES FOR THE EXPANSION OF THE -INAS 2IO 'IVEN THESE OPERATIONAL DIFäCULTIES AND DELAYS PROJECT CONTINUED DURING 4HE LATEST IN INCREASING PRODUCTION THE 'ROUP HAS RECORDED RESOURCE STATEMENT RESULTING FROM GEOLOGICAL AN IMPAIRMENT CHARGE OF BILLION AFTER TAX WORK PROVIDES A TOTAL RESOURCE VOLUME AND MINORITY INTEREST AGAINST THE CARRYING -EASURED )NDICATED AND )NFERRED OF BILLION VALUE OF THE ASSET TONNES WITH FURTHER UPSIDE POTENTIAL SUPPORTING 3AMANCOR ACHIEVED AN OPERATING PROäT OF THE ENVISAGED EXPANSION OF THE PROJECT MILLION AN DECREASE DUE TO LOWER MANGANESE ORE AND ALLOY SALES VOLUMES AND PRICES FOLLOWING THE DECLINE IN GLOBAL STEEL DEMAND
52 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Outlook !NALYST FORECASTS INDICATE THAT GLOBAL STEEL CONSUMPTION SHOULD GROW IN EXCESS OF PER ANNUM OVER THE NEXT THREE YEARS WHICH WOULD
LEAD TO INCREASING IRON ORE DEMAND #HINESE Operating and financial review DEMAND FOR IRON ORE IS EXPECTED TO GROW BY AT LEAST DURING 7ITH RECOVERY BEYOND #HINA EXPECTED DURING THE SUPPLY PRESSURES ON SEABORNE IRON ORE CONTINUE TO INCREASE /VERALL THE GLOBAL SEABORNE IRON ORE MARKET REMAINS STRUCTURALLY TIGHT +UMBA EXPECTS TO FURTHER INCREASE PRODUCTION VOLUMES DURING %XPORT SALES VOLUMES INTO #HINA ARE EXPECTED TO NORMALISE AT AROUND OF THE GEOGRAPHICAL SALES MIX !LTHOUGH GLOBAL STEEL DEMAND IS EXPECTED TO RETURN TO GROWTH IN THIS IS LIKELY TO BE MODERATE AND THE SUSTAINABILITY OF THE INCREASE IN DEMAND FROM DEVELOPED COUNTRIES REMAINS UNCERTAIN $OMESTIC SALES VOLUMES REMAIN DEPENDENT UPON !RCELOR-ITTAL 3!ÓS OFFTAKE REQUIREMENTS WHICH DECLINED IN The product screening facility under 4HE MARKET FOR MANGANESE ORE AND ALLOYS construction at Kumba Iron Ore’s IS DEPENDENT UPON THE CARBON STEEL INDUSTRY Kolomela project. The mine is on )MPROVEMENTS IN DEMAND AND PRICES WILL BE schedule to start production in the first half of 2012, ramping up to full UNDERPINNED BY STRENGTHENING STEEL PRODUCTION capacity of 9 Mtpa in 2013. TRENDS THE RATE OF FURNACE RESTARTS AND THE LEVEL OF #HINESE EXPORTS
Anglo American plc Annual Report 2009 53 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Metallurgical Coal
Seamus French CEO Metallurgical Coal
26.7 6 14% Mt – Metallurgical mines in Australia increase in coal Coal attributable (all majority owned) production in production in 2009 2010 following asset optimisation and productivity improvements
&INANCIAL HIGHLIGHTS -ETALLURGICAL #OAL MILLION UNLESS OTHERWISE STATED
/PERATING PROäT !USTRALIA 0ROJECTS AND CORPORATE %")4$! .ET OPERATING ASSETS #APITAL EXPENDITURE
3HARE OF 'ROUP OPERATING PROäT 3HARE OF 'ROUP NET OPERATING ASSETS
Metallurgical Coal potential attributable Estimated seaborne metallurgical coal demand production* (Mt) (Mt)
45 300 40 250 35 30 200 25 150 20 15 100 10 50 5 0 0 Year09 1011 12 13 F Year04 05 06 07 08 09
Existing and approved Major unapproved growth pipeline F Forecast conceptual production 10+ year outlook China India USA EU 15 Japan Rest of world Source: Anglo American Source: AME
* Includes metallurgical and thermal coal from Australia.
54 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating profit Share of Group operating profit EBITDA (2008: $1,110 m) (2008: 11%) (2008: $1,319 m) $451 m 9% $706 m
Business overview $AWSON IS AN OPEN CUT OPERATION THAT PRODUCED Strategy and growth -T IN TOTAL -T ATTRIBUTABLE OF HARD AND -ETALLURGICAL #OAL IS !USTRALIAÓS FOURTH BIGGEST -ETALLURGICAL #OALÓS STRATEGY IS TO BE A LARGE SOFT COKING COAL AND THERMAL COAL IN PRODUCER OF COAL AND ITS NUMBER THREE EXPORTER LOW COST RELIABLE EXPORTER OF QUALITY COAL TO OF METALLURGICAL COAL -ETALLURGICAL #OAL OWNS AN EFFECTIVE STEEL PRODUCERS WORLDWIDE FROM 1UEENSLANDÓS INTEREST IN THE *ELLINBAH MINE IN 1UEENSLAND WELL ESTABLISHED "OWEN "ASIN Operating and financial review 4HE COMPANYÓS OPERATIONS ARE BASED RELATIVELY WHICH PRODUCES METALLURGICAL COAL CLOSE TO THE COUNTRYÓS EAST COAST FROM WHERE /PERATIONAL EXCELLENCE IS DRIVEN THROUGH A IT SERVES A RANGE OF CUSTOMERS THROUGHOUT )N EXCLUDING *ELLINBAH -ETALLURGICAL STRUCTURED PROGRAMME OF ASSET OPTIMISATION !SIA AND AS FAR AS %UROPE AND 3OUTH !MERICA #OALÓS MINES PRODUCED -T ATTRIBUTABLE THAT BENCHMARKS PERFORMANCE FOR KEY ACTIVITIES OF METALLURGICAL COAL ALL OF WHICH WAS EXPORTED TO DRIVE PERFORMANCE ACROSS THE BUSINESS TO -ETALLURGICAL #OAL OPERATES SIX MINES ONE AND -T ATTRIBUTABLE OF THERMAL COAL OF BEST PRACTICE STANDARDS WHOLLY OWNED AND äVE IN WHICH IT HAS A WHICH WAS EXPORTED CONTROLLING INTEREST &IVE OF THE MINES ARE 'ROWTH IS DRIVEN BOTH FROM OPTIMISING OUTPUT LOCATED IN 1UEENSLANDÓS "OWEN "ASIN -ETALLURGICAL #OALÓS RESOURCE BASE TOTALS SOME FROM EXISTING MINES AND FROM THE ONGOING -ORANBAH .ORTH METALLURGICAL COAL #APCOAL BILLION TONNES OF COAL 4HESE INCLUDE HIGH DEVELOPMENT OF A PROJECT PIPELINE UNDERPINNED METALLURGICAL AND THERMAL COAL &OXLEIGH QUALITY GREENäELD METALLURGICAL COAL RESERVES BY A COMPREHENSIVE EXPLORATION AND METALLURGICAL COAL $AWSON METALLURGICAL THAT ARE CLOSE TO EXISTING INFRASTRUCTURE PLANNING PROCESS AND THERMAL COAL AND #ALLIDE THERMAL COAL +EY TO SECURING -ETALLURGICAL #OALÓS FUTURE IS $RAYTON MINE THERMAL COAL IS IN THE (UNTER Industry overview THE DEVELOPMENT OF LONG TERM RELATIONSHIPS WITH 6ALLEY IN .EW 3OUTH 7ALES -ETALLURGICAL COAL IS A KEY RAW MATERIAL FOR MAJOR CUSTOMERS IN ORDER TO CULTIVATE A STABLE !LL OF THE MINES ARE IN WELL ESTABLISHED LOCATIONS OF THE WORLDÓS STEEL INDUSTRY MARKET FOR ITS PRODUCTS 4HESE RELATIONSHIPS AND HAVE DIRECT ACCESS TO RAIL AND PORT FACILITIES PROVED THEIR WORTH DURING A PERIOD OF UNCERTAIN %ACH YEAR THE WORLD PRODUCES OVER BILLION AT $ALRYMPLE "AY 'LADSTONE OR .EWCASTLE DEMAND IN EARLY WHEN -ETALLURGICAL #OALÓS TONNES OF HARD COAL MOST OF WHICH IS USED IN PRODUCT CONTINUED TO BE ORDERED IN PREFERENCE TO -ORANBAH .ORTH IS AN UNDERGROUND LONGWALL THE COUNTRY OF ORIGIN ! SMALL VOLUME IS TRADED THAT OF A NUMBER OF OTHER PRODUCERS MINING OPERATION WITH A MINING LEASE COVERING ACROSS LAND BORDERS SUCH AS THOSE BETWEEN THE SQUARE KILOMETRES #OAL IS MINED FROM 53 AND #ANADA OR BETWEEN THE COUNTRIES OF THE !NGLO !MERICAN IS COMMITTED TO REDUCING THE 'OONYELLA -IDDLE 3EAM APPROXIMATELY FORMER 3OVIET 5NION 4HE INTERNATIONAL SEABORNE THE 'ROUPÓS CARBON EMISSIONS BY SUPPORTING METRES BELOW THE SURFACE 4HE MINE METALLURGICAL COAL MARKET COMPRISES SOME WORLD LEADING TECHNOLOGIES !S AN EXAMPLE PRODUCED -T ATTRIBUTABLE OF HIGH åUIDITY -T OF METALLURGICAL COAL OF THIS -ETALLURGICAL #OAL RECENTLY BECAME A HARD COKING COAL FOR STEEL MANUFACTURERS IN CORNERSTONE INVESTOR IN !USTRALIAN BASED -"$ 0RODUCED IN A RELATIVELY LIMITED NUMBER OF -ETALLURGICAL #OAL RECENTLY COMMISSIONED %NERGY ACQUIRING A SHAREHOLDING IN THE COUNTRIES METALLURGICAL COAL IS PRIMARILY USED A COAL SEAM METHANE POWER STATION AT BUSINESS -"$ %NERGY WILL SOON COMMENCE IN THE STEELMAKING INDUSTRY AND INCLUDES HARD -ORANBAH .ORTH THAT WILL REDUCE ITS CARBON TRIALS OF ITS LEADING EDGE CARBON CAPTURE AND COKING COAL SEMI SOFT COKING COAL AND 0#) DIOXIDE #/ EMISSIONS BY AROUND -TPA CONVERSION TECHNOLOGY USING ALGAL SYNTHESISERS COAL 4HE CHEMICAL COMPOSITION OF THE COAL AT THREE OF !USTRALIAÓS LARGEST GREENHOUSE GAS #APCOAL OPERATES TWO LONGWALL UNDERGROUND IS FUNDAMENTAL TO THE STEEL PRODUCERSÓ RAW EMITTING COAL äRED POWER PLANTS MINES AND AN OPEN CUT MINE 4OGETHER THESE MATERIAL MIX AND PRODUCT QUALITY 4HE MARKET MINES PRODUCE AROUND -T ATTRIBUTABLE FOR METALLURGICAL COAL HAS A BIGGER PROPORTION OF ANNUALLY OF PRIME QUALITY HARD COKING COAL LONGER TERM ANNUALLY PRICED CONTRACTS THOUGH PULVERISED COAL INJECTION 0#) AND THERMAL COAL INCREASINGLY SOME STEEL COMPANIES ARE USING #APCOAL SUPPLIES METHANE RICH SEAM GAS TO SHORT TERM CONTRACTS TO MEET THE BALANCE OF %NERGY $EVELOPMENTS ,IMITEDÓS WASTE COAL THEIR REQUIREMENTS $EMAND IN THE SECTOR IS MINE GAS POWER STATION ELIMINATING -T OF FUNDAMENTALLY DRIVEN BY ECONOMIC INDUSTRIAL
#/ EMISSIONS PER ANNUM AND STEEL DEMAND GROWTH 0RICE NEGOTIATIONS BETWEEN !USTRALIAN SUPPLIERS AND *APANESE STEEL &OXLEIGH IS AN OPEN CUT OPERATION WITH AN PRODUCERS HAVE TRADITIONALLY THOUGH NOT ALWAYS ANNUAL OUTPUT EXCEEDING -T ATTRIBUTABLE SET THE TREND THAT INåUENCES SETTLEMENTS OF HIGH QUALITY 0#) COAL )TS OPERATIONS WILL BE THROUGHOUT THE MARKET -ETALLURGICAL #OAL IS A DEBOTTLENECKED TO INCREASE PRODUCTION TO SIGNIäCANT SUPPLIER TO VIRTUALLY ALL THE WORLDÓS -TPA OVER THE NEXT THREE YEARS MAJOR STEEL PRODUCING GROUPS
Anglo American plc Annual Report 2009 55 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Metallurgical Coal continued
Financial overview Operating performance -ETALLURGICAL #OAL DELIVERED AN OPERATING PROäT !TTRIBUTABLE PRODUCTION OF MILLION A DECREASE PRIMARILY DUE THOUSAND TONNES The second half TO LOWER PRICES AS A RESULT OF WEAKER DEMAND %XPORT METALLURGICAL of the year saw a CONDITIONS PARTIALLY OFFSET BY LOWER MINING COSTS 4HERMAL significant increase Markets -ETALLURGICAL COAL PRODUCTION OF -T WAS !NGLO !MERICAN WEIGHTED AVERAGE LOWER THAN IN IN RESPONSE TO WEAKER in demand. ACHIEVED &/" PRICES TONNE DEMAND FROM STEEL CUSTOMERS (OWEVER THE %XPORT METALLURGICAL BUSINESS WAS WELL POSITIONED TO WEATHER THE VOLATILE MARKET DUE TO ITS DIVERSIäED PRODUCT %XPORT THERMAL POSITIONING ACROSS ALL MARKET SEGMENTS AND $OMESTIC THERMAL ITS STRONG LONG TERM RELATIONSHIPS WITH KEY CUSTOMERS ENABLING MARKET SHARE TO BE !TTRIBUTABLE SALES VOLUMES GAINED DURING THE PERIOD 4OTAL ATTRIBUTABLE THOUSAND TONNES COAL PRODUCTION WAS -T A DECREASE %XPORT METALLURGICAL )N RESPONSE TO THE MARKET DOWNTURN IN LATE %XPORT THERMAL -ETALLURGICAL #OAL ACTED SWIFTLY TO $OMESTIC THERMAL RESTRUCTURE ITS OPERATIONS AND REDUCE ITS COST BASE WHILE CONTINUING DEVELOPMENT OF KEY &OLLOWING A YEAR OF TIGHT MARKET CONDITIONS STRATEGIC PROJECTS -ARGINAL ACTIVITIES WERE AND RECORD PRICES IN DEMAND FOR COAL CLOSED HEADCOUNT WAS REDUCED BY A WAS SEVERELY CONSTRAINED IN THE äRST QUARTER NEW STREAMLINED ORGANISATIONAL MODEL WAS AS STEELMAKER INVENTORIES WERE WOUND DOWN IMPLEMENTED AND SIGNIäCANT REDUCTIONS WERE PARTICULARLY IMPACTING THE 0#) COAL MARKET MADE IN MAINTENANCE AND SUPPLY COSTS 4HESE "ENCHMARK METALLURGICAL COAL PRICES RETREATED INITIATIVES RESULTED IN SIGNIäCANTLY LOWER UNIT FROM THEIR C PER TONNE PEAK IN COSTS BY MORE THAN PER TONNE COMPARED BY UP TO REDUCING THE AVERAGE SELLING WITH THE COST BASE IN THE SECOND HALF OF PRICE FOR THE YEAR BY AND A PRODUCTIVITY INCREASE OVER -ETALLURGICAL COAL MARKETS IMPROVED IN THE )N RECENT YEARS LOGISTICS CONSTRAINTS IN THE SECOND QUARTER OWING TO SIGNIäCANT BUYING RAIL TO PORT CHAIN HAVE HINDERED BUSINESS FROM #HINA INITIALLY OF HARD COKING COAL AND PERFORMANCE 4HE CO ORDINATED THREE YEAR SUBSEQUENTLY A WIDER RANGE OF METALLURGICAL PROGRAMME TO EXPAND SYSTEM CAPACITY AT COALS INCLUDING 0#) THEREBY UNDERPINNING $ALRYMPLE "AY #OAL 4ERMINAL HAS PROCEEDED TRADITIONAL BENCHMARK PRICES AT LEVELS SECOND WELL WITH THE PORT EXPANSION COMPLETE THE ONLY TO THOSE SEEN IN 4HE SECOND HALF OF TRACK EXPANSION TO BE COMPLETED BY -ARCH THE YEAR SAW A SIGNIäCANT INCREASE IN DEMAND AND THE LAST OF THE ROLLING STOCK TO BE DELIVERED FROM TRADITIONAL CUSTOMERS IN *APAN 3OUTH BY MID 4HIS ACTION HAS IMPROVED +OREA )NDIA AND %UROPE AS STEEL INDUSTRY CAPACITY IN THE LOGISTICS SYSTEM -ETALLURGICAL PRODUCTION UNITS RAMPED UP #OAL CONTINUES TO MANAGE THE PORT QUEUING CHALLENGES BY BUILDING åEXIBILITY INTO ITS LOGISTICS PLANNING
Estimated global crude steel production (Mt)
1,400
1,200
1,000
800
600
400
200
0 Year 00 01 02 03 04 05 06 07 08 09
China India USA EU 15 Japan Rest of world Source: AME
56 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 4HE INITIATIVES TAKEN ACROSS THE BUSINESS INCLUDING THROUGH ASSET OPTIMISATION AND A REDUCTION IN REQUIRED STAY IN BUSINESS CAPITAL RESULTED IN A MORE COMPETITIVE COST POSITION FOR
THE BUSINESS AND POSITION IT WELL TO CAPITALISE ON Operating and financial review THE MORE BUOYANT MARKET CONDITIONS EXPECTED IN
Projects 0RODUCTION FROM THE BROWNäELD EXPANSION PROJECTS AT $AWSON AND #APCOAL ,AKE ,INDSAY MINES WILL CONTINUE TO INCREASE OVER THE NEXT TWO TO THREE YEARS AS EQUIPMENT PRODUCTIVITY IS RAISED TO BENCHMARK STANDARDS 3IGNIäCANT GREENäELD PROJECTS CONTINUE TO BE STUDIED AT 'ROSVENOR -ORANBAH 3OUTH AND $ARTBROOK TO MEET EXPECTATIONS FOR GROWING DEMAND FOR BOTH METALLURGICAL AND THERMAL COAL OVER THE NEXT DECADE )T IS EXPECTED THAT A äRST STAGE APPROVAL DECISION IN RELATION TO THE APPROVAL AND DEVELOPMENT OF THE -TPA 'ROSVENOR METALLURGICAL COAL PROJECT IN !USTRALIA WILL BE TAKEN DURING Capcoal – Exploration and Development – Surveyor Nigel Atkinson and trainee surveyor Outlook Shannon Coppard review plans. Great care is exercised in early stage exploration 4HE POSITIVE TREND SEEN FROM THE STEEL INDUSTRY programmes to ensure that areas of cultural IN BOTH #HINA AND THE TRADITIONAL MARKETS significance are not disturbed. DURING THE SECOND HALF OF IS EXPECTED TO CONTINUE IN WITH A RETURN TO STEEL PRODUCTION LEVELS PROVIDING POSITIVE MOMENTUM FOR METALLURGICAL COAL PRICES
Life of Mine and Reserves and Resources
Reserves* Resources*
Moranbah 336 Mt 1,537 Mt North 29
Dawson 26
Callide 21
Capcoal 21 297 Mt 1,765 Mt
Year 0010 20 30
Proved Probable Measured Indicated Source: Anglo American
* Includes Australian export thermal, coking coal, domestic power and metallurgical coal reserves. The figures reported represent 100% of the Saleable Ore Reserves and Mineral Resources; the percentage attributable to Anglo American plc is stated separately on pages 162 and 163. Coal Reserves are additional to Coal Resources.
Anglo American plc Annual Report 2009 57 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Thermal Coal
Norman Mbazima CEO Thermal Coal
69.3 9 512 Mt 2009 production wholly owned mines $ m – cost of Zibulo from Thermal Coal in South Africa project due to come fully on stream in 2012
&INANCIAL HIGHLIGHTS 4HERMAL #OAL MILLION UNLESS OTHERWISE STATED
/PERATING PROäT 3OUTH !FRICA 3OUTH !MERICA 0ROJECTS AND CORPORATE %")4$! .ET OPERATING ASSETS #APITAL EXPENDITURE
3HARE OF 'ROUP OPERATING PROäT 3HARE OF 'ROUP NET OPERATING ASSETS
Thermal coal potential attributable Estimated seaborne thermal coal demand production (Mt) (Mt)
100 700 80 600 500 60 400 40 300 200 20 100 0 0 Year 0910 11 12 13 F Year03 04 05 06 07 08 09
Existing and approved Major unapproved growth pipeline F Forecast conceptual production 10+ year outlook China India USA EU 15 Japan Rest of world Source: Anglo American Source: AME
58 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating profit Share of Group operating profit EBITDA (2008: $1,078 m) (2008: 11%) (2008: $1,200 m) $721 m 15% $875 m
Business overview 4HERMAL COAL USAGE IS DRIVEN BY THE DEMAND !T #ERREJ®N THE GROWTH STRATEGY ENCOMPASSES FOR ELECTRICITY AND IS INåUENCED BY THE PRICE MULTIPLE OPTIONS BASED ON THE CAPITAL INVESTMENT )N 3OUTH !FRICA 4HERMAL #OAL OWNS AND OF COMPETING FUELS SUCH AS OIL AND GAS AND FOR EXPANSION THAT WILL BE REQUIRED BY THE PORT OPERATES NINE MINES AND HAS A INTEREST INCREASINGLY THE COST OF CARBON 'LOBAL THERMAL AND LOGISTICS CHAIN AND THEREAFTER FOR PIT EXPANSION IN THE -AFUBE COLLIERY AND 0HOLA WASHING PLANT
COAL DEMAND IS ALSO AFFECTED BY THE AVAILABILITY AND RESERVE ACCESS %XPANSIONS SUCH AS THE Operating and financial review &IVE OF THE MINES TOGETHER SUPPLY -TPA OF OF ALTERNATIVE GENERATING TECHNOLOGIES INCLUDING 0 TARGETING -TPA AND 0 TARGETING THERMAL COAL TO BOTH EXPORT AND LOCAL MARKETS GAS NUCLEAR HYDROELECTRICITY AND RENEWABLES -TPA PROJECTS ARE CURRENTLY UNDER .EW 6AAL .EW $ENMARK AND +RIEL COLLIERIES ARE 4HE MARKET FOR EXPORT THERMAL COAL IS FURTHER CONSIDERATION BY THE OPERATIONÓS SHAREHOLDERS DOMESTIC PRODUCT OPERATIONS SUPPLYING -TPA IMPACTED BY THE VARYING DEGREES OF PRIVATISATION OF THERMAL COAL TO %SKOM THE STATE OWNED !LTHOUGH 4HERMAL #OAL CONTINUES TO DEVELOP AND DEREGULATION IN ELECTRICITY MARKETS WITH POWER UTILITY )SIBONELO MINE PRODUCES -TPA OPERATIONS IN ITS EXISTING GEOGRAPHIES IT IS ALSO CUSTOMERS FOCUSED ON SECURING THE LOWEST OF THERMAL COAL FOR 3ASOL 3YNTHETIC &UELS THE CONTINUALLY EVALUATING POTENTIAL OPPORTUNITIES COST FUEL SUPPLY IN ORDER TO PRODUCE POWER COAL TO LIQUIDS PRODUCER UNDER A YEAR IN NEW REGIONS &OLLOWING THE ESTABLISHMENT AT A COMPETITIVE PRICE 4HIS HAS RESULTED IN A SUPPLY CONTRACT OF AN OFäCE IN 'ABORONE TO MANAGE ITS COAL MOVE AWAY FROM LONGER TERM CONTRACTS TOWARDS BED METHANE #"- EXPLORATION PROGRAMME !NGLO )NYOSI #OAL A BROAD BASED BLACK SHORTER TERM CONTRACTS PRICED AGAINST VARIOUS IN "OTSWANA IN THE BUSINESS UNIT SPENT ECONOMIC EMPOWERMENT """%% COMPANY COAL PRICE INDICES WHICH HAS GIVEN RISE TO THE MILLION IN ON EXPLORATION AND NEW VALUED AT APPROXIMATELY BILLION IS DEVELOPMENT OF AN INCREASINGLY ACTIVE äNANCIAL BUSINESS DEVELOPMENT ACTIVITIES INVESTIGATING HELD BY !NGLO !MERICAN WITH THE REMAINING MARKET FOR HEDGING AND DERIVATIVE INSTRUMENTS THERMAL AND COKING COAL AND #"- RESOURCES HELD BY )NYOSI A "%% CONSORTIUM LED BY 4HE EXTENT TO WHICH THESE PRICING INSTRUMENTS MAINLY IN SOUTHERN !FRICA THE 0AMODZI AND ,ITHEMBA CONSORTIA ARE USED HOWEVER VARIES FROM REGION TO REGION WITH THE 7OMENÓS $EVELOPMENT "ANK AND A 4HERMAL #OAL CONTINUES TO PURSUE BUSINESS COMMUNITY TRUST HOLDING THE REMAINING EQUITY Strategy and growth DEVELOPMENT OPPORTUNITIES ON A RANGE OF !NGLO )NYOSI #OAL IN TURN HOLDS +RIEL COLLIERY PROJECTS THAT OFFER POTENTIAL EXPOSURE TO THE 4HERMAL #OALÓS STRATEGY IS FOCUSED ON SERVING THE NEW :IBULO MULTI PRODUCT PROJECT PREVIOUSLY BROADER ENERGY MARKETS WHILE BUILDING ON THE THE POWER GENERATION AND INDUSTRIAL SECTORS FROM KNOWN AS THE :ONDAGSFONTEIN PROJECT AND THE BUSINESSÓS CORE CAPABILITY IN COAL NAMELY #"- LARGE LOW COST COAL BASINS 4HE BUSINESS UNIT HAS GREENäELD PROJECTS OF %LDERS .EW ,ARGO AND EXPLORATION IN 3OUTH !FRICA AND "OTSWANA A DIVERSE HIGH QUALITY ASSET PORTFOLIO IN 3OUTH (EIDELBERG 4HE OUTSTANDING CONDITIONS PRECEDENT !LTHOUGH THESE PROJECTS REMAIN AT AN EARLY !FRICA AND 3OUTH !MERICA AND AIMS TO BE A LONG TO THE !NGLO )NYOSI #OAL TRANSACTION ARE EXPECTED STAGE AND HAVE DEMANDING ECONOMICS THEY TERM RELIABLE SUPPLIER )T ALSO STRIVES TO BE AN TO BE FULäLLED IN THE äRST HALF OF FOLLOWING ENSURE THAT 4HERMAL #OAL IS EQUIPPED WITH INDUSTRY LEADER IN THE PURSUIT OF CLEANER COAL WHICH THE TRANSACTION WILL COMPLETE A DIVERSE RANGE OF OPTIONS TO MEET CHANGING SOLUTIONS TO THE WORLDÓS ENERGY NEEDS MARKET DEMANDS OVER THE LONG TERM 4HERMAL #OALÓS 3OUTH !FRICAN OPERATIONS 4HERMAL #OAL IS FOCUSED ON EXPANDING ITS STRONG CURRENTLY ROUTE ALL EXPORT THERMAL COAL THROUGH STANDING IN THE EXPORT MARKET WHILE MAINTAINING THE 2ICHARDS "AY #OAL 4ERMINAL 2"#4 IN A SIGNIäCANT POSITION IN THE DOMESTIC MARKET WHICH IT HAS A SHAREHOLDING TO CUSTOMERS IN 3OUTH !FRICA 4HIS STRATEGY WILL BE DELIVERED THROUGHOUT THE -ED !TLANTIC AND !SIA 0ACIäC THROUGH ITS EXTENSIVE PORTFOLIO OF EXPANSION REGIONS 7ITHIN 3OUTH !FRICA OF TOTAL SALES PROJECTS SUPPORTED BY TARGETED ACQUISITIONS ARE MADE TO %SKOM ON LONG TERM IE LIFE OF )N ADDITION IT HAS SUBSTANTIALLY COMPLETED A MINE COST PLUS CONTRACTS ! FURTHER IS SOLD Internationally traded thermal coal export MAJOR PROGRAMME OF INVESTMENT WHICH INCLUDES TO 3ASOL AND TO INDUSTRIAL SECTOR CONSUMERS production by company (2009) (%) EXPANSIONS AT #ERREJ®N AND THE DEVELOPMENT 4HE REMAINING IS EXPORTED THROUGH 2"#4 OF :IBULO 4HE BUSINESS UNIT IS IN THE PROCESS )N 3OUTH !MERICA !NGLO !MERICAN HAS A OF COMPLETING ITS PRE FEASIBILITY STUDY ON SHAREHOLDING IN #ERREJ®N A -TPA CAPACITY .EW ,ARGO WHICH HAS BEEN IDENTIäED BY %SKOM 8.7% -TPA ATTRIBUTABLE OPENCAST OPERATION IN AS A PRIMARY COAL SUPPLIER TO ITS +USILE POWER 4.4% #OLOMBIA #ERREJ®N OWNS AND OPERATES ITS OWN STATION WHICH IS UNDER CONSTRUCTION +USILEÓS 2.9% RAIL AND DEEP WATER PORT FACILITIES AND SELLS INTO äRST UNITS ARE SCHEDULED TO BE OPERATING IN 4.7% THE EXPORT THERMAL AND 0#) COAL MARKETS AND 4HERMAL #OAL IS CONäDENT THAT IT WILL BE ABLE TO DELIVER COAL ON TIME Industry overview )NDIA IS AN EVER GROWING MARKET FOR 3OUTH #OAL IS THE MOST ABUNDANT SOURCE OF FOSSIL FUEL !FRICAN SOURCED COAL WITH SHOWING 79.3% ENERGY IN THE WORLD CONSIDERABLY EXCEEDING A PRONOUNCED SWING FROM THE -ED !TLANTIC World estimated 2009 seaborne thermal coal = 673.1 Mt KNOWN RESERVES OF OIL AND GAS 4HE BULK OF TO THE !SIA 0ACIäC MARKET &OR THE YEAR AS A COAL PRODUCED WORLDWIDE IS THERMAL COAL WHOLE OF 3OUTH !FRICAÓS COAL EXPORTS WHICH IS USED AS A FUEL FOR POWER GENERATION AND A SIMILAR PROPORTION OF 4HERMAL #OALÓS OWN AND OTHER INDUSTRIES NOTABLY THE CEMENT SECTOR EXPORTS THROUGH THE 2"#4 WERE DESTINED FOR Anglo American Rio Tinto BHP Billiton Xstrata Other 4HE SEABORNE THERMAL COAL MARKET COMPRISES )NDIA 4HERMAL #OAL IS EVALUATING OPPORTUNITIES Notes: NEARLY -T AND IS SUPPLIED FROM A LARGE TO INCREASE ITS EXPORTS TO )NDIA BY PRODUCING 1. Anglo American market share shown relative to diversified NUMBER OF COUNTRIES WITH COAL PRODUCERS LOWER QUALITY PRODUCTS SUITABLE FOR THE )NDIAN majors peer group 2. 2009 forecast based on equity holdings and production OPERATING IN A HIGHLY COMPETITIVE GLOBAL MARKET TO SUPPLEMENT THE HIGHER GRADE PRODUCT estimates as at January 2010 MARKETPLACE CURRENTLY BEING SOLD TO THE COUNTRY Source: AME
Anglo American plc Annual Report 2009 59 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Thermal Coal continued
Financial overview WAS COMPARED WITH IN WITH GOING TO )NDIA )N THE ABSENCE OF %UROPEAN 4HERMAL #OAL GENERATED AN OPERATING PROäT OF DEMAND THIS ABILITY TO DEPLOY COAL EASTWARDS MILLION A DECREASE PREDOMINANTLY GAVE SUPPORT TO BOTH 3OUTH !FRICAN EXPORT Underlying demand AS A RESULT OF LOWER THERMAL COAL PRICES MITIGATED VOLUMES AND PRICES 7ITH THE 0ACIäC MARKET IN PART BY THE BENEäTS OF TIGHTER COST DISCIPLINE DRIVING THE !0) PRICE AS PROGRESSED remains relatively ACROSS THE BUSINESS THE åOW OF COAL AWAY FROM THE !TLANTIC strong, supported Markets BECAME INCREASINGLY EVIDENT #OLOMBIAN AND 53 EXPORTS WERE GENERALLY NOT AS COMPETITIVE by economic growth !NGLO !MERICAN WEIGHTED AVERAGE IN THE !SIAN MARKETS AS IN THE !TLANTIC MARKET ACHIEVED &/" PRICES TONNE DUE TO COMPARATIVELY HIGHER FREIGHT COSTS in the Asia-Pacific 23! EXPORT THERMAL DURING THE YEAR region. 23! DOMESTIC THERMAL 3OUTH !MERICAN EXPORT Operating performance THERMAL South Africa
!TTRIBUTABLE SALES VOLUMES !TTRIBUTABLE PRODUCTION THOUSAND TONNES THOUSAND TONNES 23! EXPORT THERMAL 23! THERMAL 23! DOMESTIC THERMAL 23! %SKOM 3OUTH !MERICAN EXPORT THERMAL /PERATING PROäT FROM 3OUTH !FRICAN SOURCED COAL DECREASED BY TO MILLION MAINLY SAW CONSIDERABLE PRICE AND MARKET TREND DUE TO THE DECREASE IN EXPORT PRICES CHANGES COMPARED WITH 4HE AVERAGE COUPLED WITH LOWER SALES VOLUMES AND RAND &/" INDEX PRICE FOR 3OUTH !FRICAN THERMAL STRENGTH $OMESTIC SALES PRICES WERE COAL EXPORTS !0) WAS PER TONNE LOWER $ESPITE THE ECONOMIC DOWNTURN ANNUAL COMPARED WITH PER TONNE IN PRODUCTION REMAINED STEADY AT SOME -T DRIVEN MAINLY BY HIGHER OUTPUT AT -AFUBE AS $RIVEN BY A SUPPRESSED INDUSTRIAL SECTOR IT REACHED FULL CAPACITY DURING OFFSET %UROPEAN POWER DEMAND IN DECREASED BY LOWER PRODUCTION AT .EW $ENMARK WHERE SIGNIäCANTLY 4HE SOFTER OIL PRICE AND AN MAJOR GEOLOGICAL CHALLENGES SUSPENDED THE ABUNDANCE OF CHEAP GAS CONTRIBUTED TO LOWER LONGWALL OPERATIONS ! NEW LONGWALL HAS BEEN DEMAND FOR IMPORTED COAL RESULTING IN INCREASED COMMISSIONED DURING THE äRST QUARTER OF STOCKPILES )N CONTRAST THE 0ACIäC MARKET AND IS RAMPING UP CONTINUED TO SEE GROWTH WITH INCREASING DEMAND FOR IMPORTED THERMAL COAL !S #HINA WAS ABLE TO ACCOMMODATE LARGE VOLUMES OF )NDONESIAN AND !USTRALIAN EXPORTS )NDIA TURNED TO 3OUTH !FRICA TO MEET ITS ESCALATING DEMAND FOR THERMAL COAL 4HE PROPORTION OF 3OUTH !FRICAN COAL EXPORTS SHIPPED TO !SIA IN
Life of Mine and Thermal Coal Reserves and Resources
Reserves* Resources*
1,366 Mt 2,094 Mt
New Denmark 31
Cerrejón 23
Mafube 20
New Vaal 18
Isibonelo 17
Zibulo 17 417 Mt 1,126 Mt
Year 0 5 10 15 20 25 30 35
Proved Probable Measured Indicated Source: Anglo American
* Saleable tonnes including Colombian export thermal and South African export thermal, other metallurgical, domestic power and Synfuel coal reserves. The figures reported represent 100% of the Saleable Ore Reserves and Mineral Resources; the percentage attributable to Anglo American plc is stated separately on pages 165-168. Coal Reserves are additional to Coal Resources.
60 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 South America Miners discuss plant !TTRIBUTABLE PRODUCTION operations at Greenside THOUSAND TONNES colliery, which mined 3.3 Mt of thermal coal 3OUTH !MERICAN in 2009, predominantly
EXPORT THERMAL destined for the Operating and financial review export market. /PERATING PROäT FROM #ERREJ®N DECREASED BY TO MILLION DRIVEN PRIMARILY BY LESS FAVOURABLE MARKET CONDITIONS AS AVERAGE SALES PRICES DECREASED BY AND TOTAL SALES VOLUMES BY 4HE IMPACT OF THE MILLION DECREASE IN TURNOVER WAS PARTLY OFFSET BY REDUCED INPUT COSTS ARISING FROM LOWER FUEL PRICES AND PRICE ASSOCIATED ROYALTIES AS WELL AS COST CONTROL MEASURES !LTHOUGH SIGNIäCANT IMPROVEMENTS IN COAL RECOVERY RATES CONTINUED TO REåECT POSITIVELY IN ALL ASPECTS OF THE OPERATION SALEABLE PRODUCTION WAS REDUCED IN RESPONSE TO #ERREJ®NÓS PERCEPTION OF A WEAKER MARKET
Projects )N 3OUTH !FRICA THE MILLION -TPA :IBULO PROJECT IS UNDER CONSTRUCTION INCLUDING THE BUILDING OF A JOINT VENTURE COAL WASHING PLANT WITH "(0 "ILLITON %NERGY #OAL 3OUTH !FRICA 4HE PROJECT IS ON SCHEDULE WITH äRST COAL PRODUCED DURING THE THIRD QUARTER OF AND IT WILL CONTINUE TO RAMP UP DURING THE COURSE OF REACHING FULL PRODUCTION IN )N #OLOMBIA THE MILLION EXPANSION AT #ERREJ®N TO -TPA WAS COMPLETED AND FULL PRODUCTION WAS ACHIEVED EARLY IN &EASIBILITY STUDIES ARE UNDER WAY TO EXPAND THE OPERATION TO AROUND -TPA
Outlook 5NDERLYING DEMAND REMAINS RELATIVELY STRONG SUPPORTED BY ECONOMIC GROWTH IN THE !SIA 0ACIäC REGION IN PARTICULAR FROM )NDIA AND #HINA THE STEADY INCREASE IN THE OIL PRICE AND THE COLD %UROPEAN AND !SIAN WINTER ! SIGNIäCANT PORTION OF SALES IS EXPOSED TO MARKET PRICING 0OTENTIAL EXISTS FOR MARKET PRICES TO INCREASE DURING THE äRST QUARTER AND FOR THE REMAINDER OF WITH CURRENT FORWARD PRICES TRENDING SIGNIäCANTLY ABOVE THOSE SEEN IN
Anglo American plc Annual Report 2009 61 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Other Mining and Industrial
Duncan Wanblad Group Director Other Mining and Industrial
150 . 4 350 1.4 kt of zinc from kt Group total Mt – output of steel Skorpion – a record zinc production products at Scaw production year in 2009 Metals in 2009
&INANCIAL HIGHLIGHTS /THER -INING AND )NDUSTRIAL MILLION UNLESS OTHERWISE STATED
/PERATING PROäT 4ARMAC :INC 3CAW -ETALS #OPEBRS #ATALO #OAL Ð !MERICAS /THER %")4$! .ET OPERATING ASSETS #APITAL EXPENDITURE
3HARE OF 'ROUP OPERATING PROäT 3HARE OF 'ROUP NET OPERATING ASSETS
62 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating profit Share of Group operating profit EBITDA (2008: $1,082 m) (2008: 11%) (2008: $1,513 m) $506 m 10% $878 m
Tarmac Zinc Copebrás
4ARMAC GENERATED AN OPERATING PROäT OF !VERAGE MARKET PRICE CLB #OPEBRS DELIVERED AN OPERATING LOSS OF MILLION A DECREASE REåECTING A MILLION DUE PRINCIPALLY TO REDUCED FERTILISER :INC BILLION OR DECREASE IN TURNOVER PRICES PARTIALLY OFFSET BY A INCREASE RESULTING FROM BOTH A FALL IN DEMAND AND THE ,EAD IN SALES VOLUMES TO -T FOLLOWING GOOD Operating and financial review WEAKER STERLING EXCHANGE RATE MITIGATED BY WEATHER CONDITIONS IN THE SECOND HALF AND THE SIGNIäCANT COST REDUCTIONS 6OLUMES SHOWED !TTRIBUTABLE PRODUCTION TONNES DEPRESSED FERTILISER PRICES LEADING FARMERS A FURTHER SIGNIäCANT DECLINE IN THE YEAR WITH :INC TO EITHER RESTOCK OR INCREASE CONSUMPTION OVERALL DEMAND LOWER ALTHOUGH 4ARMACÓS ,EAD LEADING MARKET POSITIONS WERE MAINTAINED Catalão #APACITY WAS MOTHBALLED AND PRODUCTION :INC GENERATED A INCREASE IN OPERATING #ATALO GENERATED AN OPERATING PROäT OF CURTAILED TO ALIGN WITH FALLING DEMAND WHICH PROäT TO MILLION DESPITE LOWER ZINC AND MILLION HIGHER THAN THE PREVIOUS RESULTED IN CONSIDERABLE REDUCTIONS IN äXED LEAD PRICES DURING THE YEAR LARGELY AS A RESULT YEAR WITH SALES VOLUMES OF KT A COSTS )N ADDITION IMPROVEMENTS IN OPERATING OF IMPROVED PRODUCTION AND SALES AS WELL AS INCREASE RESULTING FROM INCREASED CAPACITY EFäCIENCY AND A PROGRAMME OF OVERHEAD LOWER COSTS 0RODUCTION AT 3KORPION INCREASED AT THE TAILINGS OPERATION REDUCTIONS WERE DEEPENED AND ACCELERATED BY TO KT A RECORD PRODUCTION YEAR HELPING TO MAINTAIN THE %")4$! MARGIN AT WHERE NAMEPLATE PRODUCTION WAS EXCEEDED 4OTAL äXED AND SUPPORT COSTS WERE REDUCED BY 7HILE ELECTRICITY CONSTRAINTS CATHODE CRANE Coal – Americas MILLION OR $ESPITE THE SUBSTANTIAL FAILURE AND CELL REPAIRS WERE AGAIN EXPERIENCED Canada DECLINE IN TURNOVER 4ARMAC GENERATED NET CASH THE COMBINED IMPACT WAS NEGATED BY VARIOUS 0EACE 2IVER #OAL GENERATED AN OPERATING PROäT INåOW FROM OPERATING ACTIVITIES AFTER CAPITAL ASSET OPTIMISATION INITIATIVES 4IGHT COST CONTROL OF MILLION FOR THE YEAR HAVING SUCCESSFULLY EXPENDITURE OF MILLION COMPARED WITH AND RECORD PRODUCTION RESULTED IN MINE OPERATING COMPLETED ITS MILLION TRANSITION TO OWNER MILLION IN UNIT COSTS BEING LOWER THAN OPERATED MINING RESULTING IN A IMPROVEMENT SAW A DEEPENING OF THE DIFäCULT MARKET !T ,ISHEEN ZINC PRODUCTION INCREASED BY IN MINED WASTE VOLUMES PART OF WHICH CONSTITUTED CONDITIONS FACED BY THE CONSTRUCTION INDUSTRY TO KT DUE TO HIGHER GRADES AND TONNAGE OVERBURDEN WASTE PRE STRIPPING FOR AND IN THE 5+ $RIVEN BY THE WIDER ECONOMIC ISSUES MINED WHILE LEAD OUTPUT INCREASED BY -ETALLURGICAL COAL SALES INCREASED BY INDUSTRIAL AND COMMERCIAL CONSTRUCTION SPENDING DUE TO HIGHER GRADES IMPROVED RECOVERIES AND THOUGH LOWER AVERAGE REALISED PRICES DECREASED SIGNIäCANTLY #ONTINENTAL %UROPE DID TONNES MINED !SSET OPTIMISATION INITIATIVES ARISING FROM GENERALLY WEAKER MARKET CONDITIONS NOT SUFFER AS SEVERELY AS THE 5+ IN BUT IN THE MINE AND MILL RESULTED IN A RECORD OFFSET THE TONNAGE INCREASE $RILLING DEäNITIONAL IN SAW DECLINES IN CONSTRUCTION ACTIVITY PRODUCTION YEAR MODELLING AND ENVIRONMENTAL APPROVAL WORK COMPARABLE WITH THOSE IN THE 5+ WERE SUBSTANTIALLY PROGRESSED ON THE 2OMAN !T "LACK -OUNTAIN TONNES MILLED INCREASED -OUNTAIN PROJECT WHICH TARGETS THE CONSTRUCTION 3IGNIäCANTLY LOWER DEMAND IN THE HOUSING AND BY AS A RESULT OF INCREASED ORE PRODUCTION OF THE -TPA BROWNäELD OPERATION ADJACENT TO COMMERCIAL SECTORS RESULTED IN 5+ VOLUMES FROM THE $EEPS MINE :INC PRODUCTION WAS THE EXISTING 4REND -INE DECLINING BY INCLUDING ASPHALT VOLUMES HIGHER AT KT WHILE LEAD PRODUCTION WHICH HAD SHOWN MORE RESILIENCE IN THAN INCREASED BY TO KT WITH THE HIGHER Venezuela OTHER PRODUCTS /N A LIKE FOR LIKE BASIS 5+ TONNES MILLED BEING OFFSET BY LOWER FEED GRADES OPERATING PROäTS DECREASED BY :INC AND LEAD METALLURGICAL RECOVERIES HOWEVER #ARBONES DEL 'UASARE #D' WAS SUBJECT TO IMPROVED BY AND RESPECTIVELY FURTHER ECONOMIC UNCERTAINTY AND DELIVERED AN /N A LIKE FOR LIKE BASIS 4ARMAC )NTERNATIONALÓS OPERATING LOSS OF MILLION IN 3ALES UNDERLYING OPERATING PROäTS WERE LOWER AND PRODUCTION VOLUMES OF -T WERE WITH WORSENING MARKET CONDITIONS IN &RANCE Scaw Metals LOWER THAN AND SIGNIäCANTLY BELOW THE 0OLAND AND THE #ZECH 2EPUBLIC OFFSETTING $ESPITE THE TOUGH OPERATING CONDITIONS IN THE PERFORMANCE POTENTIAL OF THE MINE RESILIENCE IN 'ERMANY AND COST SAVINGS OF STEEL INDUSTRY DURING THE YEAR 3CAW -ETALS MILLION GENERATED AN OPERATING PROäT OF MILLION 4OTAL COST SAVINGS OF MILLION WERE ACHIEVED 4HE DECREASE IN OPERATING PROäT WAS DUE BY 4ARMAC IN INCLUDING HEADCOUNT TO THE DIFäCULT ECONOMIC ENVIRONMENT ACROSS REDUCTIONS OF MORE THAN MADE ACROSS ALL OPERATIONS WITH REDUCED DEMAND IN SOME 4ARMAC DURING THE YEAR REPRESENTING A REDUCTION KEY MARKETS RESULTING IN DOWNWARD PRESSURE OF ON PRICES ,OWER STEEL PRICES AND THE IMPACT OF HIGH INPUT AND CONSUMABLE COSTS RESULTED IN $URING THE äRST QUARTER OF !NGLO !MERICAN PRESSURE ON MARGINS (OWEVER THE INTEGRATED AGREED THE SALE OF 4ARMACÓS AGGREGATES NATURE OF 3CAW -ETALS ENABLED THE ROLLING BUSINESSES IN &RANCE 'ERMANY 0OLAND AND THE MILLS TO CONTINUE TO SUPPLY THE DOWNSTREAM #ZECH 2EPUBLIC AND ITS 0OLISH CONCRETE PRODUCTS BUSINESSES WITH PRODUCT AT A TIME WHEN MOST BUSINESS WITH EXPECTED TOTAL PROCEEDS OF MAJOR STEEL MILLS WERE CURTAILING CAPACITY AND APPROXIMATELY MILLION RUNNING AT LOSSES )N ADDITION THE CAREFUL MANAGEMENT OF WORKING CAPITAL AND CAPITAL EXPENDITURE RESULTED IN STRONG CASH GENERATION 4OTAL PRODUCTION OF STEEL PRODUCTS WAS KT WITH THE 3OUTH !FRICAN OPERATIONS PRODUCING KT AND THE BALANCE OF KT FROM THE INTERNATIONAL OPERATIONS
Anglo American plc Annual Report 2009 63 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Principal risks and uncertainties
Understanding its key risks !NGLO !MERICAN IS EXPOSED TO A VARIETY OF RISKS IN WHICH IT OPERATES AND CONTINUOUS REVIEW OF AND UNCERTAINTIES WHICH CAN HAVE A äNANCIAL CAPITAL EXPENDITURE PROGRAMMES TO ENSURE THEY and developing appropriate OPERATIONAL OR REPUTATIONAL IMPACT ON THE 'ROUP REåECT MARKET CONDITIONS ! CONTINUOUS FOCUS responses to those risks is AND WHICH MAY ALSO IMPACT THE ACHIEVEMENT ON OPERATING EXPENDITURE IS ALSO AN IMPORTANT crucial to Anglo American’s OF SOCIAL ECONOMIC AND ENVIRONMENTAL METHOD OF MITIGATING THIS RISK success OBJECTIVES 4HE PRINCIPAL RISKS AND UNCERTAINTIES FACING THE 'ROUP HAVE BEEN CATEGORISED INTO Liquidity and counterparty risk HEADLINE RISK AREAS 4HE 'ROUPÓS APPROACH TO 4HE 'ROUP IS EXPOSED TO LIQUIDITY RISK RISK MANAGEMENT IS SET OUT IN THE CORPORATE ARISING FROM THE NEED TO äNANCE ITS ONGOING GOVERNANCE SECTION ON PAGES TO OPERATIONS AND GROWTH )F THE 'ROUP IS UNABLE TO OBTAIN SUFäCIENT CREDIT DUE TO CAPITAL MARKET Key headline risks CONDITIONS THE 'ROUP MAY NOT BE ABLE TO RAISE SUFäCIENT FUNDS TO DEVELOP NEW PROJECTS Commodity prices FUND ACQUISITIONS OR MEET THE 'ROUPÓS ONGOING #OMMODITY PRICES ARE DETERMINED PRIMARILY BY äNANCING NEEDS AND AS A RESULT REVENUES INTERNATIONAL MARKETS AND GLOBAL SUPPLY AND OPERATING RESULTS CASH åOWS OR äNANCIAL DEMAND &LUCTUATIONS IN COMMODITY PRICES GIVE POSITION MAY BE ADVERSELY AFFECTED RISE TO COMMODITY PRICE RISK ACROSS THE 'ROUP 4HE 'ROUP IS ALSO EXPOSED TO COUNTERPARTY (ISTORICALLY SUCH PRICES HAVE BEEN SUBJECT RISK FROM CUSTOMERS OR HOLDERS OF CASH THAT TO SUBSTANTIAL VARIATION AS ILLUSTRATED BY THE COULD RESULT IN äNANCIAL LOSSES SHOULD THOSE VOLATILITY OF PRICES IN KEY COMMODITIES OVER COUNTERPARTIES BECOME UNABLE TO MEET THEIR THE LAST TWO YEARS SHOWN BELOW OBLIGATIONS TO THE 'ROUP #ASH DEPOSITS AND 4HE IMPACT OF SUCH VOLATILITY CAN RESULT IN OTHER äNANCIAL INSTRUMENTS INCLUDING TRADE MATERIAL AND ADVERSE MOVEMENT IN THE 'ROUPÓS RECEIVABLES DUE FROM THIRD PARTIES GIVE RISE OPERATING RESULTS ASSET VALUES REVENUES AND TO COUNTERPARTY CREDIT RISK CASH åOWS )F THE GLOBAL ECONOMIC ENVIRONMENT 4HE 'ROUP HAS AN EXPERIENCED 4REASURY TEAM REMAINS WEAK FOR THE MEDIUM TO LONG TERM THE WHO ARE RESPONSIBLE FOR MANAGING THE FUNDING ABILITY OF THE 'ROUP TO DELIVER GROWTH IN FUTURE REQUIREMENTS OF THE 'ROUP AND MANAGING YEARS MAY BE ADVERSELY AFFECTED LIQUIDITY RISK 4REASURY ALSO HAS A ROLE TO PLAY &ALLING COMMODITY PRICES COULD PREVENT THE IN MANAGING COUNTERPARTY RISK PARTICULARLY 'ROUP FROM CARRYING OUT CERTAIN TRANSACTIONS WITH BANKS WHERE !NGLO !MERICAN PLACES CASH THAT ARE IMPORTANT TO THE 'ROUPÓS BUSINESS DEPOSITS 4HE 4REASURY OPERATIONS OF JOINT WHICH MAY HAVE AN ADVERSE EFFECT ON THE VENTURES AND ASSOCIATES INCLUDING $E "EERS 'ROUPÓS äNANCIAL CONDITION !N EXAMPLE WOULD ARE INDEPENDENTLY MANAGED AND MAY EXPOSE BE THE INABILITY TO äND BUYERS FOR BUSINESSES OR THE 'ROUP TO LIQUIDITY AND OTHER äNANCIAL RISKS ASSETS THE 'ROUP MAY WISH TO SELL Currency risk ,EVERAGING THE DIVERSIäED NATURE OF THE 'ROUP THE GENERAL POLICY IS NOT TO ENGAGE IN COMMODITY "ECAUSE OF THE GLOBAL NATURE OF ITS BUSINESS PRICE HEDGING 4HE 'ROUP MANAGES THIS RISK THE 'ROUP IS EXPOSED TO CURRENCY RISK WHERE THROUGH CONSTANT MONITORING OF THE MARKETS TRANSACTIONS ARE NOT CONDUCTED IN 53 DOLLARS OR WHERE ASSETS AND LIABILITIES ARE NOT 53 DOLLAR DENOMINATED &LUCTUATIONS IN THE EXCHANGE !VERAGE COMMODITY PRICES AND CURRENCY SENSITIVITY ANALYSIS IN RESPECT OF CURRENCY AND COMMODITY PRICES RATES OF THE MOST IMPORTANT CURRENCIES INåUENCING OPERATING COSTS AND ASSET VALUATIONS !VERAGE PRICE SENSITIVITY THE 3OUTH !FRICAN RAND #HILEAN PESO "RAZILIAN #OMMODITY 53 MILLION REAL !USTRALIAN DOLLAR EURO AND POUND STERLING 0LATINUM OZ OZ MAY ADVERSELY AFFECT äNANCIAL RESULTS TO A -ETALLURGICAL #OAL T T MATERIAL EXTENT &OREIGN EXCHANGE HEDGING 4HERMAL #OAL T T IS LIMITED TO DEBT INSTRUMENTS AND CAPITAL EXPENDITURE ON MAJOR PROJECTS #OPPER C)B CLB .ICKEL C)B CLB Inflation )RON /RE T T !S THE 'ROUP IS UNABLE TO CONTROL THE MARKET 0ALLADIUM OZ OZ PRICE AT WHICH THE COMMODITIES IT PRODUCES ARE :!253$ SOLD EXCEPT FOR ANY FORWARD SALES OR DERIVATIVE !5$53$ CONTRACTS IT IS POSSIBLE THAT SIGNIäCANTLY HIGHER #,053$ FUTURE INåATION IN THE COUNTRIES IN WHICH !NGLO '"053$ !MERICAN OPERATES MAY RESULT IN AN INCREASE IN FUTURE OPERATIONAL COSTS WITHOUT A CONCURRENT ÒOZÓ DENOTES OUNCES ÒTÓ DENOTES TONNES ÒCÓ DENOTES 53 CENTS ÒLBÓ DENOTES POUNDS 3OURCE *OHNSON -ATTHEY PLC DEPRECIATION OF THE LOCAL CURRENCY AGAINST THE 'ROUP AVERAGE REALISED &/" PRICE OF METALLURGICAL COAL AND THERMAL COAL DOLLAR OR AN INCREASE IN THE DOLLAR PRICE OF THE "EING THE AVERAGE ,-% PRICE APPLICABLE COMMODITIES #OST INåATION IN THE !VERAGE PRICE REPRESENTS AVERAGE IRON ORE EXPORT PRICE ACHIEVED MINING SECTOR IS MORE APPARENT DURING PERIODS %XCLUDES THE EFFECT OF ANY HEDGING ACTIVITIES 3TATED AFTER TAX AT MARGINAL RATE 3ENSITIVITIES ARE THE AVERAGE OF THE POSITIVE AND NEGATIVE AND OF HIGH COMMODITY PRICES AS DEMAND CAN EXCEED REåECT THE IMPACT OF A CHANGE IN THE AVERAGE PRICES RECEIVED AND EXCHANGE RATES DURING )NCREASES IN COMMODITY PRICES INCREASE UNDERLYING EARNINGS AND VICE VERSA ! STRENGTHENING OF THE 3OUTH !FRICAN RAND POUND STERLING !USTRALIAN DOLLAR AND #HILEAN PESO RELATIVE TO SUPPLY )N ADDITION ANY LAG IN THE REDUCTION OF THE 53 DOLLAR REDUCES UNDERLYING EARNINGS AND VICE VERSA
64 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 INPUT COSTS AGAINST FALLS IN COMMODITY PRICES FACE äNES AND PENALTIES STATUTORY LIABILITY FOR !CT -02$ PROVIDES FOR CONVERSION OF WILL HAVE A NEGATIVE IMPACT ON PROäT MARGINS ENVIRONMENTAL REMEDIATION AND OTHER äNANCIAL EXISTING MINING RIGHTS REFERRED TO AS Ò/LD /RDER AND äNANCIAL RESULTS CONSEQUENCES WHICH MAY BE SIGNIäCANT 2IGHTSÓ TO Ò.EW /RDER 2IGHTSÓ SUBJECT TO THE IMPLEMENTATION OF CERTAIN CONDITIONS &AILURE TO 4HE 'ROUP MANAGES COSTS VERY CLOSELY AND 4HE 'ROUP IS A LARGE USER OF ENERGY AND ONE
FULäL THE SPECIäC TERMS OF ANY OF ITS LICENCES Operating and financial review DURING HAS REDUCED COSTS THROUGH A OF THE KEY COMMODITIES IT PRODUCES IS COAL PERMITS OR OTHER AUTHORISATIONS MAY RESULT IN COMBINATION OF HEADCOUNT REDUCTION ASSET 2EGULATORY MEASURES AIMED AT REDUCING EMISSIONS WITHDRAWAL OF MINING RIGHTS WITH RESULTANT OPTIMISATION AND SUPPLY CHAIN INITIATIVES OF CLIMATE CHANGING GASES MAY AFFECT ENERGY IMPACT ON äNANCIAL PERFORMANCE PRICES DEMAND FOR CARBON INTENSIVE PRODUCTS SUCH Health and safety AS COAL AND REDUCED MARGINS ON SALES OF COAL 4HE 'ROUP ACTIVELY MONITORS REGULATORY AND POLITICAL DEVELOPMENTS ON A CONTINUOUS BASIS -INING IS A HAZARDOUS INDUSTRY AND IS THEREFORE 0OLICY DEVELOPMENTS AT AN INTERNATIONAL HIGHLY REGULATED BY SAFETY HEALTH AND REGIONAL NATIONAL AND SUB NATIONAL LEVEL Supplier risk ENVIRONMENTAL LAWS 4HE FAILURE TO MAINTAIN INCLUDING THOSE RELATED TO THE +YOTO THE REQUIRED HIGH LEVELS OF SAFETY MANAGEMENT 0ROTOCOL AND SUBSEQUENT INTERNATIONAL 4HE INABILITY TO OBTAIN STRATEGIC CONSUMABLES CAN RESULT IN HARM TO THE 'ROUPÓS EMPLOYEES AGREEMENTS AND EMISSIONS TRADING SCHEMES RAW MATERIALS MINING AND PROCESSING EQUIPMENT AND COMMUNITIES NEAR THE MINES AND DAMAGE SUCH AS THE %MISSIONS 4RADING 3YSTEM OF THE IN A TIMELY MANNER COULD HAVE AN ADVERSE TO THE ENVIRONMENT 4HIS COULD RESULT IN äNES %UROPEAN 5NION COULD ADVERSELY AFFECT THE IMPACT ON RESULTS OF OPERATIONS AND THE 'ROUPÓS AND PENALTIES LIABILITY TO EMPLOYEES AND THIRD PROäTABILITY OF THE 'ROUP äNANCIAL CONDITION $URING STRONG COMMODITY PARTIES FOR INJURY IMPAIRMENT OF THE 'ROUPÓS CYCLES INCREASED DEMAND CAN BE EXPERIENCED REPUTATION INDUSTRIAL ACTION OR INABILITY TO !SSESSMENT OF THE IMPACT OF CLIMATE CHANGE FOR SUCH SUPPLIES RESULTING IN PERIODS WHEN RECRUIT AND RETAIN SKILLED EMPLOYEES &AILURE REGULATION IS UNCERTAIN 4HE IMPACT OF CLIMATE SUPPLIES ARE NOT ALWAYS AVAILABLE TO MEET TO PROVIDE A SAFE WORKING ENVIRONMENT MAY CHANGE ON THE 'ROUPÓS OPERATIONS IS ALSO DEMAND OR COST INCREASES ABOVE NORMAL RESULT IN GOVERNMENT AUTHORITIES FORCING CLOSURE UNCERTAIN AND WILL DEPEND ON CIRCUMSTANCES AT INåATION RATES MATERIALISE !NY INTERRUPTION OF MINES ON EITHER A TEMPORARY OR PERMANENT INDIVIDUAL SITES 0OTENTIAL IMPACTS COULD INCLUDE TO THE 'ROUPÓS SUPPLIES OR INCREASE IN COSTS BASIS OR REFUSING MINING RIGHT APPLICATIONS INCREASED RAINFALL åOODING WATER SHORTAGES ADVERSELY AFFECTS THE 'ROUPÓS äNANCIAL POSITION #HANGES IN LAWS REGULATIONS OR COMMUNITY AND HIGHER AVERAGE TEMPERATURES 4HESE MAY AND FUTURE PERFORMANCE !NGLO !MERICAN EXPECTATIONS CAN RESULT IN INCREASED COMPLIANCE INCREASE COSTS REDUCE PRODUCTION LEVELS OR HAS LIMITED INåUENCE OVER MANUFACTURERS AND AND REMEDIATION COSTS IMPACT THE RESULTS OF OPERATIONS SUPPLIERS BUT TAKES A PROACTIVE APPROACH TO DEVELOPING RELATIONSHIPS WITH CRITICAL SUPPLIERS /CCUPATIONAL HEALTH RISKS TO EMPLOYEES AND 4HE 'ROUP IMPLEMENTS A NUMBER OF INITIATIVES TO AND IMPROVING THE EFFECTIVENESS OF THE 'ROUPÓS CONTRACTORS INCLUDE NOISE INDUCED HEARING LOSS MONITOR AND LIMIT THE IMPACT ITS OPERATIONS HAVE PURCHASING LEVERAGE THROUGH THE /NE !NGLO OCCUPATIONAL LUNG DISEASES AND TUBERCULOSIS ON THE ENVIRONMENT )T ALSO CONTINUALLY SEEKS 3UPPLY #HAIN INITIATIVE 4HE 'ROUP PROVIDES OCCUPATIONAL HEALTH TO REDUCE ENERGY INPUT LEVELS INTO ITS OPERATIONS SERVICES AND CONTINUES TO IMPLEMENT MEASURES AND THE ASSET OPTIMISATION PROGRAMME INCLUDES Reserves and resources TO MONITOR AND LIMIT THE INCIDENCE AND SEVERITY A NUMBER OF ENERGY SAVING INITIATIVES OF SUCH DISEASES !NGLO !MERICAN SETS A VERY 4HE 'ROUPÓS MINERAL RESOURCES AND ORE RESERVES HIGH PRIORITY ON SAFETY AND HEALTH MATTERS Political, legal and regulatory ARE SUBJECT TO A NUMBER OF ASSUMPTIONS INVESTING CONSIDERABLE RESOURCES IN SEEKING TO 4HE 'ROUPÓS BUSINESSES MAY BE AFFECTED BY PARTICULARLY THE PRICE OF COMMODITIES PRODUCTION IMPROVE THE SAFETY PERFORMANCE OF THE 'ROUPÓS POLITICAL OR REGULATORY DEVELOPMENTS IN ANY COSTS AND RECOVERY RATES &LUCTUATIONS IN THESE OPERATIONS 4HE 'ROUP IS CONSTANTLY REVIEWING OF THE COUNTRIES AND JURISDICTIONS IN WHICH VARIABLES MAY HAVE AN IMPACT ON THE LONG TERM PRACTICES TO IMPROVE SAFETY PERFORMANCE AND THE 'ROUP OPERATES INCLUDING CHANGES TO äNANCIAL CONDITION AND PROSPECTS OF THE 'ROUP WORKS CLOSELY WITH UNIONS AND GOVERNMENTS äSCAL REGIMES OR OTHER REGULATORY REGIMES 4HE 'ROUPÓS POLICY ON REPORTING OF ORE RESERVES STRIVING TO PRODUCE A SAFER MINING INDUSTRY WHICH MAY RESULT IN RESTRICTIONS ON THE EXPORT AND MINERAL RESOURCES IS EXPANDED ON PAGES OF CURRENCY EXPROPRIATION OF ASSETS IMPOSITION 4HE 'ROUP RECOGNISES THAT THE ()6!)$3 TO OF ROYALTIES AND REQUIREMENTS FOR LOCAL EPIDEMIC IN SUB 3AHARAN !FRICA IS A SIGNIäCANT OWNERSHIP OR BENEäCIATION 0OLITICAL INSTABILITY THREAT TO ECONOMIC GROWTH AND DEVELOPMENT IN Exploration CAN ALSO RESULT IN CIVIL UNREST NULLIäCATION THAT REGION 4HERE IS A RISK THAT THE RECRUITMENT %XPLORATION AND DEVELOPMENT ARE SPECULATIVE OF EXISTING AGREEMENTS OR MINING LEASES AND AND RETENTION OF SKILLED PEOPLE REQUIRED TO MEET ACTIVITIES WITH NO GUARANTEE OF SUCCESS BUT PERMITS !NY OF THESE THREATS MAY ADVERSELY GROWTH ASPIRATIONS MAY BE ADVERSELY AFFECTED THEY ARE NECESSARY FOR FUTURE GROWTH &AILURE TO AFFECT THE 'ROUPÓS OPERATIONS OR THE RESULTS OF !NGLO !MERICAN PROVIDES ANTI RETROVIRAL THERAPY DISCOVER NEW RESERVES OF SUFäCIENT MAGNITUDE THOSE OPERATIONS 4HE 'ROUP HAS NO CONTROL OVER TO EMPLOYEES WITH ()6!)$3 AND ALSO UNDERTAKES COULD ADVERSELY AFFECT FUTURE RESULTS AND THE CHANGES IN LOCAL MARKET INTEREST RATES OR POLITICAL EDUCATION AND AWARENESS PROGRAMMES TO HELP 'ROUPÓS äNANCIAL CONDITION ACTS WHICH MAY DEPRIVE THE 'ROUP OF THE PREVENT EMPLOYEES AND THEIR FAMILIES BECOMING ECONOMIC BENEäTS OF OWNERSHIP OF ITS ASSETS !NGLO !MERICAN INVESTS CONSIDERABLE SUMS INFECTED OR SPREADING INFECTION EACH YEAR IN FOCUSED EXPLORATION PROGRAMMES )N *ANUARY -INERA ,OMA DE .¨QUEL TO ENABLE RESOURCE DISCOVERY AND DEVELOPMENT Environment -,D. WAS NOTIäED OF THE INTENTION OF THE TO RESERVES #ERTAIN OF THE 'ROUPÓS OPERATIONS DO CREATE 6ENEZUELAN -INISTRY OF "ASIC )NDUSTRIES AND ENVIRONMENTAL RISK IN THE FORM OF DUST NOISE -INING -)"!- TO CANCEL OF ITS EXPLORATION Event risk OR LEAKAGE OF POLLUTING SUBSTANCES FROM SITE AND EXPLOITATION CONCESSIONS DUE TO -,D.ÓS ALLEGED FAILURE TO FULäL CERTAIN CONDITIONS OF THE $AMAGE TO OR BREAKDOWN OF A PHYSICAL ASSET OPERATIONS AND UNCONTROLLED BREACHES OF TAILINGS INCLUDING RISK OF äRE EXPLOSION OR NATURAL DAM FACILITIES &AILURE TO MANAGE ENVIRONMENTAL CONCESSIONS &URTHER DETAILS ARE PROVIDED IN THE .ICKEL BUSINESS UNIT OVERVIEW SECTION CATASTROPHE CAN RESULT IN A LOSS OF ASSETS RISKS MAY RESULT IN HARM TO THE 'ROUPÓS AND SUBSEQUENT äNANCIAL LOSSES 4HE 'ROUPÓS EMPLOYEES THE COMMUNITIES NEAR THE 'ROUPÓS 4HE 'ROUP RECOGNISES THAT ITS LICENCE TO OPERATE OPERATIONS ARE EXPOSED TO NATURAL RISKS SUCH OPERATIONS AND THE ENVIRONMENT GOVERNMENT THROUGH MINING RIGHTS IS DEPENDENT ON A AS EARTHQUAKES EXTREME WEATHER CONDITIONS AUTHORITIES FORCING CLOSURE OF MINES ON A NUMBER OF FACTORS INCLUDING COMPLIANCE WITH AS WELL AS THE FAILURE OF MINING PIT SLOPES TEMPORARY OR PERMANENT BASIS OR REFUSING FUTURE REGULATIONS &OR EXAMPLE IN 3OUTH !FRICA THE AND TAILINGS DAM WALLS äRE EXPLOSION AND MINING RIGHT APPLICATIONS 4HE 'ROUP COULD -INERAL AND 0ETROLEUM 2ESOURCES $EVELOPMENT MACHINERY BREAKDOWN
Anglo American plc Annual Report 2009 65 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Operating and financial review Principal risks and uncertainties continued
3PECIALIST CONSULTANTS ARE ENGAGED TO ANALYSE &AILURE TO MEET PROJECT DELIVERY TIMES AND COSTS 4HE 'ROUP SEEKS TO WORK CLOSELY WITH SUPPLIERS OF SUCH EVENT RISKS ON A ROTATIONAL BASIS AND COULD HAVE A NEGATIVE EFFECT ON OPERATIONAL RAIL AND PORT INFRASTRUCTURE TO MITIGATE THE RISK OF PROVIDE RECOMMENDATIONS FOR MANAGEMENT PERFORMANCE AND LEAD TO INCREASED COSTS OR FAILURE AND ESTABLISH CONTINGENCY ARRANGEMENTS ACTION TO PREVENT OR LIMIT THE EFFECTS OF SUCH REDUCTIONS IN REVENUE AND PROäTABILITY 3ERVICES ARE PROVIDED TO CUSTOMERS WHO REQUIRE A LOSS )N ADDITION THE 'ROUP SEEKS TO PURCHASE PRODUCT TO BE DELIVERED TO THEM AND PURCHASE OF )NCREASING REGULATORY ENVIRONMENTAL LAND INSURANCE TO PROTECT AGAINST THE äNANCIAL SHIPPING CAPACITY IS ALIGNED TO THE NEEDS OF ACCESS AND SOCIAL APPROVALS CAN RESULT IN CONSEQUENCES OF CATASTROPHIC EVENT SUBJECT 'ROUP COMPANIES SIGNIäCANT INCREASES IN CONSTRUCTION COSTS TO THE AVAILABILITY AND COST OF SUCH INSURANCE ANDOR SIGNIäCANT DELAYS IN CONSTRUCTION Community relations 4HESE INCREASES COULD MATERIALLY AND Employees ADVERSELY AFFECT THE ECONOMICS OF A PROJECT 4HE 'ROUP OPERATES IN SEVERAL COUNTRIES 4HE ABILITY TO RECRUIT DEVELOP AND RETAIN THE 'ROUPÓS ASSET VALUES COSTS REVENUES WHERE OWNERSHIP OF RIGHTS IN RESPECT OF LAND APPROPRIATE SKILLS FOR THE 'ROUP IS MADE EARNINGS AND CASH åOWS AND RESOURCES IS UNCERTAIN AND WHERE DISPUTES CHALLENGING BY GLOBAL COMPETITION FOR SKILLED IN RELATION TO OWNERSHIP OR OTHER COMMUNITY LABOUR 4HE FAILURE TO RETAIN SKILLED EMPLOYEES ! NUMBER OF STRATEGIES HAVE BEEN IMPLEMENTED MATTERS MAY ARISE 4HESE DISPUTES ARE NOT ALWAYS OR TO RECRUIT NEW STAFF MAY LEAD TO INCREASED TO MITIGATE THESE RISKS INCLUDING MANAGEMENT PREDICTABLE AND MAY CAUSE DISRUPTION TO PROJECTS COSTS INTERRUPTIONS TO EXISTING OPERATIONS OVERSIGHT OF OPERATING PERFORMANCE AND PROJECT OR OPERATIONS 4HE 'ROUPÓS OPERATIONS CAN HAVE AND DELAY IN NEW PROJECTS DELIVERY THROUGH REGULAR EXECUTIVE MANAGEMENT AN IMPACT ON LOCAL COMMUNITIES INCLUDING THE BRIEäNGS INCREASED EFFECTIVENESS OF PROCUREMENT NEED FROM TIME TO TIME TO RELOCATE COMMUNITIES ! NUMBER OF STRATEGIES ARE IMPLEMENTED ACTIVITIES THROUGH THE /NE !NGLO 3UPPLY #HAIN OR INFRASTRUCTURE NETWORKS SUCH AS RAILWAYS AND TO MITIGATE THIS RISK INCLUDING ATTENTION TO AND OTHER BUSINESS IMPROVEMENT INITIATIVES UTILITY SERVICES &AILURE TO MANAGE RELATIONSHIPS AN APPROPRIATE SUITE OF REWARD AND BENEäT TO REDUCE UNIT COSTS AND IMPROVE DELIVERY OF WITH LOCAL COMMUNITIES GOVERNMENT AND STRUCTURES FOR EXISTING EMPLOYEES AND ONGOING CAPITAL PROJECTS NON GOVERNMENTAL ORGANISATIONS MAY DISRUPT REäNEMENT OF !NGLO !MERICAN AS AN ATTRACTIVE OPERATIONS AND ADVERSELY AFFECT THE 'ROUPÓS EMPLOYEE PROPOSITION Acquisitions REPUTATION AS WELL AS ITS ABILITY TO BRING PROJECTS %MPLOYEES IN THE KEY COUNTRIES WHERE !NGLO 4HE 'ROUP HAS UNDERTAKEN A NUMBER OF INTO PRODUCTION !MERICAN OPERATES ARE UNIONISED AND THE RISK ACQUISITIONS IN THE RECENT PAST 7ITH ANY SUCH 4HE 'ROUP HAS DEVELOPED COMPREHENSIVE OF STRIKE OR OTHER INDUSTRIAL RELATIONS DISPUTES TRANSACTION THERE IS THE RISK THAT ANY BENEäTS PROCESSES TO ENABLE ITS BUSINESS UNITS TO MAY HAVE AN ADVERSE EFFECT ON THE RESULTS OF OR SYNERGIES IDENTIäED AT THE TIME OF ACQUISITION EFFECTIVELY MANAGE RELATIONSHIPS WITH OPERATIONS !NGLO !MERICAN MITIGATES THIS RISK MAY NOT BE ACHIEVED AS A RESULT OF CHANGING OR COMMUNITIES AND ACTIVELY SEEKS ENGAGEMENT THROUGH A PROCESS OF CONSTRUCTIVE DIALOGUE WITH INCORRECT ASSUMPTIONS OR MATERIALLY DIFFERENT WITH ALL AFFECTED COMMUNITIES IMPACTED BY TRADE UNIONS AND THE MAINTENANCE OF EFFECTIVE MARKET CONDITIONS OR DEäCIENCIES IN THE DUE THE 'ROUPÓS OPERATIONS WORKING RELATIONSHIPS DILIGENCE PROCESS RESULTING IN ADVERSE EFFECTS ON äNANCIAL PERFORMANCE PRODUCTION VOLUMES Joint venture relationships Contractors OR PRODUCT QUALITY &URTHERMORE THE 'ROUP COULD 3OME OF THE 'ROUPÓS OPERATIONS ARE CONTROLLED -INING CONTRACTORS ARE USED AT A NUMBER OF THE äND ITSELF LIABLE FOR PAST ACTS OR OMISSIONS OF THE AND MANAGED BY JOINT VENTURE PARTNERS 'ROUPÓS OPERATIONS TO MINE AND DELIVER ORE TO ACQUIRED BUSINESS WITHOUT ANY ADEQUATE RIGHT ASSOCIATES OR BY OTHER COMPANIES -ANAGEMENT PROCESSING PLANTS FOR EXAMPLE )N PERIODS OF OF REDRESS OF NON CONTROLLED ASSETS MAY NOT COMPLY WITH HIGH COMMODITY PRICES DEMAND FOR CONTRACTORS 2IGOROUS GUIDELINES ARE APPLIED TO THE THE 'ROUPÓS STANDARDS FOR EXAMPLE ON SAFETY MAY EXCEED SUPPLY RESULTING IN INCREASED EVALUATION AND EXECUTION OF ALL ACQUISITIONS HEALTH AND ENVIRONMENT 4HIS MAY LEAD TO HIGHER COSTS OR LACK OF AVAILABILITY OF KEY CONTRACTORS THAT REQUIRE THE APPROVAL OF THE )NVESTMENT COSTS LOWER PRODUCTION AND HAVE A NEGATIVE $ISRUPTION OF OPERATIONS OR INCREASED COSTS CAN #OMMITTEE AND 'ROUP -ANAGEMENT #OMMITTEE BEARING ON OPERATIONAL RESULTS ASSET VALUES OCCUR SHOULD THERE BE DISPUTES WITH CONTRACTORS AND SUBJECT TO SIZE THE "OARD OR THE 'ROUPÓS REPUTATION OR UNAVAILABILITY OF CERTAIN SKILLS Infrastructure !NGLO !MERICAN SEEKS TO MITIGATE THIS RISK Business integrity BY WAY OF A THOROUGH EVALUATION PROCESS )NADEQUATE SUPPORTING FACILITIES SERVICES AND BEFORE COMMITTING TO ANY JOINT VENTURE AND -ANY COUNTRIES WHERE THE 'ROUPÓS OPERATIONS INSTALLATIONS WATER POWER TRANSPORTATION ETC IMPLEMENTATION OF ONGOING GOVERNANCE ARE LOCATED HAVE INCREASED THEIR EMPHASIS MAY AFFECT THE SUSTAINABILITY AND GROWTH OF THE PROCESSES IN EXISTING JOINT VENTURES ON ENFORCEMENT OF LAWS TO WHICH THE 'ROUP BUSINESS LEADING TO A LOSS OF COMPETITIVENESS IS SUBJECT INCLUDING SAFETY ENVIRONMENTAL MARKET SHARE AND REPUTATION 4HE POTENTIAL Critical accounting judgements and key ANTITRUST AND ANTI CORRUPTION 4HE 'ROUP DISRUPTION OF THE ONGOING GENERATION AND sources of estimation and uncertainty HAS PROVIDED CLEAR STANDARDS OF CONDUCT TO SUPPLY OF POWER IS A RISK FACED BY THE 'ROUP PROMOTE FULL COMPLIANCE WITH LAWS HOWEVER IN A NUMBER OF COUNTRIES IN WHICH IT OPERATES )N THE COURSE OF PREPARING äNANCIAL STATEMENTS NON COMPLIANCE WITH THESE STANDARDS MAY INCLUDING 3OUTH !FRICA !NGLO !MERICANÓS MANAGEMENT NECESSARILY MAKES JUDGEMENTS LEAD TO PROSECUTION AND OTHER LITIGATION AND APPROACH TO ADDRESSING THIS RISK IS TO WORK AND ESTIMATES THAT CAN HAVE A SIGNIäCANT IMPACT ADVERSE EFFECTS ON THE #OMPANYÓS PROäTS JOINTLY ON DEVELOPING SUSTAINABLE SOLUTIONS TO ON THE äNANCIAL STATEMENTS 4HE MOST CRITICAL LICENCES AND REPUTATION THESE PROBLEMS WITH SUPPLIERS OF INFRASTRUCTURE OF THESE RELATE TO ESTIMATION OF THE USEFUL SERVICES AND FACILITIES ECONOMIC LIVES OF ASSETS AND ORE RESERVES Operational performance and project IMPAIRMENT OF ASSETS RESTORATION REHABILITATION delivery !NGLO !MERICAN RELIES UPON EFFECTIVE RAIL AND ENVIRONMENTAL COSTS AND RETIREMENT &AILURE TO MEET PRODUCTION TARGETS CAN RESULT AND PORT FACILITIES FOR ITS PRODUCTS AND WILL BE BENEäTS 4HESE ARE DETAILED ON PAGE 4HE IN INCREASED UNIT COSTS WHICH ARE PRONOUNCED EXPECTED TO PROVIDE SHIPMENT OF PRODUCT IN USE OF INACCURATE ASSUMPTIONS IN CALCULATIONS AT OPERATIONS WITH HIGHER LEVELS OF äXED COSTS SOME CIRCUMSTANCES TO CUSTOMERSÓ PREMISES FOR ANY OF THESE ESTIMATES COULD RESULT IN A 6ARIABLE UNIT COSTS MAY ALSO EXCEED FORECASTS &AILURE OF RAIL OR PORT FACILITIES MAY RESULT IN SIGNIäCANT IMPACT ON äNANCIAL RESULTS ADVERSELY AFFECTING PERFORMANCE AND THE DELAYS AND INCREASED COSTS AS WELL AS LOST RESULTS OF OPERATIONS REVENUE AND REPUTATION WITH CUSTOMERS &AILURE TO PROCURE SHIPPING COSTS AT MARKET RATES MAY REDUCE PROäT MARGINS THUS REDUCING PROäT LEVELS
66 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Useful economic lives of assets and ore 3UBSEQUENT CHANGES TO THE #'5 ALLOCATION OR TO Basis of disclosure reserves estimates THE TIMING OF OR ASSUMPTIONS USED TO DETERMINE 4HIS OPERATING AND äNANCIAL REVIEW /&2 CASH åOWS COULD IMPACT THE CARRYING VALUE OF 4HE 'ROUPÓS MINING PROPERTIES CLASSIäED DESCRIBES THE MAIN TRENDS AND FACTORS THE RESPECTIVE ASSETS WITHIN TANGIBLE ASSETS ARE DEPRECIATED OVER UNDERLYING THE DEVELOPMENT PERFORMANCE AND THE RESPECTIVE LIFE OF THE MINE USING THE UNIT POSITION OF !NGLO !MERICAN PLC THE 'ROUP Operating and financial review Restoration, rehabilitation OF PRODUCTION 5/0 METHOD BASED ON PROVEN DURING THE YEAR ENDED $ECEMBER and environmental costs AND PROBABLE RESERVES 7HEN DETERMINING ORE AS WELL AS THOSE LIKELY TO AFFECT THE FUTURE RESERVES ASSUMPTIONS THAT WERE VALID AT THE 0ROVISION IS MADE BASED ON NET PRESENT VALUES DEVELOPMENT PERFORMANCE AND POSITION )T TIME OF ESTIMATION MAY CHANGE WHEN NEW FOR RESTORATION REHABILITATION AND ENVIRONMENTAL HAS BEEN PREPARED IN LINE WITH THE GUIDANCE INFORMATION BECOMES AVAILABLE !NY CHANGES COSTS AS SOON AS THE OBLIGATION ARISES #OSTS PROVIDED IN THE REPORTING STATEMENT ON THE COULD AFFECT PROSPECTIVE DEPRECIATION RATES INCURRED AT THE START OF EACH PROJECT ARE CAPITALISED OPERATING AND äNANCE REVIEW ISSUED BY THE 5+ AND ASSET CARRYING VALUES AND CHARGED TO THE INCOME STATEMENT OVER THE !CCOUNTING 3TANDARDS "OARD IN *ANUARY LIFE OF THE PROJECT THROUGH DEPRECIATION OF THE 4HE CALCULATION OF THE 5/0 RATE OF AMORTISATION ASSET AND THE UNWINDING OF THE DISCOUNT ON THE COULD BE IMPACTED TO THE EXTENT THAT ACTUAL PROVISION #OSTS FOR RESTORATION OF SUBSEQUENT Forward looking statements PRODUCTION IN THE FUTURE IS DIFFERENT FROM CURRENT SITE DAMAGE ARE PROVIDED AT NET PRESENT VALUE 4HIS /&2 CONTAINS CERTAIN FORWARD LOOKING FORECAST PRODUCTION BASED ON PROVEN AND AND CHARGED AGAINST PROäTS AS EXTRACTION STATEMENTS WITH RESPECT TO THE äNANCIAL PROBABLE MINERAL RESERVES PROGRESSES %NVIRONMENTAL COSTS ARE ESTIMATED CONDITION RESULTS OPERATIONS AND BUSINESSES &ACTORS WHICH COULD IMPACT USEFUL ECONOMIC LIVES USING EITHER THE WORK OF EXTERNAL CONSULTANTS OF THE 'ROUP 4HESE STATEMENTS AND FORECASTS OF ASSETS AND ORE RESERVE ESTIMATES INCLUDE OR INTERNAL EXPERTS -ANAGEMENT USES ITS INVOLVE RISK AND UNCERTAINTY BECAUSE THEY RELATE TO EVENTS AND DEPEND ON CIRCUMSTANCES > CHANGES TO PROVEN AND PROBABLE MINERAL JUDGEMENT AND EXPERIENCE TO PROVIDE FOR AND THAT OCCUR IN THE FUTURE 4HERE ARE A NUMBER RESERVES AMORTISE THESE ESTIMATED COSTS OVER THE LIFE OF FACTORS THAT COULD CAUSE ACTUAL RESULTS > THE GRADE OF MINERAL RESERVES VARYING OF THE MINE OR DEVELOPMENTS TO DIFFER MATERIALLY FROM SIGNIäCANTLY FROM TIME TO TIME THOSE EXPRESSED OR IMPLIED BY THESE FORWARD > DIFFERENCES BETWEEN ACTUAL COMMODITY Retirement benefits LOOKING STATEMENTS PRICES AND COMMODITY PRICE ASSUMPTIONS 4HE EXPECTED COSTS OF PROVIDING PENSIONS AND USED IN THE ESTIMATION OF MINERAL RESERVES POST RETIREMENT BENEäTS UNDER DEäNED BENEäT > RENEWAL OF MINING LICENCES ARRANGEMENTS RELATING TO EMPLOYEE SERVICE > UNFORESEEN OPERATIONAL ISSUES AT MINE DURING THE PERIOD ARE CHARGED TO THE INCOME SITES AND STATEMENT !NY ACTUARIAL GAINS AND LOSSES > ADVERSE CHANGES IN CAPITAL OPERATING MINING WHICH CAN ARISE FROM DIFFERENCES BETWEEN PROCESSING AND RECLAMATION COSTS DISCOUNT EXPECTED AND ACTUAL OUTCOMES OR CHANGES RATES AND FOREIGN EXCHANGE RATES USED TO IN ACTUARIAL ASSUMPTIONS ARE RECOGNISED DETERMINE MINERAL RESERVES IMMEDIATELY IN THE #ONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 4HE MAJORITY OF OTHER TANGIBLE ASSETS ARE DEPRECIATED ON A STRAIGHT LINE BASIS OVER THEIR !SSUMPTIONS IN RESPECT OF THE EXPECTED USEFUL ECONOMIC LIVES -ANAGEMENT REVIEWS COSTS ARE SET AFTER CONSULTATION WITH QUALIäED THE APPROPRIATENESS OF ASSETSÓ USEFUL ECONOMIC ACTUARIES 7HILE MANAGEMENT BELIEVES THE LIVES AT LEAST ANNUALLY AND ANY CHANGES COULD ASSUMPTIONS USED ARE APPROPRIATE A CHANGE AFFECT PROSPECTIVE DEPRECIATION RATES AND ASSET IN THE ASSUMPTIONS USED WOULD IMPACT THE CARRYING VALUES EARNINGS OF THE 'ROUP GOING FORWARD
Impairment of assets 4HE 'ROUP REVIEWS THE CARRYING AMOUNTS OF ITS TANGIBLE AND INTANGIBLE ASSETS TO DETERMINE WHETHER THERE IS ANY INDICATION THAT THOSE ASSETS ARE IMPAIRED )N MAKING THE ASSESSMENT FOR IMPAIRMENT ASSETS THAT DO NOT GENERATE INDEPENDENT CASH åOWS ARE ALLOCATED TO AN APPROPRIATE CASH GENERATING UNIT #'5 4HE RECOVERABLE AMOUNT OF AN ASSET OR #'5 IS MEASURED AS THE HIGHER OF FAIR VALUE LESS COSTS TO SELL AND VALUE IN USE -ANAGEMENT NECESSARILY APPLIES ITS JUDGEMENT IN ALLOCATING ASSETS THAT DO NOT GENERATE INDEPENDENT CASH åOWS TO APPROPRIATE #'5S AND ALSO IN ESTIMATING THE TIMING AND VALUE OF UNDERLYING CASH åOWS WITHIN THE VALUE IN USE CALCULATION &ACTORS WHICH COULD IMPACT UNDERLYING CASH åOWS INCLUDE > #OMMODITY PRICES AND EXCHANGE RATES > 4IMELINES OF GRANTING OF LICENCES AND PERMITS > #APITAL AND OPERATING EXPENDITURE AND > !VAILABLE RESERVES AND RESOURCES
Anglo American plc Annual Report 2009 67 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Governance The Board
1 2
7 89
% %XECUTIVE DIRECTOR 1. Sir John Parker N 3. René Médori E . .ON EXECUTIVE DIRECTOR &2%NG $3C %NG 3C$ (ON $3C (ON $OCTORATE IN %CONOMICS $5NIV (ON &2).! WAS APPOINTED TO THE "OARD ON *UNE JOINED THE "OARD AS A NON EXECUTIVE BECOMING äNANCE DIRECTOR ON 3EPTEMBER DIRECTOR ON *ULY AND BECAME CHAIRMAN 2EN¤ -¤DORI IS A MEMBER OF '-# AND %X#O AND OF !NGLO !MERICAN PLC ON !UGUST CHAIRMAN OF THE )NVESTMENT #OMMITTEE (E IS (E SUCCEEDED 3IR -ARK -OODY 3TUART WHO A FORMER äNANCE DIRECTOR OF 4HE "/# 'ROUP PLC RETIRED FROM THE "OARD AFTER SEVEN YEARS AS AND IS A NON EXECUTIVE DIRECTOR OF 3COTTISH CHAIRMAN 3IR *OHN IS ALSO CHAIRMAN OF THE AND 3OUTHERN %NERGY PLC $E "EERS AND .OMINATION #OMMITTEE AND IS A MEMBER OF THE !NGLO 0LATINUM ,IMITED 33$ #OMMITTEE (E IS CHAIRMAN OF .ATIONAL 'RID PLC A NON EXECUTIVE DIRECTOR OF #ARNIVAL 4. David Challen CBE N #ORPORATION %!$3 AND DEPUTY CHAIRMAN OF -! -"! $0 7ORLD (E IS A FORMER JOINT CHAIRMAN OF JOINED THE "OARD ON 3EPTEMBER THE -ONDI 'ROUP AND RECENTLY STEPPED DOWN AND WAS APPOINTED AS THE SENIOR INDEPENDENT AS SENIOR NON EXECUTIVE DIRECTOR #HAIR OF NON EXECUTIVE DIRECTOR IN !PRIL (E THE #OURT OF THE "ANK OF %NGLAND 3IR *OHN IS IS CHAIRMAN OF THE !UDIT #OMMITTEE AND A A &ELLOW OF THE 2OYAL !CADEMY OF %NGINEERING MEMBER OF THE .OMINATION AND 2EMUNERATION #HANCELLOR OF THE 5NIVERSITY OF 3OUTHAMPTON #OMMITTEES $AVID #HALLEN IS CURRENTLY VICE AND A 6ISITING &ELLOW OF THE 5NIVERSITY OF CHAIRMAN OF #ITIGROUP %UROPEAN )NVESTMENT /XFORD (E IS A RECIPIENT OF HONORARY DOCTORATES "ANK SENIOR NON EXECUTIVE DIRECTOR OF 3MITHS FROM A NUMBER OF UNIVERSITIES IN THE 5+ AND 'ROUP PLC AND A NON EXECUTIVE DIRECTOR OF THE )RELAND 3IR *OHN IS BEING PROPOSED FOR ELECTION #LASSICAL /PERA #OMPANY 0REVIOUSLY HE WAS AT THE !'- ON !PRIL CHAIRMAN OF * (ENRY 3CHRODER #O ,IMITED WHERE HE SPENT MOST OF HIS PROFESSIONAL CAREER 2. Cynthia Carroll E (E IS CURRENTLY DEPUTY CHAIRMAN OF THE 5+ÓS -3C -"! 4AKEOVER 0ANEL WAS APPOINTED CHIEF EXECUTIVE ON -ARCH HAVING JOINED THE "OARD ON 5. Sir C K Chow N *ANUARY #YNTHIA #ARROLL CHAIRS THE $%NG (ON #%NG &2%NG (ON&(+)% &)#HEM% 'ROUP -ANAGEMENT #OMMITTEE '-# AND WAS APPOINTED TO THE "OARD ON !PRIL THE %XECUTIVE #OMMITTEE %X#O AND SITS AND IS A MEMBER OF THE .OMINATION AND ON THE 33$ #OMMITTEE 3HE IS THE FORMER 2EMUNERATION #OMMITTEES (E IS CURRENTLY PRESIDENT AND CHIEF EXECUTIVE OFäCER OF CHIEF EXECUTIVE OFäCER OF THE -42 #ORPORATION !LCANÓS 0RIMARY -ETALS 'ROUP AND A FORMER IN (ONG +ONG A POSITION HE HAS HELD SINCE DIRECTOR OF !NGLO'OLD !SHANTI ,IMITED AND THE $ECEMBER (E WAS FORMERLY CHIEF 3ARA ,EE #ORPORATION 3HE IS A NON EXECUTIVE EXECUTIVE OF "RAMBLES )NDUSTRIES AND '+. 0,# DIRECTOR OF "0 PLC !NGLO 0LATINUM ,IMITED AND 0RIOR TO JOINING '+. 0,# HE WORKED FOR THE $E "EERS #YNTHIA #ARROLL IS BEING PROPOSED "/# 'ROUP 0,# FOR YEARS BECOMING CHIEF FOR RE ELECTION AT THE !'- ON !PRIL EXECUTIVE OF ITS 'ASES $IVISION AND JOINING ITS BOARD IN (E IS THE NON EXECUTIVE CHAIRMAN OF 3TANDARD #HARTERED "ANK (ONG +ONG ,IMITED
68 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 3 4 5 6
10 11 12 13
6. Dr Chris Fay CBE N 2ESEARCH #OUNCIL AND A MEMBER OF THE 5+ 12. Jack Thompson N "3C 0H$ &2%NG &23% &)#% &%) #OUNCIL FOR 3CIENCE AND 4ECHNOLOGY !FTER "3C 0H$ Governance JOINED THE "OARD ON !PRIL SERVING THREE THREE YEAR TERMS ON THE "OARD JOINED THE "OARD ON .OVEMBER (E IS CHAIRMAN OF THE 33$ #OMMITTEE AND 3IR 2OB WILL BE STEPPING DOWN AT THE CONCLUSION AND IS A MEMBER OF THE 33$ #OMMITTEE (E IS A MEMBER OF THE !UDIT #OMMITTEE (E IS A OF THE !'- ON !PRIL CURRENTLY A NON EXECUTIVE DIRECTOR OF #ENTERRA NON EXECUTIVE CHAIRMAN OF "RIGHTSIDE 'ROUP PLC 'OLD )NC #ENTURY !LUMINUM #O -OLYCORP )OäNA PLC AND 3TENA )NTERNATIONAL 3RL #HRIS &AY 9. Nicky Oppenheimer N -INERALS ,,# AND 4IDEWATER )NC (E WAS IS A FORMER NON EXECUTIVE DIRECTOR OF "!! PLC -! PREVIOUSLY CHAIRMAN AND #%/ OF (OMESTAKE AND A FORMER CHAIRMAN OF 3HELL 5+ AND OF THE JOINED THE "OARD ON -ARCH -INING #O VICE CHAIRMAN OF "ARRICK 'OLD #ORP "RITISH GOVERNMENTÓS !DVISORY #OMMITTEE ON .ICKY /PPENHEIMER JOINED THE 'ROUP IN AND HAS SERVED ON THE BOARDS OF 0HELPS $ODGE "USINESS AND THE %NVIRONMENT !FTER SERVING AND SUBSEQUENTLY BECAME AN EXECUTIVE #ORP 2INKER 'ROUP ,TD AND 3TILLWATER -INING THREE THREE YEAR TERMS ON THE "OARD #HRIS &AY DIRECTOR AND A DEPUTY CHAIRMAN OF !NGLO !MERICAN *ACK 4HOMPSON IS BEING PROPOSED FOR ELECTION WILL BE STEPPING DOWN AT THE CONCLUSION OF THE #ORPORATION OF 3OUTH !FRICA ,IMITED (E BECAME AT THE !'- ON !PRIL !'- ON !PRIL DEPUTY CHAIRMAN OF $E "EERS #ONSOLIDATED IN AND HAS BEEN CHAIRMAN OF $E "EERS SINCE 13. Peter Woicke N 7. Sir Philip Hampton N -R /PPENHEIMER IS BEING PROPOSED -"! -! !#! -"! FOR RE ELECTION AT THE !'- ON !PRIL JOINED THE "OARD ON *ANUARY AND JOINED THE "OARD ON .OVEMBER IS A MEMBER OF THE .OMINATION 2EMUNERATION (E IS A MEMBER OF THE !UDIT AND 2EMUNERATION 10. Ray O’Rourke N AND 33$ #OMMITTEES &ROM TO *ANUARY #OMMITTEES 3IR 0HILIP IS CHAIRMAN OF 4HE 2OYAL &)#% HE WAS CHIEF EXECUTIVE OFäCER OF THE "ANK OF 3COTLAND AND HAS RECENTLY STEPPED DOWN JOINED THE "OARD ON $ECEMBER )NTERNATIONAL &INANCE #ORPORATION )&# (E AS CHAIRMAN OF * 3AINSBURY PLC A POSITION HE 2AY /Ó2OURKE FOUNDED THE /Ó2OURKE 'ROUP WAS ALSO A MANAGING DIRECTOR OF THE 7ORLD HAD HELD SINCE 0REVIOUSLY HE WAS GROUP IN HAVING BEGUN HIS CAREER AT +IER AND "ANK 0RIOR TO JOINING THE )&# 0ETER 7OICKE HELD äNANCE DIRECTOR OF ,LOYDS 43" 'ROUP PLC "4 * -URPHY 3ONS )N THE /Ó2OURKE 'ROUP NUMEROUS POSITIONS OVER NEARLY YEARS WITH 'ROUP PLC "' 'ROUP PLC "RITISH 'AS PLC "RITISH ACQUIRED *OHN ,AING TO FORM ,AING /Ó2OURKE NOW *0 -ORGAN (E IS CURRENTLY CHAIR OF THE TRUSTEES 3TEEL PLC AN EXECUTIVE DIRECTOR OF ,AZARDS AND %UROPEÓS LARGEST PRIVATELY OWNED CONSTRUCTION OF THE !SHESI 5NIVERSITY &OUNDATION A MEMBER A NON EXECUTIVE DIRECTOR OF 2-# 'ROUP PLC COMPANY OF WHICH 2AY /Ó2OURKE IS CHAIRMAN AND OF THE 3AUDI !RAMCO BOARD AND A MEMBER OF THE 3IR 0HILIP IS THE FORMER CHAIRMAN OF 5+ &INANCIAL CHIEF EXECUTIVE -R /Ó2OURKE IS BEING PROPOSED )NSTITUTE FOR (UMAN 2IGHTS AND "USINESS BOARD )NVESTMENTS ,IMITED THE COMPANY ESTABLISHED FOR ELECTION AT THE !'- ON !PRIL TO MANAGE THE "RITISH GOVERNMENTÓS SHAREHOLDING 11. Dr Mamphela Ramphele N IN BANKS SUBSCRIBING TO ITS RECAPITALISATION FUND 0H$ "#OMM -" #H " AND HAS ALSO BEEN A NON EXECUTIVE DIRECTOR OF "ELGACOM 3! 3IR 0HILIP IS BEING PROPOSED FOR JOINED THE "OARD ON !PRIL 3HE ELECTION AT THE !'- ON !PRIL IS A MEMBER OF THE .OMINATION AND 33$ #OMMITTEES -AMPHELA 2AMPHELE IS THE 8. Sir Rob Margetts CBE N EXECUTIVE CHAIR OF ,ETSEMA #IRCLE A SPECIALIST "! &2%NG TRANSFORMATION ADVISORY COMPANY AND THE JOINED THE "OARD ON -ARCH AND CHAIR OF THE 4ECHNOLOGY )NNOVATION !GENCY IS CHAIRMAN OF THE 2EMUNERATION #OMMITTEE OF 3OUTH !FRICA 3HE IS A NON EXECUTIVE DIRECTOR (E IS CHAIRMAN OF ,EGAL 'ENERAL 'ROUP 0LC OF -EDICLINIC AND "USINESS 0ARTNERS 3! A %NSUS ,IMITED /RDNANCE 3URVEY AND THE %NERGY TRUSTEE OF THE .ELSON -ANDELA AND 2OCKEFELLER 4ECHNOLOGIES )NSTITUTE (E IS ALSO A DIRECTOR OF &OUNDATIONS AND AN ADVISER TO THE 6EOLIA &ALCK 2ENEWABLES AND .EOCHIMIKI 3! (E WAS )NSTITUTE 3HE WAS FORMERLY CO CHAIR OF THE FORMERLY CHAIRMAN OF 4HE "/# 'ROUP PLC AND 'LOBAL #OMMISSION ON )NTERNATIONAL -IGRATION VICE CHAIRMAN OF )#) 0,# 3IR 2OB WAS ALSO A 7ORLD "ANK MANAGING DIRECTOR AND CHAIRMAN OF THE 5+ .ATURAL %NVIRONMENT VICE CHANCELLOR AT THE 5NIVERSITY OF #APE 4OWN
Anglo American plc Annual Report 2009 69 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Governance Executive management
The Company has two principal 12345 committees. The Group Management Committee (GMC) is responsible for formulating strategy (for discussion and approval by the Board), monitoring 67 8 9 10 performance and managing the Group’s portfolio. The Executive Committee (ExCo) is responsible for developing and implementing Group-wide policies and programmes and for the adoption 11 12 13 14 of best practice standards across the Group.
GMC and ExCo members ExCo members 1. Cynthia Carroll 6. Walter De Simoni 11. Neville Nicolau "4 -INING %NGINEERING -"! 3EE PAGE FOR BIOGRAPHICAL DETAILS "3C -INING %NG IS #%/ OF .ICKEL 7ALTER $E 3IMONI JOINED IS #%/ 0LATINUM (E JOINED THE !NGLO 2. René Médori THE !NGLO !MERICAN 'ROUP IN (E WAS !MERICAN 'ROUP IN *ANUARY SUBSEQUENTLY 3EE PAGE FOR BIOGRAPHICAL DETAILS APPOINTED PRESIDENT OF !NGLO "ASE -ETALS "RAZIL WORKING IN THE 'OLD AND 5RANIUM $IVISION AT IN (E BECAME !NGLO !MERICAN "RAZIL #%/ DIFFERENT MANAGERIAL LEVELS IN ALL THE MAJOR 3. Brian Beamish IN AND #%/ OF .ICKEL IN /CTOBER OPERATING AREAS IN 3OUTH !FRICA )N "3C -ECHANICAL %NGINEERING HE WAS THE TECHNICAL DIRECTOR OF !NGLO'OLDÓS IS 'ROUP DIRECTOR MINING AND TECHNOLOGY 7. Seamus French 3OUTH !MERICAN OPERATIONS BASED IN "RAZIL (E HELD THE POSITION OF CHIEF EXECUTIVE OF "ASE " %NG #HEMICAL (E BECAME CHIEF OPERATING OFäCER !FRICA -ETALS BETWEEN AND AND HAS MORE IS #%/ OF -ETALLURGICAL #OAL AND JOINED THE OF !NGLO'OLD !SHANTI IN -AY AND WAS THAN YEARS OF MINING INDUSTRY EXPERIENCE 'ROUP AS REGIONAL #%/ OF !NGLO #OAL !USTRALIA APPOINTED #%/ OF !NGLO 0LATINUM IN *UNE IN VARIOUS COMMODITIES AND GEOGRAPHIES (E IN (E WAS PREVIOUSLY ON THE "(0 "ILLITON SPENT YEARS AT !NGLO 0LATINUM INCLUDING %XECUTIVE #OMMITTEE AS GLOBAL VICE PRESIDENT 12. Duncan Wanblad FOUR YEARS AS EXECUTIVE DIRECTOR OPERATIONS BUSINESS EXCELLENCE FROM "3C %NG -ECH '$% %NG -ANAGEMENT BETWEEN AND IS 'ROUP DIRECTOR /THER -INING AND 8. Chris Griffith )NDUSTRIAL (E JOINED *OHANNESBURG #ONSOLIDATED 4. Mervyn Walker " %NG -INING (ONS 0R %NG )NVESTMENT #OMPANY ,IMITED IN $UNCAN -! /XON IS #%/ OF +UMBA )RON /RE (E HAS BEEN 7ANBLAD WAS APPOINTED TO THE BOARD OF !NGLO IS 'ROUP DIRECTOR OF HUMAN RESOURCES WITH !NGLO !MERICAN FOR ALMOST TWO DECADES 0LATINUM AND VARIOUS OF ITS SUBSIDIARIES IN AND COMMUNICATIONS (E IS A SOLICITOR BY (E WAS !NGLO 0LATINUMÓS HEAD OF OPERATIONS Ð BECOMING THE EXECUTIVE DIRECTOR IN CHARGE OF TRAINING AND JOINED !NGLO !MERICAN IN FOR JOINT VENTURES BEFORE BEING APPOINTED PROJECTS AND ENGINEERING (E WAS APPOINTED FROM -ONDI WHERE HE WAS GROUP (2 AND #%/ OF +UMBA )RON /RE IN JOINT ACTING CHIEF EXECUTIVE OF !NGLO 0LATINUM IN LEGAL DIRECTOR -ERVYN 7ALKER SPENT YEARS !UGUST BEFORE TAKING OVER AS #%/ COPPER AT "RITISH !IRWAYS WHERE HE HELD A SERIES 9. John MacKenzie OPERATIONS OF !NGLO !MERICAN IN -AY OF SENIOR ROLES INCLUDING (2 DIRECTOR LEGAL -3C %NG -", DIRECTOR DIRECTOR OF PURCHASING AND DIRECTOR OF IS #%/ OF #OPPER (E JOINED THE !NGLO 13. Stephan Weber 5+ AIRPORTS (E IS ALSO NON EXECUTIVE CHAIRMAN !MERICAN 'OLD AND 5RANIUM $IVISION IN *ANUARY -3C OF PENSION SCHEMES FOR !-%# PLC AND WAS PROMOTED TO VICE PRESIDENT OF IS #%/ OF )RON /RE "RAZIL (E WORKED FOR !NGLO #OAL 3OUTH !MERICAN /PERATIONS IN 2IO 4INTO FROM TO SERVING ON ITS 5. David Weston )N HE BECAME GENERAL MANAGER )RON /RE %XECUTIVE #OMMITTEE FROM TO -"! "3C %NG OF "ASE -ETALSÓ -INERA ,OMA DE .¨QUEL 3TEPHAN 7EBER JOINED !NGLO !MERICAN IN IS 'ROUP DIRECTOR BUSINESS PERFORMANCE OPERATION IN 6ENEZUELA *OHN -AC+ENZIE WAS *ANUARY AS CHIEF TECHNICAL OFäCER WITHIN AND PROJECTS (E SPENT YEARS WITH 3HELL AND APPOINTED #%/ OF "ASE -ETALSÓ :INC OPERATIONS !NGLO &ERROUS -ETALS AND WAS APPOINTED #%/ OF WAS PRESIDENT 3HELL #ANADA 0RODUCTS BEFORE IN .OVEMBER BECOMING #%/ OF #OPPER OF )RON /RE "RAZIL IN /CTOBER JOINING THE !NGLO !MERICAN 'ROUP IN AS IN /CTOBER CHIEF EXECUTIVE OF )NDUSTRIAL -INERALS 4ARMAC 14. Peter Whitcutt $AVID 7ESTON SERVED AS THE 'ROUPÓS TECHNICAL 10. Norman Mbazima "#OM (ONS #! 3! -"! DIRECTOR BETWEEN !PRIL AND /CTOBER (E &##! IS 'ROUP DIRECTOR STRATEGY AND BUSINESS IS ALSO A NON EXECUTIVE DIRECTOR AT )NTERNATIONAL IS #%/ OF 4HERMAL #OAL (E JOINED THE DEVELOPMENT (E JOINED !NGLO !MERICAN IN 0OWER PLC !NGLO !MERICAN 'ROUP IN !PRIL WHERE HE WITHIN THE #ORPORATE &INANCE DIVISION BEGAN HIS CAREER AT +ONKOLA #OPPER -INES 0,# 0ETER 7HITCUTT WORKED ON THE MERGER OF (E WAS PREVIOUSLY GLOBAL CHIEF äNANCIAL OFäCER -INORCO THE LISTING OF !NGLO !MERICAN IN FOR !NGLO #OAL AND BECAME EXECUTIVE DIRECTOR AND THE SUBSEQUENT UNWINDING OF OF äNANCE AT !NGLO 0LATINUM IN *UNE AND THE CROSS HOLDING WITH $E "EERS (E WAS LATER STEPPED IN AS JOINT ACTING CHIEF EXECUTIVE APPOINTED CHIEF äNANCIAL OFäCER OF "ASE -ETALS .ORMAN -BAZIMA WAS APPOINTED #%/ OF IN !UGUST AND TO HIS PRESENT POSITION IN 3CAW -ETALS IN -AY AND WAS APPOINTED /CTOBER #%/ OF 4HERMAL #OAL IN /CTOBER
70 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Directors’ report
4HE DIRECTORS HAVE PLEASURE IN SUBMITTING THE IN $ECEMBER AS WELL AS THE FACILITIES OF STATUTORY äNANCIAL STATEMENTS OF THE 'ROUP FOR MILLION RELATING TO !MAP )N ADDITION THE YEAR ENDED $ECEMBER THE 'ROUP HAS UNDRAWN RAND FACILITIES EQUIVALENT TO BILLION WITH DAY MATURITIES WHICH Principal activities ROLL FORWARD AUTOMATICALLY ON A DAILY BASIS UNLESS NOTICE IS SERVED 4HE DIRECTORS HAVE and business review CONSIDERED THE 'ROUPÓS CASH åOW FORECASTS FOR !NGLO !MERICAN PLC IS ONE OF THE WORLDÓS LARGEST THE PERIOD TO THE END OF -ARCH 4HE "OARD MINING COMPANIES IS HEADQUARTERED IN THE 5+ IS SATISäED THAT THE 'ROUPÓS FORECASTS AND AND LISTED ON THE ,ONDON AND *OHANNESBURG PROJECTIONS TAKING ACCOUNT OF REASONABLY STOCK EXCHANGES !NGLO !MERICANÓS PORTFOLIO OF POSSIBLE CHANGES IN TRADING PERFORMANCE AND MINING BUSINESSES SPANS PRECIOUS COMMODITIES THE INTENDED REäNANCING OF MATURING FACILITIES Ð IN WHICH IT IS A GLOBAL LEADER IN BOTH PLATINUM SHOW THAT THE 'ROUP WILL BE ABLE TO OPERATE AND DIAMONDS BASE METALS Ð COPPER AND NICKEL WITHIN THE LEVEL OF ITS CURRENT FACILITIES FOR THE AND BULK COMMODITIES Ð IRON ORE METALLURGICAL FORESEEABLE FUTURE &OR THIS REASON THE 'ROUP AND THERMAL COAL 4HE #OMPANYÓS MINING CONTINUES TO ADOPT THE GOING CONCERN BASIS AS OPERATIONS AND EXTENSIVE PIPELINE OF GROWTH INTERPRETED BY THE 'UIDANCE ON 'OING #ONCERN PROJECTS ARE LOCATED IN SOUTHERN !FRICA 3OUTH AND LIQUIDITY RISK 'UIDANCE FOR DIRECTORS OF 5+ !MERICA !USTRALIA .ORTH !MERICA AND !SIA COMPANIES PUBLISHED IN /CTOBER -ORE DETAILED INFORMATION ABOUT THE 'ROUPÓS IN PREPARING ITS äNANCIAL STATEMENTS BUSINESSES ACTIVITIES AND äNANCIAL PERFORMANCE IS INCORPORATED INTO THIS REPORT BY REFERENCE Dividends AND CAN BE FOUND IN THE #HAIRMANÓS AND 4HE #OMPANY DID NOT DECLARE AN INTERIM OR #HIEF EXECUTIVEÓS STATEMENTS ON PAGES TO RECOMMEND A äNAL DIVIDEND FOR Governance AND THE /PERATING AND äNANCIAL REVIEW ON PAGES TO 4HE #ORPORATE GOVERNANCE STATEMENT Share capital IS ON PAGES TO AND IS INCORPORATED IN THIS $IRECTORSÓ REPORT BY REFERENCE 4HE #OMPANYÓS AUTHORISED AND ISSUED SHARE CAPITAL AS AT $ECEMBER TOGETHER WITH DETAILS OF SHARE ALLOTMENTS AND PURCHASES OF Going concern OWN SHARES DURING THE YEAR IS SET OUT IN NOTE 4HE äNANCIAL POSITION OF THE 'ROUP ITS CASH ON PAGES TO åOWS LIQUIDITY POSITION AND BORROWING FACILITIES ARE SET OUT IN THE 'ROUP äNANCIAL PERFORMANCE 4HE #OMPANY WAS AUTHORISED BY SHAREHOLDERS REVIEW ON PAGES TO )N ADDITION DETAIL AT THE !'- HELD ON !PRIL TO PURCHASE IS GIVEN ON THE 'ROUPÓS POLICY ON MANAGING ITS OWN SHARES IN THE MARKET UP TO A MAXIMUM COUNTERPARTY AND LIQUIDITY RISK IN THE 0RINCIPAL OF OF THE ISSUED SHARE CAPITAL 4HIS 2ISKS AND 5NCERTAINTIES SECTION ON PAGES AUTHORITY WILL EXPIRE AT THE !'- AND IN TO WITH DETAILS OF THE #OMPANYÓS POLICY ACCORDANCE WITH USUAL PRACTICE A RESOLUTION TO ON CAPITAL RISK MANAGEMENT BEING SET OUT RENEW IT FOR ANOTHER YEAR WILL BE PROPOSED IN NOTE TO THE äNANCIAL STATEMENTS 4HE 'ROUPÓS GROSS DEBT AT $ECEMBER WAS Material shareholdings BILLION REPRESENTING A GEARING LEVEL OF $ETAILS OF INTERESTS OF OR MORE IN THE AROUND $ETAILS OF BORROWINGS AND ORDINARY SHARE CAPITAL OF THE #OMPANY ARE FACILITIES ARE SET OUT IN NOTES AND AND SHOWN WITHIN THE 3HAREHOLDER INFORMATION NET DEBT IS SET OUT IN NOTE SECTION OF THE .OTICE OF -EETING BOOKLET /VER THE LAST MONTHS THE 'ROUP HAS TAKEN A SERIES OF MEASURES TO STRENGTHEN THE BALANCE Directors SHEET AND PROVIDE äNANCIAL åEXIBILITY PRINCIPALLY "IOGRAPHICAL DETAILS OF THE DIRECTORS CURRENTLY Ú ISSUED A TWO TRANCHE BOND IN THE 53 MARKET SERVING ON THE "OARD ARE GIVEN ON PAGES TOTALLING BILLION AND $ETAILS OF DIRECTORSÓ INTERESTS IN SHARES AND SHARE OPTIONS OF THE #OMPANY CAN BE FOUND Ú ISSUED A BILLION CONVERTIBLE BOND IN THE 2EMUNERATION REPORT ON PAGES TO Ú ISSUED TWO %UROBONDS TOTALLING BILLION 3IR *OHN 0ARKER WAS APPOINTED TO THE "OARD ON AND *ULY AND SUCCEEDED 3IR -ARK -OODY Ú GENERATED BILLION OF CASH PROCEEDS FROM THE 3TUART AS CHAIRMAN ON !UGUST 3IR 0HILIP SALE OF THE REMAINING INVESTMENTS IN !NGLO'OLD (AMPTON *ACK 4HOMPSON AND 2AY /Ó2OURKE !SHANTI 4ONGAAT (ULETT AND (ULAMIN JOINED THE "OARD ON AND .OVEMBER AND $ECEMBER RESPECTIVELY !LL FOUR !T $ECEMBER !NGLO !MERICAN HAD DIRECTORS WILL BE PROPOSED FOR ELECTION AT THE UNDRAWN BANK FACILITIES OF BILLION CASH !'- ON !PRIL 3IR 2OB -ARGETTS AND DEPOSITS OF BILLION AND COMMERCIAL PAPER #HRIS &AY WILL RETIRE FROM THE "OARD AT THE MATURING THROUGHOUT OF MILLION CONCLUSION OF THE !'- ON !PRIL &RED !NGLO !MERICANÓS ONLY SIGNIäCANT DEBT FACILITY 0HASWANA RESIGNED FROM THE BOARD ON *ANUARY FOR THE PERIOD TO -ARCH IS A a MILLION +AREL 6AN -IERT SADLY PASSED AWAY ON APPROXIMATELY MILLION %UROBOND MATURING *UNE
Anglo American plc Annual Report 2009 71 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Governance Directors’ report continued
Sustainable development Employment and other policies !S IN PREVIOUS YEARS NUMEROUS EMPLOYEE COMMUNICATION PRESENTATIONS AND WORKSHOPS 4HE 2EPORT TO 3OCIETY WILL BE AVAILABLE 4HE 'ROUPÓS KEY OPERATING BUSINESSES ARE TOOK PLACE AT 'ROUP LEVEL INCLUDING A SERIES OF FROM THE #OMPANY IN !PRIL 4HIS REPORT EMPOWERED TO MANAGE WITHIN THE CONTEXT OF WORKSHOPS WORLDWIDE TO EMBED THE 'ROUPÓS SIX FOCUSES ON THE SAFETY SUSTAINABLE DEVELOPMENT THE DIFFERENT LEGISLATIVE AND SOCIAL DEMANDS OF CORE VALUES THE TRAINING OF OVER MANAGERS HEALTH AND ENVIRONMENTAL PERFORMANCE OF THE THE DIVERSE COUNTRIES IN WHICH THOSE BUSINESSES ON THE IMPLEMENTATION OF THE 3OCIO %CONOMIC 'ROUPÓS MANAGED OPERATIONS ITS PERFORMANCE OPERATE AND SUBJECT TO THE STANDARDS EMBODIED !SSESSMENT 4OOLBOX AND THREE MANAGEMENT WITH REGARD TO THE #OMPANYÓS 'OOD #ITIZENSHIP IN !NGLO !MERICANÓS 'OOD #ITIZENSHIP /UR DEVELOPMENT PROGRAMMES 4HE 'ROUP HAS A WELL /UR "USINESS 0RINCIPLES AND THE OPERATIONAL "USINESS 0RINCIPLES )N AFTER AN EXTENSIVE USED ENTERPRISE INFORMATION PORTAL THE3OURCE DIMENSIONS OF ITS SOCIAL PROGRAMMES REVIEW THE "USINESS 0RINCIPLES WERE UPDATED WHICH SEEKS TO ENSURE THAT EMPLOYEES ARE 7ITHIN ALL THE 'ROUPÓS BUSINESSES THE SAFE AND REGULARLY UPDATED ON DEVELOPMENTS WITHIN THE Payment of suppliers EFFECTIVE PERFORMANCE OF EMPLOYEES AND THE 'ROUP AND FEEDBACK IS ENCOURAGED !NGLO !MERICAN PLC IS A HOLDING COMPANY AND MAINTENANCE OF POSITIVE EMPLOYEE RELATIONS )N ADDITION THE #OMPANY REGULARLY PUBLISHES AS SUCH HAS NO MATERIAL TRADE CREDITORS ARE OF FUNDAMENTAL IMPORTANCE -ANAGERS ARE /PTIMA AVAILABLE ON THE #OMPANYÓS WEBSITE CHARGED WITH ENSURING THAT THE FOLLOWING KEY "USINESSES ACROSS THE 'ROUP ARE RESPONSIBLE FOR AND !NGLO7ORLD WHICH CONTAIN ITEMS OF NEWS PRINCIPLES ARE UPHELD AGREEING THE TERMS UNDER WHICH TRANSACTIONS CURRENT AFFAIRS AND INFORMATION RELEVANT TO WITH THEIR SUPPLIERS ARE CONDUCTED REåECTING Ú ADHERENCE TO NATIONAL LEGAL STANDARDS ON 'ROUP EMPLOYEES LOCAL AND INDUSTRY NORMS AND GROUP PURCHASING EMPLOYMENT AND WORKPLACE RIGHTS AT ALL TIMES ARRANGEMENTS WHICH MAY HAVE BEEN MADE Ú ADOPTION OF FAIR LABOUR PRACTICES Charitable donations WITH A SUPPLIER 4HE 'ROUP VALUES ITS SUPPLIERS $URING THE YEAR !NGLO !MERICAN ITS AND RECOGNISES THE BENEäTS TO BE DERIVED FROM Ú PROHIBITION OF CHILD LABOUR SUBSIDIARIES AND THE !NGLO !MERICAN 'ROUP MAINTAINING GOOD RELATIONSHIPS WITH THEM Ú PROHIBITION OF INHUMANE TREATMENT OF &OUNDATION MADE DONATIONS FOR CHARITABLE !NGLO !MERICAN ACKNOWLEDGES THE IMPORTANCE EMPLOYEES AND ANY FORM OF FORCED LABOUR PURPOSES OR WIDER SOCIAL INVESTMENTS OF PAYING INVOICES ESPECIALLY THOSE OF SMALL PHYSICAL PUNISHMENT OR OTHER ABUSE AMOUNTING TO MILLION OF PRE BUSINESSES PROMPTLY TAX PROäT OF SUBSIDIARIES AND JOINT VENTURES Ú CONTINUAL PROMOTION OF SAFE AND HEALTHY #HARITABLE DONATIONS OF MILLION WERE MADE WORKING PRACTICES Value of land IN THE 5+ CONSISTING OF PAYMENTS IN RESPECT ,AND IS MAINLY CARRIED IN THE äNANCIAL Ú PROMOTION OF WORKPLACE EQUALITY AND OF EDUCATION SPORT AND YOUTH MILLION STATEMENTS AT COST )T IS NOT PRACTICABLE TO ELIMINATION OF ALL FORMS OF UNFAIR COMMUNITY DEVELOPMENT MILLION ESTIMATE THE MARKET VALUE OF LAND AND MINERAL DISCRIMINATION HEALTH AND ()6!)$3 MILLION RIGHTS SINCE THESE DEPEND ON PRODUCT PRICES ENVIRONMENT MILLION Ú PROVISION OF OPPORTUNITIES FOR EMPLOYEES OVER THE NEXT YEARS OR MORE WHICH WILL VARY ARTS CULTURE AND HERITAGE MILLION TO ENHANCE THEIR WORK RELATED SKILLS AND WITH MARKET CONDITIONS AND OTHER CHARITABLE CAUSES MILLION CAPABILITIES 4HESE äGURES WERE COMPILED WITH REFERENCE Post-balance sheet events Ú RECOGNITION OF THE RIGHT OF OUR EMPLOYEES TO TO THE ,ONDON "ENCHMARKING 'ROUP MODEL FREEDOM OF ASSOCIATION AND FOR DEäNING AND MEASURING SOCIAL INVESTMENT 0OST BALANCE SHEET EVENTS ARE SET OUT IN NOTE SPENDING ! FULLER ANALYSIS OF THE 'ROUPÓS TO THE äNANCIAL STATEMENTS ON PAGE Ú ADOPTION OF FAIR AND APPROPRIATE PROCEDURES SOCIAL INVESTMENT ACTIVITIES CAN BE FOUND IN FOR DETERMINING TERMS AND CONDITIONS OF THE 2EPORT TO 3OCIETY Audit information EMPLOYMENT 4HE DIRECTORS CONäRM THAT SO FAR AS THEY ARE &URTHER THE 'ROUP IS COMMITTED TO TREATING Political donations AWARE THERE IS NO RELEVANT AUDIT INFORMATION EMPLOYEES AT ALL LEVELS WITH RESPECT AND .O POLITICAL DONATIONS WERE MADE DURING OF WHICH THE AUDITORS ARE UNAWARE AND THAT ALL CONSIDERATION TO INVESTING IN THEIR DEVELOPMENT !NGLO !MERICAN HAS AN ESTABLISHED POLICY OF DIRECTORS HAVE TAKEN ALL REASONABLE STEPS TO AND TO ENSURING THAT THEIR CAREERS ARE NOT NOT MAKING DONATIONS TO OR INCURRING EXPENSES MAKE THEMSELVES AWARE OF ANY RELEVANT AUDIT CONSTRAINED BY DISCRIMINATION OR ARBITRARY BARRIERS FOR THE BENEäT OF ANY POLITICAL PARTY IN ANY PART INFORMATION AND TO ESTABLISH THAT THE AUDITORS 4HE "USINESS 0RINCIPLES ARE SUPPLEMENTED BY OF THE WORLD INCLUDING ANY POLITICAL PARTY OR ARE AWARE OF THAT INFORMATION FOUR Õ!NGLO 7AYÖ DOCUMENTS COVERING THE POLITICAL ORGANISATION AS DEäNED IN THE 0OLITICAL SAFETY ENVIRONMENTAL OCCUPATIONAL HEALTH AND 0ARTIES %LECTIONS AND 2EFERENDUMS !CT SOCIAL ASPECTS OF SUSTAINABLE DEVELOPMENT 4HESE SET OUT MORE SPECIäC STANDARDS FOR EACH Annual General Meeting OF THESE SUBJECT AREAS )N A "USINESS 4HE !'- WILL BE HELD ON !PRIL )NTEGRITY POLICY AND MANUAL WERE ALSO LAUNCHED ! SEPARATE BOOKLET ENCLOSED WITH THIS REPORT TO HELP REINFORCE THE #OMPANYÓS LONGSTANDING CONTAINS THE NOTICE CONVENING THE MEETING STANCE OF BANNING THE PAYMENT OR RECEIPT OF TOGETHER WITH A DESCRIPTION OF THE BUSINESS TO BRIBES AND OTHER IMPROPER INDUCEMENTS BE CONDUCTED #OPIES OF THE 'OOD #ITIZENSHIP /UR "USINESS 0RINCIPLES AND THE !NGLO 7AY DOCUMENTS ARE AVAILABLE FROM THE #OMPANY AND MAY BE ACCESSED ON THE #OMPANYÓS WEBSITE WWWANGLOAMERICANCOUK
72 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Additional information 7HERE SHARES ARE HELD BY TRUSTEESNOMINEES Shares in uncertificated form for shareholders IN RESPECT OF THE 'ROUPÓS EMPLOYEE SHARE PLANS $IRECTORS MAY DETERMINE THAT ANY CLASS OF SHARES AND THE VOTING RIGHTS ATTACHED TO SUCH SHARES MAY BE HELD IN UNCERTIäCATED FORM AND TITLE TO 3ET OUT BELOW IS A SUMMARY OF CERTAIN ARE NOT DIRECTLY EXERCISABLE BY THE EMPLOYEES SUCH SHARES MAY BE TRANSFERRED BY MEANS OF A PROVISIONS OF THE #OMPANYÓS CURRENT !RTICLES IT IS THE #OMPANYÓS PRACTICE THAT SUCH RIGHTS ARE RELEVANT SYSTEM OR THAT SHARES OF ANY CLASS SHOULD OF !SSOCIATION THE !RTICLES AND APPLICABLE NOT EXERCISED BY THE RELEVANT TRUSTEENOMINEE CEASE TO BE HELD AND TRANSFERRED 3UBJECT TO THE %NGLISH LAW CONCERNING COMPANIES THE PROVISIONS OF THE #OMPANIES !CT THE #2%34 #OMPANIES !CT THE #OMPANIES !CT 5NDER THE #OMPANIES !CT MEMBERS ARE 2EGULATIONS AND EVERY OTHER STATUTE STATUTORY REQUIRED AS A RESULT OF THE IMPLEMENTATION OF ENTITLED TO APPOINT A PROXY WHO NEED NOT BE INSTRUMENT REGULATION OR ORDER FOR THE TIME BEING THE 4AKEOVERS $IRECTIVE IN %NGLISH LAW 4HIS IS A MEMBER OF THE #OMPANY TO EXERCISE ALL OR IN FORCE CONCERNING COMPANIES AND AFFECTING THE A SUMMARY ONLY AND THE RELEVANT PROVISIONS ANY OF THEIR RIGHTS TO ATTEND AND TO SPEAK AND #OMPANY TOGETHER THE 3TATUTES THE DIRECTORS OF THE !RTICLES OR THE #OMPANIES !CT SHOULD VOTE ON THEIR BEHALF AT A GENERAL MEETING OR MAY DETERMINE THAT ANY CLASS OF SHARES HELD ON BE CONSULTED IF FURTHER INFORMATION IS REQUIRED CLASS MEETING ! MEMBER MAY APPOINT MORE THE BRANCH REGISTER OF MEMBERS OF THE #OMPANY #ERTAIN AMENDMENTS TO THE !RTICLES WILL BE THAN ONE PROXY IN RELATION TO A GENERAL MEETING RESIDENT IN 3OUTH !FRICA OR ANY OTHER OVERSEAS PROPOSED AT THE !'- TO BE HELD ON !PRIL OR CLASS MEETING PROVIDED THAT EACH PROXY IS BRANCH REGISTER OF THE MEMBERS OF THE #OMPANY $ETAILS ARE SET OUT IN THE ENCLOSED NOTICE APPOINTED TO EXERCISE THE RIGHTS ATTACHED TO A MAY BE HELD IN UNCERTIäCATED FORM IN ACCORDANCE OF THE !'- #OPIES OF THE #OMPANYÓS !RTICLES DIFFERENT SHARE OR SHARES HELD BY THAT MEMBER WITH ANY SYSTEM OUTSIDE THE 5+ WHICH ENABLES MARKED UP TO SHOW THE PROPOSED AMENDMENTS ! MEMBER THAT IS A CORPORATION MAY APPOINT TITLE TO SUCH SHARES TO BE EVIDENCED AND TRANSFERRED ARE AVAILABLE BY APPLICATION TO THE #OMPANY ONE OR MORE INDIVIDUALS TO ACT ON ITS BEHALF WITHOUT A WRITTEN INSTRUMENT AND WHICH IS A 3ECRETARY AT THE 2EGISTERED /FäCE AT A 'ENERAL -EETING OR CLASS MEETINGS AS A CORPORATE REPRESENTATIVE 4HE DEBATE AROUND RELEVANT SYSTEM 4HE PROVISIONS OF THE !RTICLES Dividends and distributions S OF THE #OMPANIES !CT HAS BEEN RESOLVED SHALL NOT APPLY TO SHARES OF ANY CLASS WHICH ARE IN SO THAT WHERE A SHAREHOLDER APPOINTS MORE UNCERTIäCATED FORM TO THE EXTENT THAT THE !RTICLES 3UBJECT TO THE PROVISIONS OF THE #OMPANIES !CT THAN ONE CORPORATE REPRESENTATIVE IN RESPECT ARE INCONSISTENT WITH THE HOLDING OF SHARES OF THAT
THE #OMPANY MAY BY ORDINARY RESOLUTION FROM Governance OF ITS SHAREHOLDING BUT IN RESPECT OF DIFFERENT CLASS IN UNCERTIäCATED FORM THE TRANSFER OF TITLE TO TIME TO TIME DECLARE DIVIDENDS NOT EXCEEDING SHARES THOSE CORPORATE REPRESENTATIVES CAN ACT SHARES OF THAT CLASS BY MEANS OF A RELEVANT SYSTEM THE AMOUNT RECOMMENDED BY THE "OARD 4HE INDEPENDENTLY OF EACH OTHER AND VALIDLY VOTE IN OR ANY PROVISION OF THE #2%34 2EGULATIONS "OARD MAY PAY INTERIM DIVIDENDS WHENEVER DIFFERENT WAYS THE äNANCIAL POSITION OF THE #OMPANY IN THE Deadlines for exercising voting rights OPINION OF THE "OARD JUSTIäES SUCH PAYMENT Restrictions on voting 6OTES ARE EXERCISABLE AT A 'ENERAL -EETING OF 4HE "OARD MAY WITHHOLD PAYMENT OF ALL OR .O MEMBER SHALL UNLESS THE DIRECTORS THE #OMPANY IN RESPECT OF WHICH THE BUSINESS ANY PART OF ANY DIVIDENDS OR OTHER MONIES OTHERWISE DETERMINE BE ENTITLED IN RESPECT BEING VOTED UPON IS BEING HEARD 6OTES MAY BE PAYABLE IN RESPECT OF THE #OMPANYÓS SHARES OF ANY SHARE HELD BY HIMHER TO VOTE EITHER EXERCISED IN PERSON BY PROXY OR IN RELATION TO FROM A PERSON WITH A INTEREST OR MORE PERSONALLY OR BY PROXY AT A SHAREHOLDERSÓ CORPORATE MEMBERS BY CORPORATE REPRESENTATIVE AS DEäNED IN THE !RTICLES IF SUCH A PERSON MEETING OR TO EXERCISE ANY OTHER RIGHT CONFERRED 4HE !RTICLES PROVIDE A DEADLINE FOR SUBMISSION HAS BEEN SERVED WITH A NOTICE AFTER FAILING BY MEMBERSHIP IN RELATION TO SHAREHOLDERSÓ OF PROXY FORMS OF NOT THAN LESS THAN HOURS TO PROVIDE THE #OMPANY WITH INFORMATION MEETINGS IF ANY CALL OR OTHER SUM PRESENTLY BEFORE THE TIME APPOINTED FOR THE HOLDING OF THE CONCERNING INTERESTS IN THOSE SHARES REQUIRED TO PAYABLE BY HIMHER TO THE #OMPANY IN RESPECT MEETING OR ADJOURNED MEETING BE PROVIDED UNDER THE #OMPANIES !CT OF THAT SHARE REMAINS UNPAID )N ADDITION NO MEMBER SHALL BE ENTITLED TO VOTE IF HESHE Variation of rights Rights and obligations attaching HAS BEEN SERVED WITH A NOTICE AFTER FAILING 3UBJECT TO STATUTE THE !RTICLES SPECIFY THAT to shares TO PROVIDE THE #OMPANY WITH INFORMATION RIGHTS ATTACHED TO ANY CLASS OF SHARES MAY BE 4HE RIGHTS AND OBLIGATIONS ATTACHING TO THE CONCERNING INTERESTS IN THOSE SHARES REQUIRED TO VARIED WITH THE WRITTEN CONSENT OF THE HOLDERS ORDINARY AND PREFERENCE SHARES ARE SET OUT IN BE PROVIDED UNDER THE #OMPANIES !CT OF NOT LESS THAN THREE QUARTERS IN NOMINAL VALUE THE !RTICLES 4HE !RTICLES MAY ONLY BE CHANGED OF THE ISSUED SHARES OF THAT CLASS OR WITH THE BY THE SHAREHOLDERS BY SPECIAL RESOLUTION Issue of shares SANCTION OF AN EXTRAORDINARY RESOLUTION PASSED 3UBJECT TO THE PROVISIONS OF THE #OMPANIES !CT AT A SEPARATE 'ENERAL -EETING OF THE HOLDERS OF Voting RELATING TO AUTHORITY AND PRE EMPTION RIGHTS THOSE SHARES !T EVERY SUCH SEPARATE 'ENERAL 3UBJECT TO THE !RTICLES GENERALLY AND TO ANY AND OF ANY RESOLUTION OF THE #OMPANY IN A 5+ -EETING THE QUORUM SHALL BE TWO PERSONS SPECIAL RIGHTS OR RESTRICTIONS AS TO VOTING 'ENERAL -EETING ALL UNISSUED SHARES OF THE HOLDING OR REPRESENTING BY PROXY AT LEAST ONE ATTACHED BY OR IN ACCORDANCE WITH THE !RTICLES #OMPANY SHALL BE AT THE DISPOSAL OF THE DIRECTORS THIRD IN NOMINAL VALUE OF THE ISSUED SHARES OF TO ANY CLASS OF SHARES ON A SHOW OF HANDS AND THEY MAY ALLOT WITH OR WITHOUT CONFERRING THE CLASS CALCULATED EXCLUDING ANY SHARES HELD EVERY MEMBER WHO IS PRESENT IN PERSON AT A A RIGHT OF RENUNCIATION GRANT OPTIONS OVER OR AS TREASURY SHARES 4HE RIGHTS CONFERRED UPON GENERAL MEETING SHALL HAVE ONE VOTE AND ON A OTHERWISE DISPOSE OF THEM TO SUCH PERSONS THE HOLDERS OF ANY SHARES SHALL NOT UNLESS POLL EVERY MEMBER WHO IS PRESENT IN PERSON OR AT SUCH TIMES AND ON SUCH TERMS AS THEY OTHERWISE EXPRESSLY PROVIDED IN THE RIGHTS BY PROXY SHALL HAVE ONE VOTE FOR EVERY SHARE THINK PROPER ATTACHING TO THOSE SHARES BE DEEMED TO BE OF WHICH HESHE IS THE HOLDER )T IS AND HAS VARIED BY THE CREATION OR ISSUE OF FURTHER SHARES BEEN FOR SOME YEARS THE #OMPANYÓS PRACTICE TO RANKING PARI PASSU WITH THEM HOLD A POLL ON EVERY RESOLUTION AT SHAREHOLDER MEETINGS
Anglo American plc Annual Report 2009 73 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Governance Directors’ report continued
Transfer of shares Powers of directors Significant agreements: Change of !LL TRANSFERS OF SHARES WHICH ARE IN CERTIäCATED 3UBJECT TO THE !RTICLES THE #OMPANIES !CT AND control FORM MAY BE EFFECTED BY TRANSFER IN WRITING IN ANY DIRECTIONS GIVEN BY SPECIAL RESOLUTION THE !T $ECEMBER !NGLO !MERICAN HAD ANY USUAL OR COMMON FORM OR IN ANY OTHER FORM BUSINESS OF THE #OMPANY WILL BE MANAGED BY COMMITTED BILATERAL AND SYNDICATED BORROWING ACCEPTABLE TO THE DIRECTORS AND MAY BE UNDER THE "OARD WHO MAY EXERCISE ALL THE POWERS OF FACILITIES TOTALLING BILLION WITH A NUMBER HAND ONLY 4HE INSTRUMENT OF TRANSFER SHALL BE THE #OMPANY OF RELATIONSHIP BANKS WHICH CONTAIN CHANGE SIGNED BY OR ON BEHALF OF THE TRANSFEROR AND OF CONTROL CLAUSES 4HE RAND BILLION 3OUTH 4HE "OARD MAY EXERCISE ALL THE POWERS OF THE EXCEPT IN THE CASE OF FULLY PAID SHARES BY OR !FRICAN -EDIUM 4ERM .OTE 0ROGRAMME AND #OMPANY TO BORROW MONEY AND TO MORTGAGE ON BEHALF OF THE TRANSFEREE 4HE TRANSFEROR SHALL BILLION OF THE 'ROUPÓS BOND ISSUES OR CHARGE ANY OF ITS UNDERTAKING PROPERTY REMAIN THE HOLDER OF THE SHARES CONCERNED UNTIL ALSO CONTAIN CHANGE OF CONTROL PROVISIONS AND UNCALLED CAPITAL AND TO ISSUE DEBENTURES THE NAME OF THE TRANSFEREE IS ENTERED IN THE )N AGGREGATE THIS äNANCING IS CONSIDERED AND OTHER SECURITIES WHETHER OUTRIGHT OR AS REGISTER !LL TRANSFERS OF SHARES WHICH ARE IN SIGNIäCANT TO THE 'ROUP AND IN THE EVENT COLLATERAL SECURITY FOR ANY DEBT LIABILITY OR UNCERTIäCATED FORM MAY BE EFFECTED BY MEANS OF A TAKEOVER CHANGE OF CONTROL OF THE OBLIGATION OF THE #OMPANY OR OF ANY THIRD PARTY OF THE #2%34 SYSTEM #OMPANY THESE CONTRACTS MAY BE CANCELLED 4HE #OMPANY MAY BY ORDINARY RESOLUTION BECOME IMMEDIATELY PAYABLE OR BE SUBJECT 4HE DIRECTORS MAY DECLINE TO RECOGNISE ANY DECLARE DIVIDENDS BUT NO DIVIDEND SHALL BE TO ACCELERATION INSTRUMENT OF TRANSFER RELATING TO SHARES IN PAYABLE IN EXCESS OF THE AMOUNT RECOMMENDED CERTIäCATED FORM UNLESS IT BY THE DIRECTORS 3UBJECT TO THE PROVISIONS OF Purchases of own shares A IS IN RESPECT OF ONLY ONE CLASS OF SHARE AND THE !RTICLES AND TO THE RIGHTS ATTACHING TO ANY !T THE !'- HELD ON !PRIL AUTHORITY SHARES ANY DIVIDENDS OR OTHER MONIES PAYABLE B IS LODGED AT THE TRANSFER OFäCE DULY STAMPED WAS GIVEN FOR THE #OMPANY TO PURCHASE IN THE ON OR IN RESPECT OF A SHARE MAY BE PAID IN SUCH IF REQUIRED ACCOMPANIED BY THE RELEVANT SHARE MARKET UP TO MILLION /RDINARY 3HARES OF CURRENCY AS THE DIRECTORS MAY DETERMINE 4HE CERTIäCATES AND SUCH OTHER EVIDENCE AS THE 53 CENTS EACH 4HE #OMPANY DID NOT DIRECTORS MAY DEDUCT FROM ANY DIVIDEND PAYABLE DIRECTORS MAY REASONABLY REQUIRE TO SHOW THE PURCHASE ANY OF ITS OWN SHARES DURING TO ANY MEMBER ALL SUMS OF MONEY IF ANY RIGHT OF THE TRANSFEROR TO MAKE THE TRANSFER AND PRESENTLY PAYABLE BY HIMHER TO THE #OMPANY IF THE INSTRUMENT OF TRANSFER IS EXECUTED BY SOME Indemnities ON ACCOUNT OF CALLS OR OTHERWISE IN RELATION OTHER PERSON ON HISHER BEHALF THE AUTHORITY OF 4O THE EXTENT PERMITTED BY LAW AND THE !RTICLES TO SHARES OF THE #OMPANY 4HE DIRECTORS MAY THAT PERSON SO TO DO THE #OMPANY HAS MADE QUALIFYING THIRD PARTY RETAIN ANY DIVIDENDS PAYABLE ON SHARES ON INDEMNITY PROVISIONS FOR THE BENEäT OF ITS 4HE DIRECTORS MAY IN THE CASE OF SHARES IN WHICH THE #OMPANY HAS A LIEN AND MAY APPLY DIRECTORS DURING THE YEAR AND WHICH REMAIN IN CERTIäCATED FORM IN THEIR ABSOLUTE DISCRETION AND THE SAME IN OR TOWARDS SATISFACTION OF THE FORCE AT THE DATE OF THIS REPORT #OPIES OF THESE WITHOUT ASSIGNING ANY REASON THEREFOR REFUSE DEBTS LIABILITIES OR ENGAGEMENTS IN RESPECT OF INDEMNITIES ARE OPEN FOR INSPECTION AT THE TO REGISTER ANY TRANSFER OF SHARES NOT BEING WHICH THE LIEN EXISTS #OMPANYÓS REGISTERED OFäCE FULLY PAID SHARES PROVIDED THAT WHERE ANY SUCH SHARES ARE ADMITTED TO THE /FäCIAL ,IST OF THE Appointment and replacement of By order of the Board ,ONDON 3TOCK %XCHANGE SUCH DISCRETION MAY directors NOT BE EXERCISED IN SUCH A WAY AS TO PREVENT 4HE DIRECTORS MAY FROM TIME TO TIME APPOINT DEALINGS IN THE SHARES OF THAT CLASS FROM TAKING ONE OR MORE DIRECTORS Nicholas Jordan PLACE ON AN OPEN AND PROPER BASIS 4HE DIRECTORS #OMPANY 3ECRETARY 4HE "OARD MAY APPOINT ANY PERSON TO BE MAY ALSO REFUSE TO REGISTER AN ALLOTMENT OR &EBRUARY TRANSFER OF SHARES WHETHER FULLY PAID OR NOT IN A DIRECTOR SO LONG AS THE TOTAL NUMBER OF FAVOUR OF MORE THAN FOUR PERSONS JOINTLY DIRECTORS DOES NOT EXCEED THE LIMIT PRESCRIBED IN THE !RTICLES !NY SUCH DIRECTOR SHALL HOLD )F THE DIRECTORS REFUSE TO REGISTER AN ALLOTMENT OFäCE ONLY UNTIL THE NEXT !'- AND SHALL THEN BE OR TRANSFER THEY SHALL SEND WITHIN TWO MONTHS ELIGIBLE FOR ELECTION AFTER THE DATE ON WHICH THE LETTER OF ALLOTMENT OR TRANSFER WAS LODGED WITH THE #OMPANY TO !T EACH !'- ALL THOSE DIRECTORS WHO HAVE BEEN THE ALLOTTEE OR TRANSFEREE NOTICE OF THE REFUSAL IN OFäCE FOR THREE YEARS OR MORE SINCE THEIR ELECTION OR LAST RE ELECTION SHALL RETIRE FROM ! SHAREHOLDER DOES NOT NEED TO OBTAIN OFäCE )N ADDITION A DIRECTOR MAY AT ANY !'- THE APPROVAL OF THE #OMPANY OR OF OTHER RETIRE FROM OFäCE AND STAND FOR RE ELECTION SHAREHOLDERS OF SHARES IN THE #OMPANY FOR A )N ACCORDANCE WITH THE #OMBINED #ODE ANY TRANSFER OF SHARES TO TAKE PLACE DIRECTOR WHO HAS SERVED MORE THAN THREE THREE YEAR TERMS IS SUBJECT TO ANNUAL RE ELECTION Directors $IRECTORS SHALL NOT BE LESS THAN NOR MORE THAN IN NUMBER ! DIRECTOR IS NOT REQUIRED TO HOLD ANY SHARES OF THE #OMPANY BY WAY OF QUALIäCATION 4HE #OMPANY MAY BY ORDINARY RESOLUTION INCREASE OR REDUCE THE MAXIMUM OR MINIMUM NUMBER OF DIRECTORS
74 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Corporate governance
Combined Code compliance 4HE #OMPANY IS CONSCIOUS OF THE NEED TO CHAIRMAN HAS CHAIRED FOUR &43% COMPANIES MAINTAIN AN APPROPRIATE MIX OF SKILLS AND AND BRINGS LEADERSHIP EXPERIENCE ACROSS A RANGE !NGLO !MERICAN IS COMMITTED TO THE HIGHEST EXPERIENCE ON THE "OARD AND TO PROGRESSIVELY OF INDUSTRIES IN MANY COUNTRIES INCLUDING IN STANDARDS OF CORPORATE GOVERNANCE Ð THE WAY IN REFRESH ITS COMPOSITION OVER TIME AND IN THIS 3OUTH !FRICA *ACK 4HOMPSON IS AN INDEPENDENT WHICH THE #OMPANY IS DIRECTED AND CONTROLLED Ð CONNECTION FOUR NEW INDEPENDENT NON EXECUTIVE NON EXECUTIVE DIRECTOR AND MEMBER OF THE AND COMPLIED FULLY WITH THE #OMBINED #ODE ON DIRECTORS WERE APPOINTED TO THE BOARD DURING 33$ #OMMITTEE (E BRINGS EXPERIENCE GAINED #ORPORATE 'OVERNANCE *UNE THE #ODE 3IR *OHN 0ARKER WAS APPOINTED AS AT ALL LEVELS OF THE MINING INDUSTRY AND HAS THROUGHOUT THE YEAR UNDER REVIEW CHAIRMAN OF THE 'ROUP AND 3IR 0HILIP (AMPTON RECEIVED WIDE RECOGNITION AS A MINING ENGINEER *ACK 4HOMPSON AND 2AY /Ó2OURKE JOINED THE *ACK 4HOMPSON ALSO HAS EXTENSIVE BOARDROOM Role of the Board BOARD IN THE LATTER PART OF EXPERIENCE IN EXECUTIVE AND NON EXECUTIVE ROLES 4HE "OARD OF DIRECTORS HAS A DUTY TO 3IR 0HILIP (AMPTON AND 2AY /Ó2OURKE ARE BOTH 3INCE *ANUARY TWO INDEPENDENT NON PROMOTE THE SUCCESS OF THE #OMPANY INDEPENDENT NON EXECUTIVE DIRECTORS 3IR 0HILIP EXECUTIVE DIRECTORS HAVE LEFT THE BOARD 3ADLY FOR ITS SHAREHOLDERS )TS ROLE INCLUDES THE BRINGS äNANCIAL STRATEGIC AND BOARDROOM +AREL 6AN -IERT PASSED AWAY IN *UNE ESTABLISHMENT REVIEW AND MONITORING OF EXPERIENCE ACROSS A NUMBER OF INDUSTRIES AND &RED 0HASWANA RESIGNED FROM THE BOARD STRATEGIC OBJECTIVES APPROVAL OF MAJOR AND 2AY /Ó2OURKE HAS A PROVEN TRACK RECORD ON *ANUARY 3IR -ARK -OODY 3TUART ACQUISITIONS DISPOSALS AND CAPITAL EXPENDITURE IN DELIVERING COMPLEX AND LARGE SCALE PROJECTS A NON INDEPENDENT NON EXECUTIVE DIRECTOR AND OVERSEEING THE 'ROUPÓS SYSTEMS OF INTERNAL AROUND THE WORLD MOBILISING LARGE NUMBERS OF HAS ALSO LEFT THE "OARD 4HE #OMMITTEE CONTROL GOVERNANCE AND RISK MANAGEMENT ! PEOPLE WITH GREAT SUCCESS AND APPLYING LEADING MEMBERSHIPS WERE SUBSTANTIALLY REFRESHED SCHEDULE OF MATTERS RESERVED FOR THE "OARDÓS PROJECT MANAGEMENT PRACTICES IN INCORPORATING CHANGES THAT RESULTED DECISION DETAILS KEY ASPECTS OF THE #OMPANYÓS IN A FULLY INDEPENDENT .OMINATION #OMMITTEE .ONE OF THE NON EXECUTIVE DIRECTORS HAS SERVED AFFAIRS THAT THE "OARD DOES NOT DELEGATE CONCURRENTLY WITH AN EXECUTIVE DIRECTOR FOR INCLUDING AMONG OTHER THINGS APPROVAL #YNTHIA #ARROLL AND .ICKY /PPENHEIMER WILL BE MORE THAN äVE YEARS OF BUSINESS PLANS AND BUDGETS MATERIAL PROPOSED FOR RE ELECTION AT THE !'- ON !PRIL
EXPENDITURE AND ALTERATIONS TO SHARE CAPITAL 3IR *OHN 0ARKER 3IR 0HILIP (AMPTON *ACK /F THE DIRECTORS WHO WERE UNABLE TO ATTEND Governance 4HOMPSON AND 2AY /Ó2OURKE WILL BE PROPOSED ONE OF THE "OARD MEETINGS EACH DURING Board composition and FOR ELECTION AT THE !'- #YNTHIA #ARROLL IS THE 3IR 2OB -ARGETTS WAS UNABLE TO ATTEND DUE TO A CHIEF EXECUTIVE OF !NGLO !MERICAN PLC CHAIRS CLASH OF MEETINGS AS A RESULT OF THE #OMPANYÓS directors’ independence THE %X#O AND '-# AND IS A MEMBER OF THE "OARD MEETING BEING CONVENED AT SHORT NOTICE 4HE "OARD IS CHAIRED BY 3IR *OHN 0ARKER WHO 33$ #OMMITTEE .ICKY /PPENHEIMER HAS BEEN $AVID #HALLEN WAS UNABLE TO ATTEND DUE TO SUCCEEDED 3IR -ARK -OODY 3TUART IN !UGUST ON THE "OARD SINCE AND BRINGS A WEALTH ILLNESS AND #HRIS &AY WAS IN TRANSIT FROM THE 4HE CHAIRMAN IS RESPONSIBLE FOR LEADING OF KNOWLEDGE OF THE 'ROUP AND IS CONSIDERED TO 53 TO THE 5+ AGAIN THE RELEVANT MEETING WAS THE "OARD AND FOR ITS EFFECTIVENESS #YNTHIA BE AN EFFECTIVE AND COMMITTED MEMBER OF THE CONVENED AT SHORT NOTICE .ICKY /PPENHEIMER #ARROLL IS THE CHIEF EXECUTIVE AND IS RESPONSIBLE "OARD 3IR *OHN 0ARKER IS THE NEWLY APPOINTED WAS OBLIGED TO ATTEND A COURT HEARING AND &RED FOR THE EXECUTION OF STRATEGY AND THE DAY TO CHAIRMAN OF !NGLO !MERICAN PLC CHAIRMAN OF 0HASWANA WAS OBLIGED TO ATTEND A 3TANDARD DAY MANAGEMENT OF THE 'ROUP SUPPORTED BY THE .OMINATION #OMMITTEE AND SITS ON THE "ANK BOARD MEETING AS ITS NEW CHAIRMAN AND THE 'ROUP -ANAGEMENT #OMMITTEE '-# 33$ #OMMITTEE 3IR *OHN IS RECOGNISED AS HAD ALREADY GIVEN NOTICE OF HIS RESIGNATION FROM AND THE %XECUTIVE #OMMITTEE %X#O BOTH OF A HIGHLY EXPERIENCED AND INDEPENDENT THE !NGLO !MERICAN PLC "OARD AT THAT TIME WHICH SHE CHAIRS 4HE #OMPANY HAS ADOPTED THE 3TATEMENT OF $IVISION OF 2ESPONSIBILITIES BETWEEN THE #HAIRMAN AND THE #HIEF %XECUTIVE "OARD AND #OMMITTEE MEETINGS Ð FREQUENCY AND ATTENDANCE
PROMULGATED BY THE )NSTITUTE OF #HARTERED "OARD !UDIT 33$ 2EMUNERATION .OMINATION 3ECRETARIES AND !DMINISTRATORS 4HE FUNCTIONS )NDEPENDENT IN SEVEN THREE äVE THREE äVE AND MEMBERSHIP OF '-# AND %X#O ARE SET TERMS OF CODE MEETINGS MEETINGS MEETINGS MEETINGS MEETINGS OUT ON PAGE $AVID #HALLEN HAS BEEN THE 3IR *OHN 0ARKER NA !LL NA !LL NA !LL SENIOR INDEPENDENT NON EXECUTIVE DIRECTOR SINCE 3IR -ARK -OODY 3TUART NA !LL NA !LL !LL !LL 4HE SENIOR INDEPENDENT NON EXECUTIVE #YNTHIA #ARROLL .O !LL NA NA NA DIRECTOR IS AVAILABLE TO SHAREHOLDERS AS AN 2EN¤ -¤DORI .O !LL NA NA NA NA ALTERNATIVE TO THE CHAIRMAN OR CHIEF EXECUTIVE $AVID #HALLEN 9ES !LL NA !LL AND IN THIS CAPACITY MET WITH REPRESENTATIVES OF MAJOR SHAREHOLDERS OF THE 'ROUP IN 3IR # + #HOW 9ES !LL NA NA !LL !LL 4HE "OARD HAS A STRONG INDEPENDENT ELEMENT #HRIS &AY 9ES !LL !LL NA AND CURRENTLY COMPRISES IN ADDITION TO THE 3IR 0HILIP (AMPTON 9ES !LL NA NA NA NA CHAIRMAN TWO EXECUTIVE AND NON EXECUTIVE 3IR 2OB -ARGETTS 9ES NA NA !LL !LL DIRECTORS NINE OF WHOM ARE INDEPENDENT +AREL 6AN -IERT 9ES !LL !LL NA NA !LL ACCORDING TO THE DEäNITION CONTAINED IN THE .ICKY /PPENHEIMER .O NA NA NA #ODE 4HE INDEPENDENT DIRECTORS ARE INDICATED 2AY /Ó2OURKE 9ES NA NA NA NA NA WITHIN THE TABLE OPPOSITE AND FULL BIOGRAPHICAL DETAILS FOR EACH DIRECTOR ARE GIVEN ON PAGES &RED 0HASWANA 9ES NA NA !LL AND 4HE LETTERS OF APPOINTMENT OF THE NON -AMPHELA 2AMPHELE 9ES !LL NA !LL NA !LL EXECUTIVE DIRECTORS AND THE EXECUTIVESÓ SERVICE *ACK 4HOMPSON 9ES !LL NA NA NA NA CONTRACTS ARE AVAILABLE FOR INSPECTION AT THE 0ETER 7OICKE 9ES !LL !LL !LL !LL REGISTERED OFäCE OF THE #OMPANY -EETINGS ATTENDED PRIOR TO RETIREMENT OR SINCE APPOINTMENT $ECEASED *UNE -ISSED ONE MEETING PRIOR TO LEAVING THE #OMMITTEE !TTENDED ONE OUT OF TWO .OMINATION #OMMITTEE MEETINGS HELD PRIOR TO LEAVING THE #OMMITTEE
Anglo American plc Annual Report 2009 75 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Governance Corporate governance continued
Conflicts of interest Board effectiveness 4HE DIRECTORSÓ 2EMUNERATION REPORT SETTING OUT !NGLO !MERICANÓS POLICY ON EXECUTIVE $URING THE YEAR A FULL SURVEY OF THE "OARD ! FORMAL EVALUATION OF THE PERFORMANCE OF THE REMUNERATION IS SET OUT ON PAGES TO OF MEMBERSÓ INTERESTS AND APPOINTMENTS WAS "OARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS THIS !NNUAL 2EPORT ! RESOLUTION TO APPROVE THE CARRIED OUT AND THE "OARD WAS FULLY BRIEFED ON WAS CARRIED OUT BY $R ,ONG OF "OARDROOM 2EMUNERATION REPORT WILL BE PROPOSED AT THE THE #OMPANIES !CT PROVISIONS IN RELATION 2EVIEW IN LATE AND PRESENTED TO THE FORTHCOMING !'- 4HE #OMMITTEE MET THREE TO CONåICTS OF INTEREST !PPROPRIATE CONåICT "OARD &OR THE äRST TIME THE SCOPE OF THE TIMES DURING MANAGEMENT PROCEDURES ARE IN PLACE !NGLO EVALUATION WAS WIDENED TO INCLUDE THE VIEWS !MERICAN POLICY DICTATES THAT IF A DIRECTOR OF SENIOR EXECUTIVES BELOW BOARD LEVEL 4HE 4HE 2EMUNERATION #OMMITTEE PRESENTLY BECOMES AWARE THAT THEY HAVE A DIRECT OR AIM IS TO ENSURE CONTINUOUS IMPROVEMENT IN COMPRISES 3IR 2OB -ARGETTS CHAIRMAN $AVID INDIRECT INTEREST IN AN EXISTING OR PROPOSED THE FUNCTIONING OF THE "OARD !RISING FROM #HALLEN 3IR #+ #HOW 0ETER 7OICKE AND 3IR TRANSACTION WITH !NGLO !MERICAN THEY SHOULD THIS REVIEW THE "OARD HAS AGREED TO CERTAIN 0HILIP (AMPTON ALL OF WHOM ARE INDEPENDENT NOTIFY THE "OARD AT THE NEXT "OARD MEETING CHANGES AND ONGOING DEVELOPMENT IN THE NON EXECUTIVE DIRECTORS OR BY A WRITTEN DECLARATION $IRECTORS HAVE A FOLLOWING AREAS CONTINUING DUTY TO UPDATE ANY CHANGES IN THESE Safety and Sustainable Development Ú 3TRATEGY PLANNING INTERESTS 4HERE WERE NO SUCH NOTIäCATIONS OF (S&SD) Committee INTERESTS IN PROPOSED TRANSACTIONS DURING THE Ú #OMMUNICATIONS WITH MAJOR SHAREHOLDERS 4HE 33$ #OMMITTEE IS RESPONSIBLE FOR YEAR )N ACCORDANCE WITH THE #OMPANYÓS !RTICLES Ú 4ALENT MANAGEMENT AND SUCCESSION PLANNING DEVELOPING FRAMEWORK POLICIES AND GUIDELINES FOR AND RELEVANT LEGISLATION AN UNCONåICTED THE MANAGEMENT OF SUSTAINABLE DEVELOPMENT QUORUM OF THE "OARD CAN AUTHORISE POTENTIAL Ú #OMMITTEE COMPOSITION ISSUES INCLUDING SAFETY HEALTH AND ENVIRONMENT CONåICTS AND SUCH AUTHORISATIONS CAN BE LIMITED Ú 3UBMISSION OF INFORMATION TO THE "OARD AND MATTERS AND ENSURING THEIR PROGRESSIVE IN SCOPE AND ARE REVIEWED ON AN ANNUAL BASIS SCHEDULING OF MEETINGS IMPLEMENTATION THROUGHOUT THE 'ROUP $URING THE YEAR UNDER REVIEW THE CONåICT MANAGEMENT PROCEDURES WERE ADHERED TO !S IN PAST YEARS THE EVALUATION PROCESS 4HE 33$ #OMMITTEE NORMALLY MEETS THREE AND OPERATED EFFECTIVELY ALSO INCLUDED A REVIEW CHAIRED BY THE SENIOR OR FOUR TIMES EACH YEAR INCLUDING A VISIT TO AN INDEPENDENT NON EXECUTIVE DIRECTOR WITHOUT OPERATION AND BUSINESS UNIT HEADS ARE INVITED Directors’ training THE CHAIRMAN PRESENT OF THE PERFORMANCE OF TO ATTEND COMMITTEE MEETINGS %ACH BUSINESS THE CHAIRMAN )T IS THE "OARDÓS CURRENT INTENTION UNIT HEAD MAKES A SAFETY AND SUSTAINABLE !NGLO !MERICANÓS DIRECTORS HAVE A WIDE RANGE TO CONTINUE TO ENGAGE AN EXTERNAL REVIEWER FOR DEVELOPMENT PRESENTATION TO THE #OMMITTEE OF EXPERTISE AS WELL AS SIGNIäCANT EXPERIENCE THE "OARD EFFECTIVENESS EVALUATION PROCESS 4HE #OMMITTEE MET äVE TIMES DURING IN STRATEGIC äNANCIAL COMMERCIAL AND MINING FROM TIME TO TIME )N LIGHT OF THE MANY CHANGES 4HE 2EPORT TO 3OCIETY TO BE PUBLISHED ACTIVITIES 5PON APPOINTMENT DIRECTORS ARE TO THE "OARD DURING THE YEAR IT WAS DECIDED THAT IN !PRIL WILL FOCUS ON THE SAFETY SUSTAINABLE PROVIDED WITH RECENT "OARD MATERIALS AND A AN EXTERNAL REVIEW WOULD NOT BE CARRIED OUT DEVELOPMENT HEALTH AND ENVIRONMENTAL REFERENCE MANUAL CONTAINING INFORMATION ON IN )N THE MEANTIME THE CHAIRMAN HAS PERFORMANCE OF THE 'ROUPÓS MANAGED OPERATIONS LEGAL OBLIGATIONS AND OTHER MATTERS OF WHICH HELD INDIVIDUAL BRIEäNGS WITH EACH DIRECTOR TO THEIR PERFORMANCE WITH REGARD TO THE #OMPANYÓS THEY SHOULD BE AWARE 'UIDANCE IS PROVIDED ENSURE THAT THE NECESSARY "OARD AND COMMITTEE 'OOD #ITIZENSHIP PRINCIPLES AND THE OPERATIONAL ON -ARKET #ONDUCT UNDER THE &3! THE PROCESSES ARE FUNCTIONING PROPERLY 3INCE HIS DIMENSIONS OF THEIR SOCIAL PROGRAMMES #OMPANYÓS !RTICLES THE #OMBINED #ODE ON APPOINTMENT 3IR *OHN HAS INTRODUCED A ROLLING #ORPORATE 'OVERNANCE AND THE -ODEL #ODE 4HE 33$ #OMMITTEE PRESENTLY COMPRISES AGENDA FOR THE "OARD AND INSTIGATED REGULAR 4HE MANUAL ALSO INCLUDES ITEMS SUCH AS "OARD #HRIS &AY CHAIRMAN #YNTHIA #ARROLL 3IR *OHN INFORMAL MEETINGS OF THE NON EXECUTIVES AND #OMMITTEE TERMS OF REFERENCE RELEVANT 0ARKER -AMPHELA 2AMPHELE *ACK 4HOMPSON PRIOR TO EACH "OARD MEETING 4HESE INFORMAL COMPANY INFORMATION AND GUIDANCE ON WHERE AND 0ETER 7OICKE MEETINGS GIVE THE "OARD THE OPPORTUNITY TO OBTAIN INDEPENDENT ADVICE 4HE MANUAL INTER ALIA TO DISCUSS THE PERFORMANCE OF THE IS UPDATED PERIODICALLY WHEN APPROPRIATE Nomination Committee MANAGEMENT AND TO AIR SUBJECTS OUTSIDE THE 4RAINING AND BRIEäNGS ARE ALSO AVAILABLE TO ALL 4HE .OMINATION #OMMITTEE MAKES CONäNES OF THE BOARDROOM IN AN INFORMAL BUT DIRECTORS ON APPOINTMENT AND SUBSEQUENTLY RECOMMENDATIONS TO THE "OARD ON THE NEVERTHELESS CONSTRUCTIVE MANNER AS NECESSARY TAKING INTO ACCOUNT EXISTING APPOINTMENT OF NEW EXECUTIVE AND NON QUALIäCATIONS AND EXPERIENCE $IRECTORS ALSO EXECUTIVE DIRECTORS INCLUDING MAKING HAVE ACCESS TO MANAGEMENT AND TO THE ADVICE Committees of the Board RECOMMENDATIONS AS TO THE COMPOSITION OF OF THE COMPANY SECRETARY &URTHERMORE ALL 3UBJECT TO THOSE MATTERS RESERVED FOR ITS DECISION THE "OARD AND ITS COMMITTEES AND THE BALANCE DIRECTORS ARE ENTITLED TO SEEK INDEPENDENT THE "OARD DELEGATES CERTAIN RESPONSIBILITIES BETWEEN EXECUTIVE AND NON EXECUTIVE DIRECTORS PROFESSIONAL ADVICE CONCERNING THE AFFAIRS OF TO A NUMBER OF STANDING COMMITTEES Ð THE 4HE .OMINATION #OMMITTEE MEETS AS AND WHEN !NGLO !MERICAN AT ITS EXPENSE ALTHOUGH NO 2EMUNERATION 33$ .OMINATION AND !UDIT REQUIRED AND ENGAGES EXTERNAL CONSULTANTS TO SUCH ADVICE WAS SOUGHT DURING #OMMITTEES 4HE TERMS OF REFERENCE FOR EACH IDENTIFY APPROPRIATE CANDIDATES $URING OF THESE COMMITTEES AND A SCHEDULE OF MATTERS THE SERVICES OF 3PENCER 3TUART WERE USED BY 0RESENTATIONS ARE MADE TO THE "OARD BY BUSINESS RESERVED FOR THE "OARDÓS DECISION ARE PUBLISHED THE #OMMITTEE MANAGEMENT ON THE ACTIVITIES OF OPERATIONS ON THE #OMPANYÓS WEBSITE $IRECTORS UNDERTAKE REGULAR VISITS TO OPERATIONS 4HE "OARD VIA THE .OMINATION #OMMITTEE AND PROJECTS AND IN OPERATIONS AND HAS TAKEN STEPS TO ENSURE THAT THE (UMAN Remuneration Committee PROJECTS IN !LASKA 3OUTH !FRICA "RAZIL #HILE 2ESOURCES FUNCTION OF THE 'ROUP REGULARLY #HINA !USTRALIA )NDIA AND "OTSWANA WERE 4HE 2EMUNERATION #OMMITTEE IS RESPONSIBLE FOR REVIEWS AND UPDATES THE SUCCESSION PLANS OF VISITED )N ADDITION DURING THE YEAR DIRECTORS ESTABLISHING AND DEVELOPING THE 'ROUPÓS GENERAL DIRECTORS AND SENIOR MANAGERS 4HE #OMMITTEE ATTENDED COURSESSEMINARS ON )&23 OTHER POLICY ON EXECUTIVE AND SENIOR MANAGEMENT MET äVE TIMES DURING äNANCIAL MATTERS AND DIRECTORSÓ FORUMS REMUNERATION AND DETERMINING SPECIäC REMUNERATION PACKAGES FOR EXECUTIVE DIRECTORS 4HE .OMINATION #OMMITTEE CURRENTLY COMPRISES 3IR *OHN 0ARKER CHAIRMAN $AVID #HALLEN -AMPHELA 2AMPHELE 0ETER 7OICKE AND 3IR #+ #HOW
76 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Audit Committee ON TWO OCCASIONS AND THE CHAIRMAN OF THE Ú THE EXTERNAL AUDITORS ARE REQUIRED TO ASSESS 4HE PRIMARY ROLE OF THE !UDIT #OMMITTEE IS !UDIT #OMMITTEE HELD REGULAR MEETINGS WITH PERIODICALLY IN THEIR PROFESSIONAL JUDGEMENT TO ENSURE THE INTEGRITY OF äNANCIAL REPORTING THE AUDIT ENGAGEMENT PARTNER DURING THE WHETHER THEY ARE INDEPENDENT OF THE 'ROUP YEAR &URTHER INFORMATION ON RISK MANAGEMENT AND THE AUDIT PROCESS AND THAT A SOUND RISK Ú THE !UDIT #OMMITTEE ENSURES THAT THE SCOPE PROCESSES IS PROVIDED IN THE INTERNAL CONTROL MANAGEMENT AND INTERNAL CONTROL SYSTEM IS OF THE AUDITORSÓ WORK IS SUFäCIENT AND THAT THE DISCLOSURE STATEMENT ON PAGE MAINTAINED )N PURSUING THESE OBJECTIVES THE AUDITORS ARE FAIRLY REMUNERATED !UDIT #OMMITTEE OVERSEES RELATIONS WITH THE EXTERNAL AUDITORS AND REVIEWS THE EFFECTIVENESS External audit Ú THE !UDIT #OMMITTEE HAS PRIMARY RESPONSIBILITY OF THE INTERNAL AUDIT FUNCTION 4HE #OMMITTEE !NGLO !MERICANÓS POLICY ON AUDITORSÓ FOR MAKING RECOMMENDATIONS TO THE "OARD ON ALSO MONITORS DEVELOPMENTS IN CORPORATE INDEPENDENCE WHICH CAME INTO EFFECT ON THE APPOINTMENT RE APPOINTMENT AND REMOVAL GOVERNANCE TO ENSURE THE 'ROUP CONTINUES TO *ANUARY IS CONSISTENT WITH THE ETHICAL OF THE EXTERNAL AUDITORS APPLY HIGH AND APPROPRIATE STANDARDS STANDARDS PUBLISHED BY THE !UDITING 0RACTICES Ú THE !UDIT #OMMITTEE HAS THE AUTHORITY "OARD IN $ECEMBER AND REVISED IN !PRIL TO ENGAGE INDEPENDENT COUNSEL AND OTHER Composition AND /CTOBER ADVISERS AS THEY DETERMINE NECESSARY IN ORDER 4HE !UDIT #OMMITTEE PRESENTLY COMPRISES ! KEY FACTOR THAT MAY IMPAIR AUDITORSÓ TO RESOLVE ISSUES ON AUDITOR INDEPENDENCE $AVID #HALLEN CHAIRMAN #HRIS &AY AND 3IR 0HILIP INDEPENDENCE IS A LACK OF CONTROL OVER NON AUDIT 4HE !UDIT #OMMITTEE HAS SATISäED ITSELF THAT (AMPTON ALL OF WHOM ARE INDEPENDENT NON SERVICES PROVIDED BY THE EXTERNAL AUDITORS )N THE 5NITED +INGDOM PROFESSIONAL AND REGULATORY EXECUTIVE DIRECTORS 4HE "OARD IN CONSULTATION ESSENCE THE EXTERNAL AUDITORSÓ INDEPENDENCE IS REQUIREMENTS FOR AUDIT PARTNER ROTATION AND WITH THE !UDIT #OMMITTEE CHAIRMAN MAKES DEEMED TO BE IMPAIRED IF THE AUDITORS PROVIDE A EMPLOYMENT OF FORMER EMPLOYEES OF THE APPOINTMENTS TO THE #OMMITTEE 4HE "OARD HAS SERVICE WHICH EXTERNAL AUDITORS HAVE BEEN COMPLIED WITH DETERMINED THAT THE #OMMITTEE MEMBERS HAVE THE SKILLS AND EXPERIENCE NECESSARY TO CONTRIBUTE Ú RESULTS IN AUDITING OF OWN WORK BY THE 4HE !UDIT #OMMITTEE CONSIDERED INFORMATION MEANINGFULLY TO THE #OMMITTEEÓS DELIBERATIONS AUDITORS PERTAINING TO THE BALANCE BETWEEN FEES FOR )N ADDITION THE CHAIRMAN HAS REQUISITE EXPERIENCE Ú RESULTS IN THE AUDITORS ACTING AS A MANAGER AUDIT AND NON AUDIT WORK FOR THE 'ROUP IN Governance IN ACCOUNTING AND äNANCIAL MANAGEMENT OR EMPLOYEE OF THE 'ROUP AND CONCLUDED THAT THE NATURE AND EXTENT OF NON AUDIT FEES DO NOT PRESENT A THREAT TO THE 4HE #OMMITTEE MET THREE TIMES DURING Ú PUTS THE AUDITORS IN THE ROLE OF ADVOCATE EXTERNAL AUDITORSÓ INDEPENDENCE AND ON TWO OF THOSE OCCASIONS THE MEMBERS FOR THE 'ROUP OR HELD DISCUSSIONS WITH THE EXTERNAL AUDIT &URTHERMORE AFTER REVIEWING A REPORT FROM THE PARTNERS AND THE HEAD OF INTERNAL AUDIT IN THE Ú CREATES A MUTUALITY OF INTEREST BETWEEN EXTERNAL AUDITORS ON ALL THEIR RELATIONSHIPS WITH ABSENCE OF MANAGEMENT THE AUDITORS AND THE 'ROUP !NGLO !MERICAN THAT MIGHT REASONABLY HAVE A BEARING ON THE EXTERNAL AUDITORSÓ INDEPENDENCE )N FULäLLING ITS RESPONSIBILITY OF MONITORING THE !NGLO !MERICAN ADDRESSES THIS ISSUE THROUGH AND THE AUDIT ENGAGEMENT PARTNER AND STAFFÓS INTEGRITY OF äNANCIAL REPORTS TO SHAREHOLDERS THREE PRIMARY MEASURES NAMELY OBJECTIVITY AND THE RELATED SAFEGUARDS AND THE !UDIT #OMMITTEE HAS REVIEWED ACCOUNTING Ú DISCLOSURE OF THE EXTENT AND NATURE OF PROCEDURES THE #OMMITTEE HAS CONCLUDED THAT THE PRINCIPLES POLICIES AND PRACTICES ADOPTED IN NON AUDIT SERVICES EXTERNAL AUDITORSÓ INDEPENDENCE WAS NOT IMPAIRED THE PREPARATION OF PUBLIC äNANCIAL INFORMATION AND HAS EXAMINED DOCUMENTATION RELATING TO Ú THE PROHIBITION OF SELECTED SERVICES AND 4HE !UDIT #OMMITTEE APPROVED THE EXTERNAL THE !NNUAL 2EPORT (ALF 9EAR &INANCIAL 2EPORT Ú PRIOR APPROVAL BY THE !UDIT #OMMITTEE AUDITORSÓ TERMS OF ENGAGEMENT SCOPE OF PRELIMINARY ANNOUNCEMENTS AND RELATED PUBLIC CHAIRMAN OF NON AUDIT SERVICES WHERE THE WORK THE PROCESS FOR THE INTERIM REPORTS 4HE CLARITY OF DISCLOSURES INCLUDED COST OF THE PROPOSED ASSIGNMENT IS LIKELY REVIEW THE ANNUAL AUDIT AND THE APPLICABLE IN THE äNANCIAL STATEMENTS WAS REVIEWED BY TO EXCEED LEVELS OF MATERIALITY "ASED ON WRITTEN REPORTS THE !UDIT #OMMITTEE AS WAS THE BASIS FOR SUBMITTED THE #OMMITTEE REVIEWED WITH THE SIGNIäCANT ESTIMATES AND JUDGEMENTS 4HE DEäNITION OF PROHIBITED NON AUDIT SERVICES EXTERNAL AUDITORS THE äNDINGS OF THEIR WORK AND )N ASSESSING THE ACCOUNTING TREATMENT OF CORRESPONDS WITH THE %UROPEAN #OMMISSIONÓS CONäRMED THAT ALL SIGNIäCANT MATTERS HAD BEEN MAJOR TRANSACTIONS OPEN TO DIFFERENT RECOMMENDATIONS ON AUDITORSÓ INDEPENDENCE SATISFACTORILY RESOLVED APPROACHES THE #OMMITTEE CONSIDERED WRITTEN AND WITH THE %THICAL 3TANDARDS ISSUED BY THE 4HE APPOINTMENT OF $ELOITTE ,,0 AS THE 'ROUPÓS REPORTS BY MANAGEMENT AND THE EXTERNAL !UDIT 0RACTICES "OARD IN THE 5+ EXTERNAL AUDITORS INCUMBENTS SINCE THE LISTING AUDITORS 4HE #OMMITTEEÓS RECOMMENDATIONS /THER SAFEGUARDS ENCAPSULATED IN THE POLICY INCLUDE IN IS KEPT UNDER ANNUAL REVIEW AND IF ARE SUBMITTED TO THE "OARD FOR APPROVAL Ú THE EXTERNAL AUDITORS ARE REQUIRED TO ADHERE SATISFACTORY THE #OMMITTEE WILL RECOMMEND 4HE CHIEF äNANCIAL OFäCERS OF ALL OPERATIONS TO A ROTATION POLICY BASED ON BEST PRACTICE AND THE RE APPOINTMENT OF THE AUDIT äRM 4HE HAVE PROVIDED CONäRMATION ON A SIX MONTHLY PROFESSIONAL STANDARDS IN THE 5NITED +INGDOM APPOINTMENT OF $ELOITTE ,,0 FOLLOWED A DETAILED BASIS THAT äNANCIAL AND ACCOUNTING CONTROL 4HE STANDARD PERIOD FOR ROTATION OF THE AUDIT EVALUATION OF THE PREDECESSOR AUDIT äRMS FRAMEWORKS OPERATE SATISFACTORILY 4HE ENGAGEMENT PARTNER IS äVE YEARS AND FOR ANY FOLLOWING THE LISTING AND RATHER THAN ADOPTING A #OMMITTEE CONSIDERED SUMMARIES OF THE KEY AUDIT PARTNER SEVEN YEARS ! NEW AUDIT POLICY ON TENDERING FREQUENCY AN ANNUAL REVIEW SIGNIäCANT RISK AND CONTROL ISSUES ARISING FROM ENGAGEMENT PARTNER HAS BEEN APPOINTED FROM OF THE EFFECTIVENESS OF THE EXTERNAL AUDIT IS THESE REPORTS 4HE #OMMITTEE ALSO RECEIVED IN ACCORDANCE WITH THIS REQUIREMENT SUPPLEMENTED BY A PERIODIC COMPREHENSIVE REGULAR INTERNAL AUDIT REPORTS ON THE RESULTS OF REASSESSMENT BY THE #OMMITTEE AUDITS AT VARIOUS OPERATIONS $URING THE Ú ANY PARTNER DESIGNATED AS A KEY AUDIT PARTNER !UDIT #OMMITTEE APPROVED THE INTERNAL AUDIT OF !NGLO !MERICAN SHALL NOT BE EMPLOYED AND RISK MANAGEMENT PLANS FOR AND THE BY !NGLO !MERICAN IN A KEY MANAGEMENT PROCESS BY WHICH THE NEW AUDIT ENGAGEMENT POSITION UNLESS A PERIOD OF AT LEAST TWO YEARS PARTNER RECEIVED INDUCTION TO THE BUSINESS HAS ELAPSED SINCE THE CONCLUSION OF THE LAST PRIOR TO TAKING UP HIS ROLE IN 4HE !UDIT RELEVANT AUDIT #OMMITTEE HELD MEETINGS WITH THE %XTERNAL !UDITORS WITHOUT THE PRESENCE OF MANAGEMENT
Anglo American plc Annual Report 2009 77 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Governance Corporate governance continued
4HE #OMMITTEEÓS ASSESSMENT OF THE EXTERNAL AND PRESERVATION OF SHAREHOLDER WEALTH 7HERE ARE SUPPORTED IN GIVING EFFECT TO THEIR RISK AUDITORSÓ PERFORMANCE AND INDEPENDENCE APPROPRIATE NECESSARY ACTION HAS BEEN OR IS BEING RESPONSIBILITIES THROUGH POLICIES AND GUIDELINES UNDERPINS ITS RECOMMENDATION TO THE "OARD TO TAKEN TO REMEDY ANY FAILINGS OR WEAKNESSES ON RISK AND CONTROL MANAGEMENT 3UPPORT PROPOSE TO SHAREHOLDERS THE RE APPOINTMENT IDENTIäED FROM REVIEW OF THE EFFECTIVENESS OF THROUGH FACILITATED RISK ASSESSMENTS IS PROVIDED OF $ELOITTE ,,0 AS AUDITORS UNTIL THE CONCLUSION THE INTERNAL CONTROL SYSTEM INCLUDING THE BY A CENTRAL TEAM RESPONSIBLE FOR ENSURING OF THE !'- IN 2ESOLUTIONS TO AUTHORISE LESSONS LEARNED FROM THE ACQUISITION AND A ROBUST PROCESS IS IMPLEMENTED FOR RISK THE "OARD TO RE APPOINT AND DETERMINE THEIR DEVELOPMENT OF THE !MAP SYSTEM MANAGEMENT $URING OVER SEPARATE REMUNERATION WILL BE PROPOSED AT THE !'- ON RISK ASSESSMENT WORKSHOPS WERE CONDUCTED !PRIL Internal control REVIEWING RISK IN BUSINESS UNIT STRATEGIES 4HE SYSTEM OF INTERNAL CONTROL WHICH IS RISKS TO ACHIEVING MINE PLANS RISKS IN CAPITAL Internal audit EMBEDDED IN ALL KEY OPERATIONS PROVIDES PROJECTS AND RISKS TO KEY CHANGE PROGRAMMES 4HE 'ROUP HAS AN INTERNAL AUDIT DEPARTMENT REASONABLE RATHER THAN ABSOLUTE ASSURANCE 4HE RESULTS OF THESE RISK ASSESSMENTS WERE THAT REPORTS CENTRALLY WITH RESPONSIBILITY FOR THAT THE 'ROUPÓS BUSINESS OBJECTIVES WILL BE REPORTED TO SENIOR MANAGEMENT AND THE !UDIT REVIEWING AND PROVIDING ASSURANCE ON THE ACHIEVED WITHIN THE RISK TOLERANCE LEVELS DEäNED #OMMITTEE 4HE PROCESS OF RISK MANAGEMENT ADEQUACY OF THE INTERNAL CONTROL ENVIRONMENT BY THE "OARD 2EGULAR MANAGEMENT REPORTING IS DESIGNED TO IDENTIFY INTERNAL AND EXTERNAL ACROSS ALL OF !NGLO !MERICANÓS OPERATIONS WHICH PROVIDES A BALANCED ASSESSMENT OF KEY THREATS TO THE BUSINESS AND TO ASSIST 4HE HEAD OF INTERNAL AUDIT IS RESPONSIBLE FOR RISKS AND CONTROLS IS AN IMPORTANT COMPONENT MANAGEMENT IN PRIORITISING THEIR RESPONSE TO REPORTING AND FOLLOWING UP ON THE äNDINGS OF OF "OARD ASSURANCE )N ADDITION CERTAIN "OARD THOSE RISKS #ONTINUOUS MONITORING OF RISK AND THIS INTERNAL AUDIT WORK TO LOCAL MANAGEMENT COMMITTEES FOCUS ON SPECIäC RISKS SUCH AS CONTROL PROCESSES ACROSS HEADLINE RISK AREAS AND THE !UDIT #OMMITTEE ON A REGULAR BASIS SAFETY AND CAPITAL INVESTMENT AND PROVIDE AND OTHER BUSINESS SPECIäC RISK AREAS PROVIDES )NTERNAL AUDIT TEAMS OPERATED IN ALL OF THE ASSURANCE TO THE "OARD ON THOSE MATTERS 4HE THE BASIS FOR REGULAR AND EXCEPTION REPORTING TO 'ROUPÓS PRINCIPAL DIVISIONS IN THE PERIOD UNDER CHIEF äNANCIAL OFäCERS PROVIDE CONäRMATION BUSINESS MANAGEMENT AND BOARDS %X#O THE REVIEW REPORTING äNDINGS TO LOCAL SENIOR ON A SIX MONTHLY BASIS THAT äNANCIAL AND !UDIT #OMMITTEE AND THE "OARD MANAGEMENT 4HE INTERNAL AUDIT FUNCTIONÓS ACCOUNTING CONTROL FRAMEWORKS HAVE OPERATED 3OME OF THE HEADLINE RISK AREAS WHICH HAVE MANDATES AND ANNUAL AUDIT COVERAGE PLANS SATISFACTORILY 4HE "OARD ALSO RECEIVES BEEN ELABORATED UPON IN THE äNANCIAL REVIEW WERE APPROVED BY THE !UDIT #OMMITTEE ASSURANCE FROM THE !UDIT #OMMITTEE WHICH SET OUT ON PAGES TO ARE DERIVES ITS INFORMATION IN PART FROM REGULAR 4HE INTERNAL AUDIT ACTIVITIES ARE PERFORMED INTERNAL AUDIT REPORTS ON RISK AND INTERNAL Ú COMMODITY PRICE RISK EITHER BY TEAMS OF APPROPRIATE QUALIäED CONTROL THROUGHOUT THE 'ROUP AND EXTERNAL AUDIT AND EXPERIENCED EMPLOYEES OR THROUGH THE Ú POLITICAL RISK REPORTING 4HE 'ROUPÓS INTERNAL AUDIT FUNCTION ENGAGEMENT OF EXTERNAL PRACTITIONERS UPON HAS A FORMAL COLLABORATION PROCESS IN PLACE Ú LEGAL AND REGULATORY RISK SPECIäED AND AGREED TERMS ! SUMMARY OF AUDIT WITH THE EXTERNAL AUDITORS TO ENSURE EFäCIENT RESULTS AND RISK MANAGEMENT INFORMATION WAS Ú COUNTERPARTY RISK AND COVERAGE OF INTERNAL CONTROLS 4HE !NGLO PRESENTED TO THE #OMMITTEE AND 'ROUP SENIOR !MERICAN INTERNAL AUDIT FUNCTION IS RESPONSIBLE Ú INFRASTRUCTURE AND OPERATIONAL MANAGEMENT AT REGULAR INTERVALS THROUGHOUT FOR PROVIDING INDEPENDENT ASSURANCE TO PERFORMANCE RISKS THE YEAR 4HE 'ROUPÓS HEAD OF INTERNAL AUDIT EXECUTIVE MANAGEMENT AND THE "OARD ON THE REPORTS TO THE !UDIT #OMMITTEE ON THE INTERNAL 4HE RISK ASSESSMENT AND REPORTING CRITERIA EFFECTIVENESS OF THE RISK MANAGEMENT PROCESS AUDIT FUNCTIONÓS PERFORMANCE AGAINST THE AGREED ARE DESIGNED TO PROVIDE THE "OARD WITH A THROUGHOUT THE 'ROUP INTERNAL AUDIT PLAN CONSISTENT 'ROUP WIDE PERSPECTIVE OF THE !NGLO !MERICAN SEEKS TO HAVE A SOUND SYSTEM KEY RISKS 4HE REPORTS TO THE "OARD WHICH ARE !SSURANCE REGARDING THE ACCURACY AND OF INTERNAL CONTROL BASED ON THE 'ROUPÓS POLICIES SUBMITTED AT LEAST EVERY SIX MONTHS INCLUDE RELIABILITY OF MINERAL RESOURCES AND ORE RESERVES AND GUIDELINES IN ALL MATERIAL ASSOCIATES AND AN ASSESSMENT OF THE LIKELIHOOD AND IMPACT OF DISCLOSURES IS PROVIDED THROUGH A COMBINATION JOINT VENTURES )N THOSE COMPANIES THAT ARE RISKS MATERIALISING AS WELL AS RISK MITIGATION OF INTERNAL TECHNICALLY PROäCIENT STAFF AND INDEPENDENTLY MANAGED AS WELL AS JOINT INITIATIVES AND THEIR EFFECTIVENESS INDEPENDENT THIRD PARTIES VENTURES THE DIRECTORS WHO ARE REPRESENTED )N CONDUCTING ITS ANNUAL REVIEW OF THE $URING OVER AUDIT PROJECTS WERE ON THESE ORGANISATIONSÓ BOARDS SEEK ASSURANCE EFFECTIVENESS OF RISK MANAGEMENT THE COMPLETED COVERING A VARIETY OF äNANCIAL THAT SIGNIäCANT RISKS ARE BEING MANAGED "OARD CONSIDERS THE KEY äNDINGS FROM THE OPERATIONAL STRATEGIC AND COMPLIANCE RELATED ONGOING MONITORING AND REPORTING PROCESSES BUSINESS PROCESSES ACROSS ALL BUSINESS Risk management MANAGEMENT ASSERTIONS AND INDEPENDENT UNITS AND FUNCTIONS )N ADDITION THE INTERNAL 4HE "OARDÓS POLICY ON RISK MANAGEMENT ASSURANCE REPORTS 4HE "OARD ALSO TAKES AUDIT DEPARTMENT RESPONDED TO A NUMBER OF ENCOMPASSES ALL SIGNIäCANT BUSINESS RISKS TO ACCOUNT OF MATERIAL CHANGES AND TRENDS IN MANAGEMENT REQUESTS TO INVESTIGATE ALLEGED THE 'ROUP INCLUDING äNANCIAL OPERATIONAL THE RISK PROäLE AND CONSIDERS WHETHER THE BREACHES OF OUR BUSINESS PRINCIPLES AND COMPLIANCE RISK WHICH COULD UNDERMINE CONTROL SYSTEM INCLUDING REPORTING ADEQUATELY THE ACHIEVEMENT OF BUSINESS OBJECTIVES 4HIS SUPPORTS THE "OARD IN ACHIEVING ITS RISK Effectiveness of internal control SYSTEM OF RISK MANAGEMENT IS DESIGNED SO MANAGEMENT OBJECTIVES and risk management THAT THE DIFFERENT BUSINESSES ARE ABLE TO TAILOR AND ADAPT THEIR RISK MANAGEMENT PROCESSES $URING THE COURSE OF THE YEAR THE "OARD 4HE '-# AS MANDATED BY THE "OARD MAINTAINS TO SUIT THEIR SPECIäC CIRCUMSTANCES 4HIS CONSIDERED THE 'ROUPÓS RESPONSIVENESS TO A 'ROUP WIDE SYSTEM OF INTERNAL CONTROL TO åEXIBLE APPROACH HAS THE COMMITMENT OF THE CHANGES WITHIN ITS BUSINESS ENVIRONMENT MANAGE SIGNIäCANT 'ROUP RISKS 4HIS SYSTEM 'ROUPÓS SENIOR MANAGEMENT 4HERE IS CLEAR 4HE "OARD IS SATISäED THAT THERE IS AN ONGOING WHICH HAS BEEN OPERATING THROUGHOUT THE YEAR ACCOUNTABILITY FOR RISK MANAGEMENT WHICH PROCESS WHICH HAS BEEN OPERATIONAL DURING AND TO THE DATE OF THIS REPORT SUPPORTS THE IS A KEY PERFORMANCE AREA OF LINE MANAGERS THE YEAR AND UP TO THE DATE OF APPROVAL OF THE "OARD IN DISCHARGING ITS RESPONSIBILITY FOR THROUGHOUT THE 'ROUP 4HE REQUISITE RISK AND !NNUAL 2EPORT FOR IDENTIFYING EVALUATING AND ENSURING THAT THE WIDE RANGE OF RISKS ASSOCIATED CONTROL CAPABILITY IS ASSURED THROUGH "OARD MANAGING THE SIGNIäCANT RISKS FACED BY THE WITH THE 'ROUPÓS DIVERSE INTERNATIONAL OPERATIONS CHALLENGE AND APPROPRIATE MANAGEMENT 'ROUP 4HIS INCLUDES SOCIAL ENVIRONMENTAL AND IS EFFECTIVELY MANAGED IN SUPPORT OF THE CREATION SELECTION AND SKILLS DEVELOPMENT -ANAGERS ETHICAL RISKS AS HIGHLIGHTED IN THE $ISCLOSURE
78 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 'UIDELINES ON 3OCIALLY 2ESPONSIBLE )NVESTMENT SAFETY AND HUMAN RESOURCE TYPE ISSUES !NY CONCERNS RAISED BY A SHAREHOLDER IN ISSUED BY THE !SSOCIATION OF "RITISH )NSURERS 2EPORTS RECEIVED WERE KEPT STRICTLY CONäDENTIAL RELATION TO THE #OMPANY AND ITS AFFAIRS ARE ! DETAILED REPORT ON SOCIAL ENVIRONMENTAL AND AND WERE REFERRED TO APPROPRIATE LINE MANAGERS COMMUNICATED TO THE "OARD AS A WHOLE ETHICAL ISSUES IS INCLUDED IN THE #OMPANYÓS WITHIN THE 'ROUP FOR RESOLUTION 7HERE 4HE "OARD IS BRIEFED ON A REGULAR BASIS BY THE 2EPORT TO 3OCIETY APPROPRIATE ACTION WAS TAKEN TO ADDRESS THE )NVESTOR 2ELATIONS $EPARTMENT AND ANALYSTSÓ ISSUES RAISED 4HE REPORTS ARE ANALYSED AND REPORTS ARE CIRCULATED TO THE DIRECTORS &EEDBACK Accountability and audit MONITORED TO ENSURE THE PROCESS IS EFFECTIVE FROM MEETINGS HELD BETWEEN EXECUTIVE 4HE "OARD IS REQUIRED TO PRESENT A BALANCED MANAGEMENT OR THE )NVESTOR 2ELATIONS AND UNDERSTANDABLE ASSESSMENT OF !NGLO Executive management $EPARTMENT AND INSTITUTIONAL SHAREHOLDERS IS !MERICANÓS äNANCIAL POSITION AND PROSPECTS ALSO COMMUNICATED TO THE "OARD 3UCH ASSESSMENT IS PROVIDED IN THE #HAIRMANÓS Group Management Committee (GMC) $URING THE YEAR THERE WERE REGULAR AND #HIEF EXECUTIVEÓS STATEMENTS AND THE '-# REPLACED THE %X#O IN TERMS OF AUTHORITY PRESENTATIONS AND MEETINGS WITH INSTITUTIONAL /PERATING AND äNANCIAL REVIEW OF THIS !NNUAL IN AND IS RESPONSIBLE FOR FORMULATING INVESTORS IN THE 5+ 3OUTH !FRICA CONTINENTAL 2EPORT 4HE RESPECTIVE RESPONSIBILITIES OF THE STRATEGY FOR DISCUSSION AND AGREEMENT BY THE %UROPE AND THE 53 TO COMMUNICATE THE DIRECTORS AND EXTERNAL AUDITORS ARE SET OUT ON "OARD MONITORING PERFORMANCE AND MANAGING STRATEGY AND PERFORMANCE OF !NGLO !MERICAN PAGES AND !S REFERRED TO IN THE THE 'ROUPÓS PORTFOLIO 4HE CURRENT MEMBERS OF %XECUTIVE DIRECTORS AS WELL AS KEY CORPORATE $IRECTORSÓ REPORT THE DIRECTORS HAVE EXPRESSED '-# ARE #YNTHIA #ARROLL CHAIR 2EN¤ -¤DORI OFäCERS INCLUDING BUSINESS UNIT HEADS HOST THEIR VIEW THAT !NGLO !MERICANÓS BUSINESS IS A "RIAN "EAMISH -ERVYN 7ALKER AND $AVID 7ESTON SUCH PRESENTATIONS INCLUDING SEMINARS FOR GOING CONCERN INVESTORS AND ANALYSTS AND ÒONE ON ONEÓ Executive Committee (ExCo) MEETINGS %XECUTIVE MANAGEMENT ALSO Whistleblowing programme %X#O IS RESPONSIBLE FOR THE IMPLEMENTATION PRESENTS AT INDUSTRY CONFERENCES ON A REGULAR 4HE 'ROUP HAS HAD IN PLACE FOR A NUMBER OF OF POLICIES AND PROGRAMMES THE ADOPTION BASIS THROUGHOUT THE YEAR WHICH ARE MAINLY YEARS A WHISTLEBLOWING PROGRAMME IN ALL ITS OF BEST PRACTICE STANDARDS AND SENIOR TALENT ORGANISED BY INVESTMENT BANKS FOR THEIR MANAGED OPERATIONS 4HE PROGRAMME WHICH MANAGEMENT ACROSS THE 'ROUP %X#O MEETS AT INSTITUTIONAL INVESTOR BASE 4HE CHAIRMAN Governance IS MONITORED BY THE !UDIT #OMMITTEE IS LEAST EVERY TWO MONTHS ON A FORMAL BASIS FOR SENIOR INDEPENDENT NON EXECUTIVE DIRECTOR DESIGNED TO ENABLE EMPLOYEES CUSTOMERS A TWO DAY SESSION AND WHEN REQUIRED IN THE AND OTHER NON EXECUTIVE DIRECTORS ARE ALSO SUPPLIERS MANAGERS OR OTHER STAKEHOLDERS ON INTERVENING PERIODS AVAILABLE TO SHAREHOLDERS TO DISCUSS ANY A CONäDENTIAL BASIS TO RAISE CONCERNS IN CASES MATTER THEY WISH TO RAISE 4HE #OMPANYÓS 4HE CURRENT MEMBERS OF %X#O ARE #YNTHIA WHERE CONDUCT IS DEEMED TO BE CONTRARY TO OUR WEBSITE WWWANGLOAMERICANCOUK PROVIDES #ARROLL CHAIR 2EN¤ -¤DORI "RIAN "EAMISH VALUES )T MAY INCLUDE THE LATEST NEWS AND HISTORICAL äNANCIAL 7ALTER $E 3IMONI 3EAMUS &RENCH #HRIS INFORMATION DETAILS ABOUT FORTHCOMING EVENTS Ú ACTIONS THAT MAY RESULT IN DANGER TO THE 'RIFäTH *OHN -AC+ENZIE .ORMAN -BAZIMA FOR SHAREHOLDERS AND ANALYSTS AND OTHER HEALTH ANDOR SAFETY OF PEOPLE OR DAMAGE TO .EVILLE .ICOLAU -ERVYN 7ALKER $UNCAN INFORMATION ON !NGLO !MERICAN THE ENVIRONMENT 7ANBLAD 3TEPHAN 7EBER $AVID 7ESTON AND 0ETER 7HITCUTT !LONG WITH THE CHIEF EXECUTIVE 3HAREHOLDERS WILL HAVE THE OPPORTUNITY AT THE Ú UNETHICAL PRACTICE IN ACCOUNTING INTERNAL AND äNANCE DIRECTOR THE MEMBERS OF %X#O ARE FORTHCOMING !'- NOTICE OF WHICH IS CONTAINED ACCOUNTING CONTROLS äNANCIAL REPORTING AND SELECTED FROM THE HEADS OF BUSINESS UNITS AND IN THE BOOKLET ENCLOSED HEREWITH TO PUT AUDITING MATTERS CORPORATE FUNCTIONS QUESTIONS TO THE "OARD INCLUDING THE CHAIRMEN Ú CRIMINAL OFFENCES INCLUDING MONEY OF THE VARIOUS COMMITTEES &ACILITIES HAVE BEEN LAUNDERING FRAUD BRIBERY AND CORRUPTION Investment Committee PUT IN PLACE TO ENABLE SHAREHOLDERS ON THE 5+ REGISTER TO RECEIVE #OMPANY COMMUNICATIONS Ú FAILURE TO COMPLY WITH ANY LEGAL OBLIGATION 4HE ROLE OF THE )NVESTMENT #OMMITTEE WHICH IS A SUB COMMITTEE OF '-# IS TO MANAGE THE ELECTRONICALLY RATHER THAN BY MAIL AND FOR THOSE Ú MISCARRIAGE OF JUSTICE PROCESS OF CAPITAL ALLOCATION BY ENSURING THAT UNABLE TO ATTEND THE MEETING TO CAST THEIR VOTES BY ELECTRONIC MEANS INCLUDING THOSE Ú ANY CONDUCT CONTRARY TO THE ETHICAL PRINCIPLES INVESTMENTS AND DIVESTMENTS INCREASE SHAREHOLDERS WHOSE SHARES ARE HELD IN THE EMBRACED IN OUR "USINESS 0RINCIPLES OR ANY SHAREHOLDER VALUE AND MEET !NGLO !MERICANÓS #2%34 SYSTEM SIMILAR POLICY äNANCIAL CRITERIA 4HE #OMMITTEE MAKES RECOMMENDATIONS TO '-# ANDOR THE "OARD ON !S A RESULT OF THE IMPLEMENTATION OF THE Ú ANY OTHER LEGAL OR ETHICAL CONCERN AND THESE MATTERS 4HE #OMMITTEE MEETS AS REQUIRED ELECTRONIC COMMUNICATIONS PROVISIONS IN Ú CONCEALMENT OF ANY OF THE ABOVE 4HE )NVESTMENT #OMMITTEE PRESENTLY THE #OMPANIES !CT THE #OMPANY HAS SUBSTANTIALLY REDUCED THE COST OF THE 4HE PROGRAMME MAKES AVAILABLE A SELECTION COMPRISES 2EN¤ -¤DORI CHAIRMAN "RIAN ANNUAL REPORT PRODUCTION AND DISTRIBUTION OF TELEPHONIC E MAIL WEB BASED AND SURFACE "EAMISH 'ARETH -OSTYN AND $AVID 7ESTON 4HE #OMPANY SUCCESSFULLY EXTENDED THIS MAIL COMMUNICATION CHANNELS TO ANY PERSON IN APPROACH IN TO INCORPORATE 3OUTH !FRICAN THE WORLD WHO HAS INFORMATION ABOUT UNETHICAL Relations with shareholders INVESTORS HOLDING SHARES IN DEMATERIALISED FORM PRACTICE IN !NGLO !MERICAN AND ITS MANAGED 4HE #OMPANY MAINTAINS AN ACTIVE DIALOGUE 3HAREHOLDERS MAY ELECT TO RECEIVE NOTIäCATION OPERATIONS 4HE MULTILINGUAL COMMUNICATION WITH ITS KEY äNANCIAL AUDIENCES INCLUDING BY EMAIL OF THE AVAILABILITY OF THE ANNUAL REPORT FACILITIES ARE OPERATED BY INDEPENDENT SERVICE INSTITUTIONAL SHAREHOLDERS SELL SIDE ANALYSTS ON THE #OMPANYÓS WEBSITE INSTEAD OF RECEIVING PROVIDERS WHO REMOVE ALL INDICATIONS FROM AND POTENTIAL SHAREHOLDERS 4HE )NVESTOR PAPER COPIES INFORMATION RECEIVED AS TO THE IDENTITY OF THE 2ELATIONS $EPARTMENT MANAGES THE ONGOING CALLERS BEFORE SUBMISSION TO DESIGNATED PERSONS DIALOGUE WITH THESE AUDIENCES AND REGULAR )N ACCORDANCE WITH BEST PRACTICE VOTING ON IN THE 'ROUP PRESENTATIONS TAKE PLACE AT THE TIME OF INTERIM EACH RESOLUTION TO BE PROPOSED AT THE !'- WILL BE CONDUCTED ON A POLL RATHER THAN BY A SHOW OF $URING REPORTS WERE RECEIVED AND äNAL RESULTS AS WELL AS DURING THE REST OF HANDS 4HE RESULTS OF THE POLL WILL BE ANNOUNCED VIA THE GLOBAL Ò3PEAKUPÓ FACILITY COVERING A THE YEAR !N ACTIVE PROGRAMME WITH POTENTIAL TO THE PRESS AND ON THE #OMPANYÓS WEBSITE BROAD SPECTRUM OF CONCERNS INCLUDING ETHICAL SHAREHOLDERS IS ALSO MAINTAINED CRIMINAL SUPPLIER RELATIONSHIPS HEALTH AND
Anglo American plc Annual Report 2009 79 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Governance Remuneration report
1. Remuneration Committee Ú 3IR 0HILIP (AMPTON APPOINTED WITH EFFECT Ú TOTAL REWARDS WILL BE SET AT LEVELS THAT ARE FROM $ECEMBER SUFäCIENTLY COMPETITIVE TO ENABLE THE RECRUITMENT 4HIS REPORT SETS OUT THE #OMPANYÓS REMUNERATION AND RETENTION OF HIGH CALIBRE EXECUTIVES POLICY AND PRACTICE FOR EXECUTIVE AND NON Ú 3IR -ARK -OODY 3TUART RESIGNED WITH EFFECT EXECUTIVE DIRECTORS AND PROVIDES DETAILS OF THEIR FROM !UGUST Ú TOTAL INCENTIVE BASED REWARDS WILL BE EARNED REMUNERATION AND SHARE INTERESTS FOR THE YEAR THROUGH THE ACHIEVEMENT OF DEMANDING Ú 0ETER 7OICKE APPOINTED WITH EFFECT FROM ENDED $ECEMBER PERFORMANCE CONDITIONS CONSISTENT WITH !PRIL SHAREHOLDER INTERESTS 1.1 Role of the Remuneration 4HE #OMPANYÓS CHIEF EXECUTIVE ATTENDS THE Ú INCENTIVE PLANS PERFORMANCE MEASURES AND Committee and Terms of Reference #OMMITTEE MEETINGS BY INVITATION AND ASSISTS TARGETS WILL BE STRUCTURED TO OPERATE SOUNDLY THE #OMMITTEE IN ITS DELIBERATIONS EXCEPT 4HE 2EMUNERATION #OMMITTEE THE #OMMITTEE THROUGHOUT THE BUSINESS CYCLE IS RESPONSIBLE FOR CONSIDERING AND MAKING WHEN ISSUES RELATING TO HER OWN COMPENSATION RECOMMENDATIONS TO THE "OARD ON ARE DISCUSSED .O DIRECTORS ARE INVOLVED IN Ú THE DESIGN OF LONG TERM INCENTIVES WILL BE DECIDING THEIR OWN REMUNERATION )N THE PRUDENT AND WILL NOT EXPOSE SHAREHOLDERS TO Ú THE #OMPANYÓS GENERAL POLICY ON EXECUTIVE #OMMITTEE WAS ADVISED BY THE #OMPANYÓS UNREASONABLE äNANCIAL RISK AND SENIOR MANAGEMENT REMUNERATION (UMAN 2ESOURCES AND &INANCE FUNCTIONS AND Ú IN CONSIDERING THE MARKET POSITIONING OF SPECIäCALLY -ERVYN 7ALKER AND #HRIS #ORRIN )T Ú THE SPECIäC REMUNERATION PACKAGES FOR EXECUTIVE REWARD ELEMENTS ACCOUNT WILL BE TAKEN OF ALSO TOOK EXTERNAL ADVICE AS SHOWN IN &IGURE DIRECTORS OF THE #OMPANY INCLUDING BASIC SALARY THE PERFORMANCE OF THE #OMPANY AND OF THE PERFORMANCE BASED SHORT TERM AND LONG TERM #ERTAIN OVERSEAS OPERATIONS WITHIN THE 'ROUP INDIVIDUAL EXECUTIVE DIRECTOR AND INCENTIVES PENSIONS AND OTHER BENEäTS AND ARE ALSO PROVIDED WITH AUDIT RELATED SERVICES Ú REWARD PRACTICE WILL CONFORM TO BEST PRACTICE FROM 0W#ÓS AND $ELOITTEÓS WORLDWIDE MEMBER Ú THE DESIGN AND OPERATION OF THE #OMPANYÓS STANDARDS AS FAR AS REASONABLY PRACTICABLE SHARE INCENTIVE SCHEMES äRMS AND NON AUDIT RELATED SERVICES FROM -ERCERÓS WORLDWIDE MEMBER äRMS 2EPRESENTATIVES OF THE #OMPANYÓS PRINCIPAL 4HE FULL 4ERMS OF 2EFERENCE OF THE #OMMITTEE INVESTORS ARE CONSULTED ON MATERIAL CHANGES TO ! SUMMARY OF THE LETTER FROM -ERCER CONTAINING CAN BE FOUND ON THE !NGLO !MERICAN WEBSITE REMUNERATION POLICY WWWANGLOAMERICANCOUK AND COPIES ARE THE CONCLUSIONS OF THEIR REVIEW OF THE #OMMITTEEÓS AVAILABLE ON REQUEST EXECUTIVE REMUNERATION PROCESSES FOR CAN BE FOUND ON PAGE WHILE THE FULL LETTER CAN BE 3. Elements of executive director 4HE #OMMITTEE MET THREE TIMES DURING FOUND ON THE #OMPANYÓS WEBSITE remuneration AND DEALT WITH AD HOC ITEMS BETWEEN FORMAL MEETINGS BY ÒROUND ROBINÓ RESOLUTIONS 2. Remuneration policy 3.1 Remuneration mix %ACH EXECUTIVE DIRECTORÓS TOTAL REMUNERATION 1.2 Membership of the Committee on executive director CONSISTS OF SALARY ANNUAL BONUS LONG TERM 4HE #OMMITTEE COMPRISED THE FOLLOWING remuneration INCENTIVES AND BENEäTS !N APPROPRIATE BALANCE IS NON EXECUTIVE DIRECTORS DURING THE YEAR 4HE #OMPANYÓS REMUNERATION POLICY IS MAINTAINED BETWEEN äXED AND PERFORMANCE RELATED ENDED $ECEMBER FORMULATED TO ATTRACT AND RETAIN HIGH CALIBRE REMUNERATION AND BETWEEN ELEMENTS LINKED TO Ú 3IR 2OB -ARGETTS #HAIRMAN EXECUTIVES AND TO MOTIVATE THEM TO DEVELOP SHORT TERM äNANCIAL PERFORMANCE AND THOSE LINKED AND IMPLEMENT THE #OMPANYÓS BUSINESS TO LONGER TERM SHAREHOLDER VALUE CREATION Ú $AVID #HALLEN STRATEGY IN ORDER TO OPTIMISE LONG TERM !SSUMING ON TARGET PERFORMANCE THE #OMMITTEEÓS Ú 3IR # + #HOW APPOINTED WITH EFFECT FROM SHAREHOLDER VALUE CREATION 4HE #OMMITTEE POLICY IS THAT AT LEAST FOR #YNTHIA !PRIL INTENDS THAT THIS POLICY WILL CONTINUE TO APPLY #ARROLL OF EACH EXECUTIVE DIRECTORÓS REMUNERATION FOR AND SUBSEQUENT YEARS SUBJECT TO IS PERFORMANCE RELATED )N OF BOTH Ú #HRIS &AY RESIGNED WITH EFFECT FROM ONGOING REVIEW AS APPROPRIATE 4HE POLICY IS !PRIL THE CHIEF EXECUTIVEÓS AND THE äNANCE DIRECTORÓS FRAMED AROUND THE FOLLOWING KEY PRINCIPLES REMUNERATION ON AN EXPECTED VALUE BASIS WAS PERFORMANCE RELATED SEE ILLUSTRATIVE CHARTS
&IGURE %XTERNAL ADVICE PROVIDED TO THE 2EMUNERATION #OMMITTEE
!DVISERS /THER SERVICES PROVIDED TO THE #OMPANY 0RICEWATERHOUSE#OOPERS ,,0 !PPOINTED BY THE #OMPANY WITH THE AGREEMENT OF THE )NVESTMENT ADVISERS ACTUARIES AND AUDITORS FOR 0W# #OMMITTEE TO PROVIDE SPECIALIST VALUATION SERVICES VARIOUS PENSION SCHEMES ADVISERS ON INTERNAL AUDIT PROJECTS TAXATION PAYROLL AND EXECUTIVE COMPENSATION ADVICE -ONKS 0ARTNERSHIP !PPOINTED BY THE #OMPANY WITH THE AGREEMENT OF THE A SUBSIDIARY OF 0W# #OMMITTEE TO PROVIDE MARKET REMUNERATION DATA ,INKLATERS ,,0 !PPOINTED BY THE #OMPANY WITH THE AGREEMENT OF THE ,EGAL ADVICE ON CERTAIN CORPORATE MATTERS ,INKLATERS #OMMITTEE TO PROVIDE LEGAL ADVICE ON LONG TERM INCENTIVES AND DIRECTORSÓ SERVICE CONTRACTS -ERCER ,IMITED %NGAGED BY THE #OMMITTEE TO REVIEW THE #OMMITTEEÓS )NVESTMENT ADVISERS AND ACTUARIES FOR VARIOUS -ERCER PROCESSES ON AN ANNUAL BASIS IN ORDER TO PROVIDE PENSION SCHEMES SHAREHOLDERS WITH ASSURANCE THAT THE REMUNERATION PROCESSES THE #OMMITTEE HAS FOLLOWED ARE IN LINE WITH STATED POLICY AND THAT THE #OMMITTEE HAS OPERATED WITHIN ITS 4ERMS OF 2EFERENCE $ELOITTE ,,0 )N THEIR CAPACITY AS 'ROUP AUDITORS $ELOITTE $ELOITTE UNDERTAKES AN AUDIT OF SECTIONS AND OF THE REMUNERATION REPORT ANNUALLY (OWEVER THEY PROVIDE NO ADVICE TO THE #OMMITTEE
80 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 CEO – Expected values 4HE "ONUS 3HARE 0LAN "30 AND THE ,ONG 4ERM Ú THE #OMMITTEE REVIEWS THESE MEASURES )NCENTIVE 0LAN ,4)0 ARE DESIGNED TO ALIGN ANNUALLY TO ENSURE THEY REMAIN APPROPRIATE THE LONGER TERM INTERESTS OF SHAREHOLDERS AND AND SUFäCIENTLY STRETCHING IN THE CONTEXT OF THE
3 1 EXECUTIVES AND TO UNDERPIN THE #OMPANYÓS ECONOMIC AND PERFORMANCE EXPECTATIONS FOR PERFORMANCE CULTURE 4HE #OMMITTEE MONITORS THE THE #OMPANY AND ITS OPERATING BUSINESSES RELEVANCE AND APPROPRIATENESS OF THE PERFORMANCE Ú IN OF EACH ANNUAL BONUS WAS BASED MEASURES AND TARGETS APPLICABLE TO BOTH PLANS ON THE CORPORATE äNANCIAL MEASURE AND THE &URTHER DETAILS OF THE "30 AND THE ,4)0 ARE SET OUT 2 REMAINING ON KEY PERSONAL PERFORMANCE BELOW AND ON PAGES AND MEASURES 4HIS SPLIT WAS DECIDED UPON TO 1 Fixed 31% REåECT THE IMPORTANCE OF THE ONGOING STRATEGIC 2 Performance-related annual bonus 40% 3.2 Basic salary 3 Performance-related long-term incentives 29% REPOSITIONING OF THE 'ROUP AND BECAUSE OF THE 4HE BASIC SALARY OF THE EXECUTIVE DIRECTORS IS VOLATILE NATURE OF COMMODITY PRICES WITH THE REVIEWED ANNUALLY AND IS TARGETED AT THE MARKET IMPLICATIONS OF THIS ON SETTING EARNINGS TARGETS MEDIAN OF COMPANIES OF COMPARABLE SIZE MARKET 4HE LEVEL OF BONUS PAYABLE IS REDUCED IF CERTAIN SECTOR BUSINESS COMPLEXITY AND INTERNATIONAL FD – Expected values OVERALL SAFETY IMPROVEMENT TARGETS ARE NOT SCOPE 4HIS IS ADJUSTED EITHER WAY BASED ON MET "ONUS PARAMETERS ARE SET ON AN INDIVIDUAL EXPERIENCE AND OTHER RELEVANT FACTORS 4HE MARKET BASIS FOR EXECUTIVES OF MAIN BOARD CALIBRE IN LARGE 3 1 INTERNATIONAL MINING COMPANIES IN PARTICULAR HAS Ú THE MAXIMUM CASH ELEMENT IS OF BASIC CONTINUED TO BE VERY COMPETITIVE IN RECENT YEARS SALARY IN THE CASE OF BOTH #YNTHIA #ARROLL AND AND IT IS THEREFORE DEEMED SENSIBLE TO POSITION 2EN¤ -¤DORI (ALF OF THE BONUS EARNED IS PAYABLE IN CASH AND THE OTHER HALF IS DEFERRED 2 BASIC SALARY FOR EXECUTIVE DIRECTORS AT NO LOWER THAN THE MEDIAN POINT #OMPANY PERFORMANCE INTO SHARES 4HE MAXIMUM BONUS IS PAYABLE
ONLY FOR MEETING TARGETS WHICH IN THE OPINION Governance 1 Fixed 31% INDIVIDUAL PERFORMANCE AND CHANGES IN 2 Performance-related annual bonus 40% RESPONSIBILITIES ARE ALSO TAKEN INTO CONSIDERATION OF THE #OMMITTEE REPRESENT AN EXCEPTIONAL 3 Performance-related long-term incentives 29% IN SETTING SALARY LEVELS EACH YEAR PERFORMANCE FOR THE 'ROUP IN THE LIGHT OF PREVAILING MARKET CONDITIONS 4HE OTHER PART 3.3 Bonus Share Plan (BSP) OF THE BONUS IS IN THE FORM OF A CONDITIONAL AWARD OF "ONUS 3HARES EQUAL IN VALUE TO 4HE "30 WAS äRST OPERATED IN AND ALL THE CASH ELEMENT 4HESE "ONUS 3HARES VEST Vesting of Enhancement Shares EXECUTIVE DIRECTORS ARE NORMALLY ELIGIBLE TO ONLY IF THE PARTICIPANT REMAINS IN EMPLOYMENT PARTICIPATE IN IT WITH THE 'ROUP UNTIL THE END OF A THREE 4HE "30 REQUIRES EXECUTIVE DIRECTORS TO INVEST 75% YEAR HOLDING PERIOD OR IS REGARDED BY THE A SIGNIäCANT PROPORTION OF THEIR REMUNERATION #OMMITTEE AS A ÒGOOD LEAVERÓ !T THE TIME 3 1 IN SHARES THEREBY MORE CLOSELY ALIGNING THAT BONUS TARGETS WERE SET IN EARLY THEIR INTERESTS WITH THOSE OF SHAREHOLDERS THE PRICES OF THE #OMPANYÓS PRODUCTS HAD
33% AND ENCOURAGES MANAGEMENT AT ALL LEVELS FALLEN VERY SHARPLY AND THE %03 TARGETS SET BY 2 TO BUILD UP A MEANINGFUL PERSONAL STAKE IN THE #OMMITTEE LOOKED EXTREMELY STRETCHING THE #OMPANY !WARDS UNDER THE "30 ARE NOT $URING THE YEAR THE ACTIONS TAKEN BY PENSIONABLE ARE MADE ANNUALLY AND CONSIST OF MANAGEMENT TOGETHER WITH IMPROVING PRICES 0% THREE ELEMENTS RPI RPI RPI RPI RPI RPI RPI LED TO AN OUT TURN HIGHER THAN THE TARGETS
Additional percentage of Bonus Shares acquired Shares Bonus of percentage Additional +0% +3% +6% +9% +12% +15% +18% THAT HAD BEEN SET (AVING TAKEN ALL RELEVANT Ú A PERFORMANCE RELATED CASH ELEMENT Real EPS growth over three years CONSIDERATIONS INTO ACCOUNT THE #OMMITTEE Ú "ONUS 3HARES AS A CONDITIONAL AWARD CONCLUDED THAT THE BONUSES AWARDED SHOULD NORMALLY TO A VALUE EQUAL TO THE CASH REåECT THE ACHIEVEMENT OF THE TARGETS BUT ELEMENT AND THAT THE PROPORTION OF THE BONUS DEFERRED INTO SHARES SHOULD BE INCREASED FROM TO Ú AN ADDITIONAL PERFORMANCE RELATED ELEMENT IN FOR A SECOND YEAR RUNNING THE FORM OF %NHANCEMENT 3HARES Ú EXECUTIVE DIRECTORS ALSO RECEIVE A CONDITIONAL 4HE "30 OPERATES AS FOLLOWS AWARD OF %NHANCEMENT 3HARES AT THE SAME Ú THE VALUE OF THE BONUS IS CALCULATED BY TIME AS THE AWARD OF "ONUS 3HARES 4HE REFERENCE TO ACHIEVEMENT AGAINST ANNUAL MAXIMUM POTENTIAL AT FACE VALUE OF THE PERFORMANCE TARGETS WHICH INCLUDE MEASURES %NHANCEMENT 3HARES IS OF THE FACE VALUE OF CORPORATE AND WHERE APPLICABLE BUSINESS OF THE "ONUS 3HARES !WARDS OF %NHANCEMENT UNIT PERFORMANCE AS WELL AS THE ACHIEVEMENT 3HARES MADE IN WILL VEST AFTER THREE OF SPECIäC INDIVIDUAL OBJECTIVES &OR EXECUTIVE YEARS ONLY TO THE EXTENT THAT A CHALLENGING DIRECTORS THE CORPORATE ELEMENT IS BASED ON PERFORMANCE CONDITION BASED ON EARNINGS PER STRETCHING EARNINGS PER SHARE %03 TARGETS SHARE GROWTH AGAINST GROWTH IN THE 5+ 2ETAIL WHICH ARE CALCULATED USING UNDERLYING EARNINGS 0RICE )NDEX 20) Ð 2EAL %03 GROWTH IS MET RECONCILED IN NOTE OF THE äNANCIAL SEE ILLUSTRATIVE CHART OPPOSITE 4HERE IS NO STATEMENTS 4HE KEY INDIVIDUAL OBJECTIVES ARE RETESTING OF THIS PERFORMANCE CONDITION 2EAL DESIGNED TO SUPPORT THE #OMPANYÓS STRATEGIC %03 GROWTH IS VIEWED AS THE MOST APPROPRIATE PRIORITIES AND IN INCLUDED COST AND PERFORMANCE MEASURE FOR THIS ELEMENT OF THE ASSET OPTIMISATION PORTFOLIO RESTRUCTURING "30 BECAUSE IT IS A FUNDAMENTAL äNANCIAL STRATEGIC INITIATIVES ORGANISATIONAL STRUCTURE PERFORMANCE INDICATOR BOTH INTERNALLY AND AND CAPABILITIES SAFETY IMPROVEMENTS AND EXTERNALLY AND LINKS DIRECTLY TO THE #OMPANYÓS OPERATIONAL EFFECTIVENESS LONG TERM OBJECTIVE OF IMPROVING EARNINGS
Anglo American plc Annual Report 2009 81 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Governance Remuneration report continued
4HE "30 TARGETS HAVE BEEN APPROVED BY THE Performance measures Total shareholder return (TSR) #OMMITTEE AFTER REVIEWING PERFORMANCE OVER !S IN PREVIOUS YEARS VESTING OF THE ,4)0 4HE #OMMITTEE CONSIDERS COMPARATIVE 432 TO BE A NUMBER OF YEARS AND HAVE BEEN SET AT A LEVEL AWARDS MADE DURING IS SUBJECT TO THE A SUITABLE LONG TERM PERFORMANCE MEASURE FOR WHICH PROVIDES STRETCHING PERFORMANCE LEVELS ACHIEVEMENT OVER A äXED THREE YEAR PERIOD THE #OMPANYÓS ,4)0 AWARDS %XECUTIVES WOULD FOR MANAGEMENT OF STRETCHING 'ROUP PERFORMANCE TARGETS BENEäT UNDER THIS MEASURE ONLY IF SHAREHOLDERS HAVE ENJOYED RETURNS ON THEIR INVESTMENT WHICH 4HE LEVEL OF PERFORMANCE ACHIEVED AND THE (ALF OF EACH AWARD IS SUBJECT TO A 'ROUP 4OTAL ARE SUPERIOR TO THOSE THAT COULD HAVE BEEN PROPORTION OF AWARDS VESTING IN RESPECT OF EACH 3HAREHOLDER 2ETURN 432 MEASURE WHILE OBTAINED IN OTHER COMPARABLE COMPANIES PERFORMANCE PERIOD WILL BE PUBLISHED IN THE THE OTHER HALF IS SUBJECT TO A 'ROUP OPERATING SUBSEQUENT REMUNERATION REPORT MEASURE CURRENTLY RETURN ON CAPITAL EMPLOYED OF THE PROPORTION OF EACH AWARD THAT 2/#% 4HESE PERFORMANCE MEASURES WERE IS BASED ON 432 IS MEASURED AGAINST THE 3.4 Share options and all-employee SELECTED ON THE BASIS THAT THEY FOSTER THE 3ECTOR )NDEX AND IS MEASURED AGAINST share schemes CREATION OF SHAREHOLDER VALUE AND THEIR THE CONSTITUENTS OF THE &43% -AXIMUM .O SHARE OPTIONS WERE GRANTED IN TO APPROPRIATENESS IS KEPT UNDER REVIEW BY VESTING OF THE 432 ELEMENT OF AN AWARD WILL BE EXECUTIVE DIRECTORS UNDER THE #OMPANYÓS THE #OMMITTEE 4AKEN AS A WHOLE VESTING POSSIBLE ONLY IF !NGLO !MERICAN OUTPERFORMS BY %XECUTIVE 3HARE /PTION 3CHEME %3/3 AND DEPENDS ON MEETING A VERY CHALLENGING SET OF A SUBSTANTIAL MARGIN BOTH THE SECTOR BENCHMARK THERE IS NO INTENTION TO MAKE FUTURE GRANTS PERFORMANCE HURDLES AS DESCRIBED BELOW AND THE LARGEST 5+ UNDER THE UNAPPROVED PART OF THE %3/3 TO COMPANIES ACROSS ALL SECTORS !T THE END OF EACH PERFORMANCE PERIOD THE EXECUTIVE DIRECTORS (OWEVER THE %3/3 IS LEVELS OF 432 AND 2/#% PERFORMANCE ACHIEVED RETAINED FOR USE IN SPECIAL CIRCUMSTANCES Sector Index comparison AND THE LEVEL OF AWARD EARNED ARE PUBLISHED IN RELATING TO THE RECRUITMENT OR RETENTION OF KEY THE SUBSEQUENT REMUNERATION REPORT 4HERE IS /NE HALF OF THE 432 ELEMENT OF AN ,4)0 AWARD EXECUTIVES !CCORDINGLY AS THE PREVIOUS %3/3 NO RETESTING OF PERFORMANCE VESTS ACCORDING TO THE #OMPANYÓS 432 OVER WAS DUE TO EXPIRE IN EARLY THE PLAN THE PERFORMANCE PERIOD RELATIVE TO A WEIGHTED WAS REPLACED IN BY THE !NGLO !MERICAN &OR THE ,4)0 AWARD THE #OMMITTEE BASKET OF INTERNATIONAL MINING COMPANIES THE $ISCRETIONARY /PTION 0LAN $/0 WHICH WAS IS EXAMINING THE POSSIBLE USE OF AN !SSET 3ECTOR )NDEX 4HE #OMMITTEE MAY AMEND THE APPROVED BY SHAREHOLDERS AT THE !NNUAL /PTIMISATION3UPPLY #HAIN !/3# EFäCIENCY LIST OF COMPARATOR COMPANIES IN THE 3ECTOR 'ENERAL -EETING !'- IN !PRIL .O MEASURE IN PLACE OF THE 2/#% METRIC 4HE )NDEX AND RELATIVE WEIGHTINGS IF CIRCUMSTANCES OPTIONS WERE GRANTED IN TO EXECUTIVE !/3# TARGETS ARE OF SUCH SIZE AND SIGNIäCANCE MAKE THIS NECESSARY FOR EXAMPLE AS A DIRECTORS UNDER THE $/0 THAT THE #OMMITTEE REGARDS THEIR ACHIEVEMENT RESULT OF TAKEOVERS OR MERGERS OF COMPARATOR AS CRUCIALLY IMPORTANT TO THE 'ROUP IN DELIVERING 5+ BASED EXECUTIVE DIRECTORS ARE ELIGIBLE TO COMPANIES OR SIGNIäCANT CHANGES IN THE INCREASED VALUE TO SHAREHOLDERS 4HE TARGETS PARTICIPATE IN THE #OMPANYÓS 3AVE !S 9OU COMPOSITION OF THE 'ROUP )N CALCULATING 432 IT WILL BE ALIGNED TO THE 'ROUPÓS EXTERNAL STATEMENTS %ARN SCHEME 3!9% AND 3HARE )NCENTIVE 0LAN IS ASSUMED THAT ALL DIVIDENDS ARE REINVESTED IN THIS REGARD AND THE EXTENT TO WHICH THEY ARE MET 3)0 0ERFORMANCE CONDITIONS DO NOT APPLY TO UNDER THE TERMS OF THE ,4)0 WILL BE REPORTED AND &OR AWARDS MADE IN THE COMPANIES THESE SCHEMES BECAUSE THEY ARE OFFERED TO ALL AUDITED AT THE END OF EACH PERFORMANCE PERIOD CONSTITUTING THE 3ECTOR )NDEX WERE AS SHOWN IN 5+ BASED EMPLOYEES !S THE PREVIOUS 3!9% 4HERE IS NO RETESTING OF PERFORMANCE &IGURE 3HOULD THE 4ARMAC GROUP BE SOLD OR SCHEME WAS DUE TO EXPIRE IN EARLY IT DEMERGED DURING THE PERFORMANCE PERIOD RELATING WAS REPLACED IN BY THE NEW 3!9% SCHEME 4HE ,4)0 IS INTENDED CLOSELY TO ALIGN THE TO THIS AWARD THE PERCENTAGE ATTRIBUTABLE TO WHICH WAS APPROVED BY SHAREHOLDERS AT THE INTERESTS OF SHAREHOLDERS AND EXECUTIVE )NDUSTRIAL -INERALS WILL FALL TO ZERO !'- IN !PRIL DIRECTORS BY REWARDING SUPERIOR SHAREHOLDER RETURNS AND äNANCIAL PERFORMANCE AND 3.5 Long Term Incentive Plan (LTIP) BY ENCOURAGING EXECUTIVES TO BUILD UP A SHAREHOLDING IN THE #OMPANY Grant levels #ONDITIONAL ,4)0 AWARDS ARE MADE ANNUALLY TO &IGURE ,4)0 Ð 3ECTOR )NDEX EXECUTIVE DIRECTORS 4HE MAXIMUM GRANT LEVEL UNDER THE ,4)0 IS CURRENTLY OF BASIC SALARY -INING )NDUSTRIAL -INERALS AND IT IS ANTICIPATED THAT IN CONDITIONAL #ATEGORY WEIGHTING GRANTS UNDER THE ,4)0 WILL BE MADE AT THIS LEVEL #OMPARATOR COMPANIES "(0 "ILLITON PLC #2( PLC FOR EXECUTIVE DIRECTORS INCLUDING THE CHIEF 2IO 4INTO PLC (OLCIM ,IMITED EXECUTIVE 4HE #OMMITTEE IS SATISäED THAT THE 4ECK #OMINCO ,IMITED ,AFARGE PERFORMANCE CONDITIONS THAT NEED TO BE MET 6ALE FOR THESE AWARDS TO VEST IN FULL ARE SUFäCIENTLY 6EDANTA 2ESOURCES PLC 8STRATA PLC STRETCHING IN THE CONTEXT OF THE AWARD LEVELS )N DETERMINING ANNUAL AWARD LEVELS THE #OMMITTEE ALSO GIVES CONSIDERATION TO MARKET &IGURE ,4)0 Ð 3ECTOR )NDEX COMPARISON COMPETITIVENESS AND HAS SET THE LEVELS TAKING ACCOUNT OF MEDIAN EXPECTED VALUE OF LONG TERM 4HE #OMPANYÓS RELATIVE 432 COMPARED WITH THE 3ECTOR )NDEX PROPORTION OF TOTAL 432 ELEMENT VESTING INCENTIVES RELATIVE TO OTHER COMPANIES OF A "ELOW 4ARGET SIMILAR SIZE 4HESE AWARDS ARE DISCRETIONARY AND 4ARGET MATCHING THE WEIGHTED MEDIAN OF THE 3ECTOR )NDEX ARE CONSIDERED ON A CASE BY CASE BASIS 4ARGET PLUS PER ANNUM 4ARGET PLUS PER ANNUM OR ABOVE
82 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 &IGURE ,4)0 Ð &43% COMPARISON 3.6 Vesting of share incentives in
4HE #OMPANYÓS RELATIVE 432 COMPARED WITH THE &43% PROPORTION OF TOTAL 432 ELEMENT VESTING the event of change of control or "ELOW THE MEDIAN 432 OF THE &43% termination of employment %QUAL TO THE MEDIAN 432 OF THE &43% )N THE EVENT OF A CHANGE OF CONTROL OF THE #OMPANY THE FOLLOWING PROVISIONS APPLY UNDER %QUAL TO THE TH PERCENTILE 432 OF THE &43% THE #OMPANYÓS INCENTIVE PLANS !BOVE THE TH PERCENTILE 432 OF THE &43% Ú SHARE OPTIONS GRANTED UNDER THE %3/3 OR UNDER THE $/0 MAY BE EXERCISED IRRESPECTIVE &IGURE ,4)0 Ð 2/#% TARGETS OF WHETHER THE APPLICABLE PERFORMANCE CONDITIONS HAVE BEEN MET %XISTING CAPITAL EMPLOYED )NCREMENTAL CAPITAL EMPLOYED -INIMUM 2/#% 4ARGET Ú THE NUMBER OF SHARES THAT VEST UNDER THE -AXIMUM 2/#% 4ARGET ,4)0 WILL BE CALCULATED BY REFERENCE TO THE EXTENT TO WHICH THE APPLICABLE PERFORMANCE CONDITIONS HAVE BEEN MET AT THE TIME OF THE &IGURE ,4)0 Ð 2/#% VESTING CHANGE OF CONTROL PROPORTION OF 2/#% ELEMENT VESTING Ú THE "ONUS 3HARES AWARDED UNDER THE "30 "ELOW OR EQUAL TO THE -INIMUM 2/#% 4ARGET WILL BE RELEASED AND TO THE EXTENT THAT THE %QUAL TO OR GREATER THAN THE -AXIMUM 2/#% 4ARGET PERFORMANCE CONDITION HAS BEEN MET AT THE TIME OF THE CHANGE OF CONTROL %NHANCEMENT 3HARES AWARDED UNDER THE "30 WILL VEST 4ARGET PERFORMANCE FOR THE 3ECTOR )NDEX Return on capital employed Ú 3!9% OPTIONS MAY BE EXERCISED TO THE EXTENT IS ASSESSED BY CALCULATING THE MEDIAN 432 'ROUP 2/#% IS THE SECOND PERFORMANCE OF SAVINGS AT THE DATE OF EXERCISE AND Governance PERFORMANCE WITHIN EACH SUB SECTOR CATEGORY MEASURE FOR ,4)0 AWARDS 4HE #OMMITTEE HAS AND THEN WEIGHTING THESE MEDIANS BY THE CONSIDERED THIS TO BE AN IMPORTANT FACTOR IN Ú PARTICIPANTS MAY DIRECT THE 3)0 TRUSTEE AS TO CATEGORY WEIGHTINGS SHOWN IN &IGURE 4HAT DRIVING IMPROVEMENTS IN SHAREHOLDER VALUE HOW TO DEAL WITH THEIR 3)0 SHARES PART OF ANY AWARD THAT IS CONTINGENT UPON THE (OWEVER AS HAS BEEN NOTED ABOVE THE )N THE EVENT THAT A DIRECTORÓS EMPLOYMENT IS 3ECTOR )NDEX ELEMENT OF THE 432 PERFORMANCE #OMMITTEE IS CONSIDERING AN ALTERNATIVE METRIC TERMINATED VESTING OF ANY OUTSTANDING SHARE WILL VEST AS SHOWN IN &IGURE 3HARES WILL WHICH IS LESS COMPLEX AND IS DIRECTLY SUPPORTIVE OPTIONS UNDER THE %3/3 OR UNDER THE $/0 IS VEST ON A STRAIGHT LINE BASIS FOR PERFORMANCE OF THE #OMPANYÓS FOCUS ON !SSET /PTIMISATION DEPENDENT UPON THE REASONS FOR TERMINATION BETWEEN THE LEVELS SHOWN IN &IGURE AND 3UPPLY #HAIN INITIATIVES 0ERFORMANCE CONDITIONS FALL AWAY IN THE EVENT FTSE 100 comparison 4HE PROPORTION OF SHARES VESTING BASED ON OF REDUNDANCY (OWEVER IF THE DIRECTOR RESIGNS 'ROUP 2/#% WILL VARY ACCORDING TO THE DEGREE VOLUNTARILY THEN ALL SUCH OPTIONS LAPSE UNLESS 4HE VESTING OF THE OTHER HALF OF THE 432 OF IMPROVEMENT IN THE 'ROUPÓS AVERAGE THE #OMMITTEE DETERMINES OTHERWISE ELEMENT OF AN ,4)0 AWARD WILL DEPEND ON ANNUALISED 2/#% OVER THE PERFORMANCE THE #OMPANYÓS 432 PERFORMANCE OVER THE )N THE CASE OF ,4)0 AWARDS THE #OMMITTEE WOULD PERIOD 5NLESS CERTAIN MINIMUM TARGETS FOR PERFORMANCE PERIOD COMPARED WITH THE NORMALLY EXERCISE ITS DISCRETION WHEN A DIRECTORÓS IMPROVEMENT IN RETURNS ON BOTH CAPITAL CONSTITUENTS OF THE &43% )NDEX AS OUTLINED EMPLOYMENT CEASES AS FOLLOWS IF THE DIRECTOR EMPLOYED FOR THE äNANCIAL YEAR PRECEDING IN &IGURE 3HARES WILL VEST ON A STRAIGHT LINE RESIGNS VOLUNTARILY THEN HISHER INTERESTS THE START OF THE PERFORMANCE PERIOD EXISTING BASIS FOR PERFORMANCE BETWEEN THE LEVELS LAPSE )F HESHE RETIRES WITH THE CONSENT OF THE CAPITAL EMPLOYED AND ON THE ADDITIONAL CAPITAL SHOWN IN &IGURE #OMMITTEE IS MADE REDUNDANT OR IS CONSIDERED EMPLOYED DURING THE PERFORMANCE PERIOD BY THE #OMMITTEE TO BE A ÒGOOD LEAVERÓ VESTING 4HESE TARGETS WERE CALIBRATED SUCH THAT FOR THE INCREMENTAL CAPITAL EMPLOYED ARE MET AT THE END OF THE PERFORMANCE PERIOD IS BASED 432 ELEMENT OF THE AWARD THERE IS APPROXIMATELY NO SHARES WILL VEST UNDER THIS PERFORMANCE ON THE NORMAL PERFORMANCE CRITERIA AND THEN A CHANCE OF ACHIEVING FULL VESTING AND MEASURE 4HE MAXIMUM 2/#% TARGETS ARE PRO RATED FOR THE PROPORTION OF THE PERFORMANCE A CHANCE OF TWO THIRDS VESTING 4HESE BASED ON STRETCHING LEVELS OF RETURN ON THE PERIOD FOR WHICH THE DIRECTOR SERVED PROBABILITIES WERE ASSESSED BY 0W# USING THE EXISTING CAPITAL EMPLOYED SAME -ONTE #ARLO MODEL USED FOR CALCULATING FAIR )N THE CASE OF THE "30 IF A DIRECTOR CEASES 4HE TARGETS FOR THE 2/#% ELEMENT OF THE VALUES OF THE ,4)0 UNDER )&23 3HARE BASED TO BE EMPLOYED BEFORE THE END OF THE YEAR CONDITIONAL AWARD ARE SHOWN IN &IGURE 0AYMENTS 4HE ESTIMATED AVERAGE FAIR VALUE OF IN RESPECT OF WHICH THE ANNUAL PERFORMANCE AN AWARD UNDER THE 432 ELEMENT IS OF THE 4O ENSURE THAT THE TARGETS ARE AN EFFECTIVE TARGETS APPLY THEN NO AWARD WILL BE MADE VALUE OF SHARES AWARDED INCENTIVE THEY ARE ADJUSTED FOR FACTORS OUTSIDE UNLESS THE #OMMITTEE DETERMINES OTHERWISE MANAGEMENTÓS CONTROL SUCH AS MOVEMENTS IN TAKING INTO ACCOUNT THE PROPORTION OF THE YEAR 'RAPHS SHOWING THE #OMPANYÓS 432 COMMODITY PRICES CERTAIN FOREIGN EXCHANGE RATE FOR WHICH THE DIRECTOR WAS AN EMPLOYEE OF PERFORMANCE AGAINST THE WEIGHTED AVERAGE EFFECTS AND CAPITAL IN PROGRESS AS WELL AS FOR THE 'ROUP AND OF PERFORMANCE TO DATE AGAINST OF THE 3ECTOR )NDEX AND AGAINST THE &43% RELEVANT CHANGES IN THE COMPOSITION OF THE 'ROUP THE ANNUAL PERFORMANCE TARGETS AT THE DATE FOR THE äVE YEARS FROM *ANUARY TO OF CESSATION )F A DIRECTOR RESIGNS VOLUNTARILY $ECEMBER CAN BE FOUND IN &IGURE 4HE 2/#% ELEMENTS OF THE AWARD VEST AS BEFORE THE END OF THE THREE YEAR VESTING PERIOD ON PAGE SHOWN IN &IGURE THE "ONUS 3HARE !WARDS LAPSE AND AWARDS OF 3HARES WILL VEST ON A STRAIGHT LINE BASIS FOR %NHANCEMENT 3HARES ARE FORGONE )F A DIRECTOR PERFORMANCE BETWEEN THE -INIMUM 4ARGET AND THE -AXIMUM 4ARGET
Anglo American plc Annual Report 2009 83 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Governance Remuneration report continued
RETIRES WITH THE CONSENT OF THE #OMMITTEE &IGURE %XECUTIVE DIRECTORS
IS MADE REDUNDANT OR IS CONSIDERED BY THE $ATE OF .EXT !'- RE ELECTION #OMMITTEE TO BE A ÒGOOD LEAVERÓ "ONUS 3HARES APPOINTMENT OR ELECTION ALREADY AWARDED WILL BE TRANSFERRED AS SOON #YNTHIA #ARROLL CHIEF EXECUTIVE *ANUARY !PRIL AS PRACTICABLE AFTER THE DATE OF LEAVING AND 2EN¤ -¤DORI äNANCE DIRECTOR *UNE !PRIL %NHANCEMENT 3HARES WILL VEST AT THE END OF
THE PERFORMANCE PERIOD TO THE EXTENT THAT THE !T EACH !'- ALL THOSE DIRECTORS WHO HAVE BEEN IN OFäCE FOR THREE YEARS OR MORE SINCE THEIR ELECTION OR LAST RE ELECTION SHALL RETIRE FROM OFäCE PERFORMANCE CONDITION HAS BEEN MET $ETAILS OF THOSE RETIRING BY ROTATION THIS YEAR ARE CONTAINED IN THE .OTICE OF !'-
3.7 Employee Share Ownership Trust and policy on provision of shares for incentive schemes 3.9 Other benefits Ð IN THE FORM OF CASH FEES BUT WITH THE 4HE 'ROUP USES AN %MPLOYEE 3HARE /WNERSHIP %XECUTIVE DIRECTORS ARE ENTITLED TO THE PROVISION åEXIBILITY TO FORGO ALL OR PART OF SUCH FEES 4RUST THE 4RUST TO ACQUIRE AND HOLD SHARES TO OF A CAR ALLOWANCE MEDICAL INSURANCE DEATH AFTER DEDUCTION OF APPLICABLE INCOME TAX FACILITATE THE OPERATION OF ITS SHARE SCHEMES AND DISABILITY INSURANCE SOCIAL CLUB MEMBERSHIP AND SOCIAL SECURITY CONTRIBUTIONS TO !S AT $ECEMBER THE 4RUST HELD AND LIMITED PERSONAL TAXATIONäNANCIAL ADVICE ACQUIRE SHARES IN THE #OMPANY SHOULD THE ORDINARY SHARES IN THE #OMPANY IN ADDITION TO REIMBURSEMENT OF REASONABLE NON EXECUTIVE DIRECTOR SO WISH AND REGISTERED IN THE NAME OF 'REENWOOD .OMINEES BUSINESS EXPENSES 4HE PROVISION OF THESE Ð SET BY REFERENCE TO THE RESPONSIBILITIES TAKEN ,IMITED 3HARES HELD BY THE 4RUST ARE NOT VOTED BENEäTS IS CONSIDERED TO BE MARKET COMPETITIVE ON BY THE NON EXECUTIVES IN CHAIRING THE AT THE #OMPANYÓS GENERAL MEETINGS )T IS THE "OARD AND ITS COMMITTEES #OMPANYÓS CURRENT POLICY TO USE SHARES FROM 4. Executive shareholding Ú .ON EXECUTIVE DIRECTORS MAY NOT PARTICIPATE THE 4RUST OR BY MARKET PURCHASE TO MEET THE targets IN THE #OMPANYÓS SHARE INCENTIVES SCHEMES OR REQUIREMENTS OF SHARE INCENTIVES 4HE "OARD PENSION ARRANGEMENTS ALSO HAS THE NECESSARY AUTHORITIES TO UTILISE 7ITHIN äVE YEARS OF THEIR APPOINTMENT NEWLY ISSUED OR 4REASURY 3HARES IN CONNECTION EXECUTIVE DIRECTORS ARE EXPECTED TO ACQUIRE AND )T IS THE INTENTION THAT THIS POLICY WILL CONTINUE WITH THE OPERATION OF ITS SHARE SCHEMES MAINTAIN A HOLDING OF SHARES WITH A VALUE OF TO APPLY FOR AND SUBSEQUENT YEARS TWO TIMES BASIC SALARY IN THE CASE OF THE CHIEF SUBJECT TO ONGOING REVIEW AS APPROPRIATE EXECUTIVE AND ONE TIMES BASIC SALARY IN THE 3.8 Pensions 4HE "OARD REVIEWS NON EXECUTIVE DIRECTORSÓ CASE OF ANY OTHER EXECUTIVE DIRECTOR $ETAILS OF INDIVIDUAL PENSION ARRANGEMENTS FEES PERIODICALLY TO ENSURE THAT THEY REMAIN ARE SET OUT ON PAGE 4HE #OMMITTEE HAS 4HE #OMMITTEE TAKES INTO CONSIDERATION MARKET COMPETITIVE !DDITIONAL FEES ARE PAID DECIDED THAT IN THE LIGHT OF THE ANNOUNCEMENT ACHIEVEMENT AGAINST THESE TARGETS WHEN TO THE CHAIRMEN OF "OARD COMMITTEES AND TO OF INTENDED CHANGES IN THE TAX EFäCIENCY MAKING GRANTS UNDER THE #OMPANYÓS VARIOUS THE SENIOR INDEPENDENT DIRECTOR 3)$ 3HOULD OF REGISTERED PENSION SCHEMES EXECUTIVE LONG TERM INCENTIVE PLANS NON EXECUTIVE DIRECTORS ACQUIRE EXECUTIVE BOARD DIRECTORS AND 5+ EMPLOYEES MORE GENERALLY ROLES WITHIN SUBSIDIARIES OF THE #OMPANY THEN BE GIVEN THE OPTION OF ALL OR PART OF THEIR 5. External appointments THEY MIGHT ALSO RECEIVE ADDITIONAL REMUNERATION EMPLOYER FUNDED DEäNED CONTRIBUTION PENSION FROM THE RELEVANT SUBSIDIARIES ON ACCOUNT OF %XECUTIVE DIRECTORS ARE NOT PERMITTED TO HOLD CONTRIBUTIONS BEING PAID AS AN ALTERNATIVE TO AN THESE INCREASED RESPONSIBILITIES .ON EXECUTIVE EXTERNAL DIRECTORSHIPS OR OFäCES WITHOUT THE UNREGISTERED RETIREMENT BENEäTS SCHEME DIRECTORSÓ FEES WERE LAST INCREASED FOLLOWING A PRIOR APPROVAL OF THE "OARD IF APPROVED THEY AN %&2"3 REVIEW IN $ECEMBER AND TOOK EFFECT IN MAY EACH RETAIN THE FEES PAYABLE FROM ONE *ANUARY 3INCE THAT TIME IT IS FELT THAT 3INCE THE INCEPTION OF THE NEW 5+ PENSIONS SUCH APPOINTMENT $URING THE YEAR ENDED FEE LEVELS HAVE FALLEN BEHIND THE MARKET AND REGIME APPLICABLE FROM !PRIL THE $ECEMBER #YNTHIA #ARROLL AND THE "OARD HAS THEREFORE AGREED TO INCREASE THE #OMMITTEE HAS BEEN PREPARED TO CONSIDER 2EN¤ -¤DORI EACH RETAINED FEES AMOUNTING BASIC FEE TO a PER ANNUM PA AND THE REQUESTS FROM EXECUTIVE DIRECTORS AS IS THE CASE TO a AND a RESPECTIVELY FEE FOR THE 3)$ TO a PA WITH EFFECT FOR ,ONDON BASED EMPLOYEES MORE GENERALLY FROM *ANUARY 4HERE WILL BE NO CHANGE THAT THEIR CONTRACTS BE ALTERED FOR FUTURE SERVICE 6. Policy on non-executive TO THE FEES FOR #OMMITTEE #HAIRMEN SO THAT FUTURE PENSION BENEäTS ARE REDUCED OR CEASE TO ACCRUE AND THAT A PENSION ALLOWANCE BE director remuneration PAID HAVING THE SAME COST TO THE EMPLOYER AS .ON EXECUTIVE DIRECTOR REMUNERATION IS APPROVED 7. Chairman’s fees THE DEäNED CONTRIBUTION BENEäTS FORGONE BY THE "OARD AS A WHOLE ON THE RECOMMENDATION 4HE CHAIRMANÓS FEES WERE SET IN *ULY AT OF THE CHAIRMAN AND EXECUTIVE DIRECTORS a PA TO TAKE EFFECT FROM HIS APPOINTMENT 3IMILARLY THE #OMMITTEE IS PREPARED TO CONSIDER ON !UGUST 4HE CHAIRMANÓS FEES ARE REQUESTS FROM EXECUTIVE DIRECTORS AS IS THE CASE 4HE #OMPANYÓS POLICY ON NON EXECUTIVE REVIEWED PERIODICALLY ON A DIFFERENT CYCLE FROM FOR ,ONDON BASED EMPLOYEES MORE GENERALLY DIRECTOR REMUNERATION IS BASED ON THE FOLLOWING THE REVIEW OF NON EXECUTIVE DIRECTORSÓ FEES ! THAT THEIR CONTRACTS BE ALTERED FOR FUTURE SERVICE KEY PRINCIPLES RECOMMENDATION IS THEN MADE TO THE "OARD IN THE SO THAT SUPPLEMENTARY PENSION CONTRIBUTIONS Ú 2EMUNERATION SHOULD BE ABSENCE OF THE CHAIRMAN BY THE #OMMITTEE AND ARE MADE INTO THEIR DEäNED CONTRIBUTION PENSION CHIEF EXECUTIVE WHO WILL TAKE EXTERNAL ADVICE ON ARRANGEMENTS IN RETURN FOR EQUIVALENT COST Ð SUFäCIENT TO ATTRACT AND RETAIN WORLD CLASS MARKET COMPARATORS )N ACCORDANCE WITH THE TERMS REDUCTIONS IN THEIR FUTURE BASIC SALARIES ANDOR IN NON EXECUTIVE TALENT OF HIS APPOINTMENT AS CHAIRMAN 3IR *OHN 0ARKER THE CASH ELEMENT OF ANY FUTURE "30 AWARDS Ð CONSISTENT WITH RECOGNISED BEST PRACTICE STANDARDS FOR NON EXECUTIVE DIRECTOR RECEIVED A ONE OFF RESTRICTED SHARE AWARD OF REMUNERATION ORDINARY SHARES IN THE #OMPANY ON 3EPTEMBER
84 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 &IGURE .ON EXECUTIVE DIRECTORS Figure 9: Historical comparative TSR performance graphs $ATE OF .EXT !'- RE ELECTION APPOINTMENT OR ELECTION 3IR *OHN 0ARKER CHAIRMAN !! PLC AND .OMINATION 300 #OMMITTEE *ULY !PRIL 250 3IR -ARK -OODY 3TUART CHAIRMAN RESIGNED *ULY NA 200
$AVID #HALLEN 3)$ AND CHAIRMAN !UDIT #OMMITTEE 3EPTEMBER !PRIL 150
3IR #+ #HOW !PRIL !PRIL 100 #HRIS &AY CHAIRMAN 33$ #OMMITTEE TO RETIRE 50 !PRIL NA 3IR 0HILIP (AMPTON .OVEMBER !PRIL 0 Year04 05 06 07 08 09 3IR 2OB -ARGETTS CHAIRMAN 2EMUNERATION #OMMITTEE TO RETIRE -ARCH NA .ICKY /PPENHEIMER -ARCH !PRIL 500 2AY /Ó2OURKE $ECEMBER !PRIL 400
&RED 0HASWANA CHAIRMAN .OMINATION #OMMITTEE 300 RESIGNED *UNE NA -AMPHELA 2AMPHELE !PRIL !PRIL 200 *ACK 4HOMPSON .OVEMBER !PRIL 100 +AREL 6AN -IERT PASSED AWAY -ARCH NA 0 0ETER 7OICKE *ANUARY !PRIL Year04 05 06 07 08 09
Anglo American
!T EACH !'- ALL THOSE DIRECTORS WHO HAVE BEEN IN OFäCE FOR THREE YEARS OR MORE SINCE THEIR ELECTION OR LAST RE ELECTION SHALL RETIRE FROM OFäCE Governance $ETAILS OF THOSE RETIRING BY ROTATION THIS YEAR ARE CONTAINED IN THE .OTICE OF !'- FTSE 100 Index LTIP sector comparator 4HERE IS NO äXED NOTICE PERIOD HOWEVER THE #OMPANY MAY IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THE #OMPANIES !CT BY Source: Thomson Datastream /RDINARY 2ESOLUTION OF WHICH SPECIAL NOTICE HAS BEEN GIVEN REMOVE ANY DIRECTOR FROM OFäCE 4HE #OMPANYÓS !RTICLES OF !SSOCIATION ALSO PERMIT THE DIRECTORS UNDER CERTAIN CIRCUMSTANCES TO REMOVE A DIRECTOR FROM OFäCE
EQUIVALENT TO a 4HE SHARE AWARD !LL NON EXECUTIVE DIRECTORS HAVE LETTERS OF ACCORDANCE WITH THE ,ARGE AND -EDIUM 3IZED WILL BE RELEASED IN FULL AT THE THIRD ANNIVERSARY OF HIS APPOINTMENT WITH THE #OMPANY FOR AN INITIAL #OMPANIES AND 'ROUPS !CCOUNTS AND 2EPORTS APPOINTMENT !UGUST SUBJECT TO HIS STILL BEING PERIOD OF THREE YEARS FROM THEIR DATE OF 2EGULATIONS CHAIRMAN 4HE CHAIRMAN WILL INVEST PROGRESSIVELY APPOINTMENT SUBJECT TO REAPPOINTMENT AT THE 4HE SECOND GRAPH SHOWS THE #OMPANYÓS IN !NGLO !MERICAN SHARES OVER THE SAME PERIOD IN !'- &IGURE PERFORMANCE AGAINST THE WEIGHTED 3ECTOR )NDEX ORDER TO ACQUIRE A SIMILAR HOLDING COMPARATOR GROUP USED TO MEASURE COMPANY 9. Historical comparative TSR PERFORMANCE FOR THE PURPOSES OF THE VESTING 8. Directors’ service contracts performance graphs OF ,4)0 INTERESTS CONDITIONALLY AWARDED IN #YNTHIA #ARROLL AND 2EN¤ -¤DORI ARE EMPLOYED 4HE GRAPHS SHOWN IN &IGURE REPRESENT THE 4HIS GRAPH GIVES AN INDICATION OF HOW BY !NGLO !MERICAN 3ERVICES 5+ ,TD !!3 COMPARATIVE 432 PERFORMANCE OF THE #OMPANY THE #OMPANY IS PERFORMING AGAINST THE TARGETS IN PLACE FOR ,4)0 INTERESTS ALREADY GRANTED )T IS THE #OMPANYÓS POLICY THAT THE PERIOD OF FROM *ANUARY TO $ECEMBER )N ALTHOUGH THE SPECIäCS OF THE COMPARATOR NOTICE FOR EXECUTIVE DIRECTORS WILL NOT EXCEED DRAWING UP THESE GRAPHS IT HAS BEEN ASSUMED COMPANIES FOR EACH YEARÓS INTERESTS MAY MONTHS AND ACCORDINGLY THE EMPLOYMENT THAT ALL DIVIDENDS PAID HAVE BEEN REINVESTED VARY TO REåECT CHANGES SUCH AS MERGERS AND CONTRACTS OF THE EXECUTIVE DIRECTORS ARE 4HE äRST GRAPH SHOWS THE #OMPANYÓS ACQUISITIONS AMONG THE #OMPANYÓS COMPETITORS TERMINABLE AT MONTHSÓ NOTICE BY EITHER PARTY PERFORMANCE AGAINST THE PERFORMANCE OF THE OR CHANGES TO THE #OMPANYÓS BUSINESS MIX 4HE CONTRACTS OF EXECUTIVE DIRECTORS DO NOT &43% )NDEX CHOSEN AS BEING A BROAD 432 IS CALCULATED IN 53 DOLLARS AND THE 432 PROVIDE FOR ANY ENHANCED PAYMENTS IN THE EQUITY MARKET INDEX WHICH INCLUDES COMPANIES LEVEL SHOWN AS AT $ECEMBER EACH YEAR IS THE EVENT OF A CHANGE OF CONTROL OF THE #OMPANY OF A COMPARABLE SIZE AND COMPLEXITY TO !NGLO AVERAGE OF THE CLOSING DAILY 432 LEVELS FOR THE NOR FOR LIQUIDATED DAMAGES !MERICAN 4HIS GRAPH HAS BEEN PRODUCED IN äVE DAY PERIOD UP TO AND INCLUDING THAT DATE
&IGURE %XECUTIVE DIRECTORSÓ EMOLUMENTS
4OTAL !NNUAL PERFORMANCE "ENEäTS BASIC SALARY BONUS Ð CASH ELEMENT IN KIND 4OTAL a a a a a a a a #YNTHIA #ARROLL 2EN¤ -¤DORI )N #YNTHIA #ARROLL AND 2EN¤ -¤DORI HELD NON EXECUTIVE DIRECTORSHIPS OF !NGLO 0LATINUM ,IMITED AND 2EN¤ -¤DORI HELD A NON EXECUTIVE DIRECTORSHIP OF !NGLO !MERICAN 3OUTH !FRICA ,IMITED 4HE FEES FOR THESE DIRECTORSHIPS WERE CEDED TO THEIR EMPLOYER !!3 3UBSEQUENT TO HIS RETIREMENT FROM THE "OARD IN "ILL .AIRN PROVIDED CONSULTANCY SERVICES TO !NGLO !MERICAN WHICH ENDED DURING (E THEREFORE RECEIVED aNIL a DURING 4HE SPLIT BETWEEN THE CASH AND SHARE ELEMENTS OF THE "ONUS 3HAR E 0LAN IS SET OUT ON PAGE %ACH EXECUTIVE DIRECTOR RECEIVES A CAR ALLOWANCE AND A LIMITED AMOUNT OF PERSONAL TAXATIONäNANCIAL ADVICE THEY ALSO RECEIVE DEATH AND DISABILITY BENEäTS AND MEDICAL INSURANCE #YNTHIA #ARROLL WAS IN ACCORDANCE WITH THE TERMS OF HER APPOINTMENT ENTITLED TO BE COMPENSATED FOR THE TAX DUE ON HER RELOCATION EXPENSES THIS COMPENSATION IS INCLUDED IN "ENEäTS IN KIND ABOVE
Anglo American plc Annual Report 2009 85 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Governance Remuneration report continued
10. Remuneration outcomes &IGURE .ON EXECUTIVE DIRECTORSÓ EMOLUMENTS during 2009 4OTAL FEES 4HE INFORMATION SET OUT IN THIS SECTION AND a a SECTION HAS BEEN SUBJECT TO AUDIT 3IR *OHN 0ARKER Ð 10.1 Directors’ emoluments 3IR -ARK -OODY 3TUART Executive directors $AVID #HALLEN &IGURE SETS OUT AN ANALYSIS OF THE PRE TAX 3IR #+ #HOW REMUNERATION DURING THE YEARS ENDED #HRIS &AY $ECEMBER AND INCLUDING 3IR 0HILIP (AMPTON Ð BONUSES BUT EXCLUDING PENSIONS FOR INDIVIDUAL 3IR 2OB -ARGETTS DIRECTORS WHO HELD OFäCE IN THE #OMPANY DURING .ICKY /PPENHEIMER THE YEAR ENDED $ECEMBER 2AY /Ó2OURKE Ð Non-executive directors &RED 0HASWANA &IGURE SETS OUT THE FEES AND OTHER -AMPHELA 2AMPHELE EMOLUMENTS PAID TO NON EXECUTIVE DIRECTORS *ACK 4HOMPSON Ð DURING THE YEAR ENDED $ECEMBER +AREL 6AN -IERT WHICH AMOUNTED TO a 0ETER 7OICKE a %ACH NON EXECUTIVE DIRECTOR WITH THE EXCEPTION OF 3IR *OHN 0ARKER AND 3IR -ARK -OODY 3TUART WAS PAID A FEE OF a a PER ANNUM AND THOSE NON EXECUTIVE DIRECTORS WHO ACT AS CHAIRMEN OF THE !UDIT #OMMITTEE 3AFETY AND 3USTAINABLE $EVELOPMENT #OMMITTEE AND 10.2 Bonus Share Plan 2EMUNERATION #OMMITTEE WERE PAID AN ADDITIONAL SUM OF a a PER ANNUM 4HE CHAIRMAN OF THE .OMINATION #OMMITTEE WAS PAID AN ADDITIONAL SUM OF a a PER ANNUM 4HE SENIOR INDEPENDENT DIRECTOR 3)$ RECEIVED FEES OF a PER ANNUM $ETAILS OF SHARES AWARDED UNDER THE "30 TO )N ADDITION TO THE FEES REPORTED ABOVE FOR "OBBY 'ODSELL WHO RETIRED ON !PRIL RECEIVED FEES IN OF a EXECUTIVE DIRECTORS DURING AND THEIR .ICKY /PPENHEIMER RECEIVED FEES FOR HIS SERVICES AS A NON EXECUTIVE DIRECTOR OF !NGLO !MERICAN 3OUTH !FRICA ,IMITED AMOUNTING TO a a WHICH ARE INCLUDED IN THE ABOVE TABLE &RED 0HASWANA IS THE NON EXECUTIVE CHAIRMAN OF !NGLO !MERICAN 3OUTH !FRICA ,IMITED CURRENT HOLDINGS ARE SHOWN IN &IGURE AND OF !NGLO 0LATINUM AND RECEIVED FEES FOR THESE SERVICES AMOUNTING TO a a WHICH ARE INCLUDED IN THE ABOVE TABLE
&IGURE "ONUS 3HARE 0LAN
.UMBER .UMBER OF %ND DATE OF OF "ONUS %NHANCEMENT -ARKET PERFORMANCE 3HARES 3HARES .UMBER .UMBER OF .UMBER OF PRICE AT $ATE OF PERIOD FOR CONDITIONALLY CONDITIONALLY OF "ONUS %NHANCEMENT %NHANCEMENT 4OTAL DATE OF VESTING OF %NHANCEMENT 4OTAL AWARDED AWARDED 3HARES 3HARES 3HARES INTEREST AT "ONUS 3HARES 3HARES INTEREST AT DURING DURING VESTED VESTED LAPSED $ECEMBER AWARD AWARDED AWARDED "30 INTERESTS *ANUARY DURING DURING DURING a DURING DURING #YNTHIA #ARROLL Ð Ð 2EN¤ -¤DORI Ð
4HE PERFORMANCE PERIOD APPLICABLE TO EACH AWARD IS THREE YEARS #YNTHIA #ARROLL DID NOT RECEIVE A "30 AWARD IN IN RESPECT OF THE äNANCIAL YEAR AND CONSEQUENTLY NO SHARES VESTED IN 2EN¤ -¤DORI WAS AWARDED "30 SHARES IN WHICH VESTED IN
.UMBER OF $ATES OF -ARKET PRICE AT -ARKET PRICE AT -ONEY VALUE 3HARES VESTED "30 !WARD SHARES VESTED CONDITIONAL AWARD DATE OF AWARD a DATE OF VESTING a AT DATE OF VESTING a 2EN¤ -¤DORI
)N THE CASE OF THE "30 AWARDS GRANTED IN THE DETERMINANT FOR THE VESTING OF %NHANCEMENT 3HARES WAS REAL %03 GROWTH BASED ON EARNINGS PER SHARE GROWTH AGAINST GROWTH IN THE 5+ 2ETAIL 0RICE )NDEX 20) OVER THE PERFORMANCE PERIOD OF THE %NHANCEMENT 3HARES WOULD VEST IF %03 GROWTH WAS 20) AND WOULD VEST IF %03 GROWTH WAS 20) !S THE %03 GROWTH ACHIEVED WAS 20) OVER THE PERIOD FULL VESTING OF THE %NHANCEMENT 3HARES OCCURRED 7HERE PERMITTED BY äNANCE LEGISLATION AWARDS OF "ONUS 3HARES UNDER THE "30 ARE GRANTED AS FORFEITABLE SHARES WHICH WOULD BE FORFEITED IN THE EVENT THAT AN EXECUTIVE DIRECTOR LEAVES SERVICE OTHER THAN AS A ÒGOOD LEAVERÓ BEFORE THE SHARES ARE RELEASED 3UBSISTING AWARDS OF "ONUS 3HARES WERE REDUCED TO MEET INCOME TAX LIABILITIES ARISING IN 4HE REDUCTION IN RESPECT OF #YNTHIA #ARROLL WAS SHARES AND IN RESPECT OF 2EN¤ -¤DORI WAS SHARES AT A VALUE OF a AND a RESPECTIVELY )N ACCORDANCE WITH HER TERMS UPON JOINING #YNTHIA #ARROLL WAS GRANTED FORFEITABLE SHARES IN COMPENSATION FOR LONG TERM INCENTIVES FORGONE AT HER PREVIOUS EMPLOYER 4HE MARKET PRICE OF THE SHARES AT THE DATE OF THIS AWARD WAS a 4HESE SHARES ARE FORFEITABLE IN THE EVENT THAT SHE LEAVES SERVICE BEFORE THEY ARE RELEASED TO HER !S A RESULT OF THE SHARE CONSOLIDATION FOLLOWING THE DEMERGER OF -ONDI SHARES LAPSED AND THE RESULTANT FORFEITABLE AWARD WAS FORFEITABLE SHARES OF WHICH WERE RELEASED TO HER IN &EBRUARY WERE RELEASED TO HER IN &EBRUARY AND WILL BE RELEASED TO HER IN &EBRUARY SUBJECT TO HER CONTINUED EMPLOYMENT 4HESE AWARDS ARE AS FOLLOWS
"ENEäCIAL INTEREST IN .UMBER OF FORFEITABLE "ENEäCIAL INTEREST IN ,ATEST FORFEITABLE SHARES AT SHARES VESTED DURING THE .UMBER OF FORFEITABLE SHARES FORFEITABLE SHARES AT PERFORMANCE )NTERESTS $ECEMBER YEAR LAPSED DURING THE YEAR $ECEMBER PERIOD END DATE #YNTHIA #ARROLL Ð Ð -ARKET PRICE AT .UMBER OF $ATE OF DATE OF -ARKET PRICE AT -ARKET VALUE AT SHARES CONDITIONAL AWARD DATE OF VESTING DATE OF VESTING 3HARES VESTED VESTED AWARD a a a #YNTHIA #ARROLL
86 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 10.3 Long Term Incentive Plan 10.6 Pensions AS A DIRECTOR OF ANY OF THE #OMPANYÓS #ONDITIONAL AWARDS OF SHARES WERE MADE IN SUBSIDIARY UNDERTAKINGS OR AS A DIRECTOR OF ANY 10.6.1 Directors’ pension arrangements TO EXECUTIVE DIRECTORS UNDER THE ,4)0 OTHER UNDERTAKING OF WHICH HESHE WAS WHILE AS SHOWN IN &IGURE #YNTHIA #ARROLL AND 2EN¤ -¤DORI PARTICIPATED A DIRECTOR OF THE #OMPANY A DIRECTOR BY VIRTUE IN DEäNED CONTRIBUTION PENSION ARRANGEMENTS OF THE #OMPANYÓS NOMINATION OR OTHERWISE 10.4 Directors’ share options IN TERMS OF THEIR CONTRACTS WITH !!3 )N IN CONNECTION WITH THE MANAGEMENT OF THE NORMAL CONTRIBUTIONS WERE PAYABLE ON THEIR #OMPANY OR ANY UNDERTAKING DURING THE YEAR TO .O EXECUTIVE SHARE OPTIONS HAVE BEEN GRANTED BEHALF AT THE RATE OF OF THEIR BASIC SALARIES $ECEMBER TO ANY DIRECTOR SINCE &IGURE PAYABLE UNDER THESE CONTRACTS 4HE HIGHEST AND LOWEST MID MARKET PRICES 12. Directors’ share interests OF THE #OMPANYÓS SHARES DURING THE PERIOD 10.6.2 Defined contribution pension schemes 4HE INTERESTS OF DIRECTORS WHO HELD OFäCE DURING *ANUARY TO $ECEMBER WERE 4HE AMOUNTS PAYABLE INTO DEäNED CONTRIBUTION THE PERIOD *ANUARY TO $ECEMBER a AND a RESPECTIVELY 4HE MID MARKET PENSION SCHEMES BY THE 'ROUP IN RESPECT OF THE IN /RDINARY 3HARES 3HARES OF THE PRICE OF THE #OMPANYÓS SHARES AT $ECEMBER INDIVIDUAL DIRECTORS WERE AS SHOWN IN &IGURE #OMPANY AND ITS SUBSIDIARIES WERE AS SHOWN WAS a IN &IGURES AND 10.6.3 Defined benefit pension schemes 10.5 Share Incentive Plan (SIP) .O DIRECTOR WAS ELIGIBLE IN FOR MEMBERSHIP &IGURES AND OUTLINE THE CHANGES IN $URING THE YEAR #YNTHIA #ARROLL AND 2EN¤ -¤DORI OF ANY DEäNED BENEäT PENSION SCHEME THE ABOVE INTERESTS WHICH OCCURRED BETWEEN PURCHASED AND SHARES UNDER THE 3)0 *ANUARY AND THE DATE OF THIS REPORT RESPECTIVELY IN ADDITION TO THE SHARES HELD 10.6.4 Excess retirement benefits BY THEM AT *ANUARY )F THESE SHARES .O PERSON WHO SERVED AS A DIRECTOR OF THE Approval ARE HELD FOR THREE YEARS THEY WILL BE MATCHED #OMPANY DURING OR BEFORE HAS BEEN PAID 4HIS DIRECTORSÓ REMUNERATION REPORT HAS BEEN BY THE #OMPANY ON A ONE FOR ONE BASIS OR RECEIVED RETIREMENT BENEäTS IN EXCESS OF THE APPROVED BY THE "OARD OF DIRECTORS OF !NGLO CONDITIONAL UPON THE DIRECTORÓS CONTINUED RETIREMENT BENEäTS TO WHICH HE WAS ENTITLED ON !MERICAN PLC Governance EMPLOYMENT )N ADDITION #YNTHIA #ARROLL THE DATE ON WHICH BENEäTS äRST BECAME PAYABLE 3IGNED ON BEHALF OF THE "OARD OF DIRECTORS AND 2EN¤ -¤DORI WERE EACH AWARDED OR -ARCH WHICHEVER IS LATER FREE SHARES UNDER THE 3)0 IN -ARCH 0ARTICIPANTS IN THE 3)0 ARE ENTITLED TO RECEIVE DIVIDENDS ON THEIR SHARES 11. Sums paid to third parties in respect of a director’s 4HE INFORMATION PROVIDED IN SECTIONS TO IS A SUMMARY (OWEVER FULL DETAILS services OF DIRECTORSÓ SHAREHOLDINGS AND OPTIONS ARE .O CONSIDERATION WAS PAID TO OR BECAME CONTAINED IN THE 2EGISTER OF $IRECTORSÓ )NTERESTS RECEIVABLE BY THIRD PARTIES FOR MAKING AVAILABLE Sir Rob Margetts OF THE #OMPANY WHICH ARE OPEN TO INSPECTION THE SERVICES OF ANY PERSON AS A DIRECTOR OF THE #HAIRMAN 2EMUNERATION #OMMITTEE #OMPANY OR WHILE A DIRECTOR OF THE #OMPANY &EBRUARY
&IGURE ,ONG 4ERM )NCENTIVE 0LAN
.UMBER OF SHARES .UMBER 4OTAL BENEäCIAL CONDITIONALLY OF SHARES .UMBER 4OTAL BENEäCIAL ,ATEST INTEREST IN ,4)0 AT AWARDED DURING VESTED OF SHARES LAPSED INTEREST IN ,4)0 AT PERFORMANCE ,4)0 INTERESTS *ANUARY DURING DURING $ECEMBER PERIOD END DATE #YNTHIA #ARROLL Ð Ð 2EN¤ -¤DORI
4HE ,4)0 AWARDS MADE IN ARE CONDITIONAL ON TWO PERFORMANCE CONDITIONS AS OUTLINED ON PAGES AND THE äRST IS BASED ON THE #OMPANYÓS 432 RELATIVE TO A WEIGHTED GROUP OF INTERNATIONAL MINING COMPANIES AND TO THE CONSTITUENTS OF THE &43% THE SECOND IS BASED ON AN UNDERLYING OPERATING MEASURE WHICH FOCUSES ON RAISING THE #OMPANYÓS 2/#% IN THE MEDIUM TERM &URTHER DETAILS ON THE STRUCTURE OF THE ,4)0 THE REQUIRED LEVEL OF PERFORMANCE FOR THE AWARD AND HOW PERFORMANCE AGAINST TARGETS IS MEASURED CAN BE FOUND ON PAGES AND 4HE MARKET PRICE OF THE SHARES AT THE DATE OF AWARD WAS a 4HE PERFORMANCE PERIOD APPLICABLE TO EACH AWARD IS THREE YEARS 4HE PERFORMANCE PERIOD RELATING TO THE ,4)0 AWARDS IN WHICH WERE GRANTED ON !PRIL ENDED ON $ECEMBER 6ESTING WAS SUBJECT TO TWO PERFORMANCE CONDITIONS THE äRST BASED ON THE #OMPANYÓS 432 RELATIVE TO A WEIGHTED GROUP OF INTERNATIONAL MINING COMPANIES AND THE &43% WITH THE SECOND BASED ON AN UNDERLYING OPERATING MEASURE WHICH FOCUSED ON IMPROVEMENTS IN THE #OMPANYÓS 2/#% IN THE MEDIUM TERM 0ART OF EACH AWARD WAS BASED ON THE 432 MEASURE AND PART ON THE OPERATING MEASURE 4HESE AWARDS ARE AS FOLLOWS
.UMBER OF $ATES OF -ARKET PRICE AT -ARKET PRICE AT -ONEY VALUE 3HARES VESTED SHARES VESTED CONDITIONAL AWARD DATE OF AWARD a DATE OF VESTING a AT DATE OF VESTING a 2EN¤ -¤DORI
)N THE CASE OF THE ,4)0 AWARDS GRANTED IN THE DETERMINANTS FOR VESTING WERE ON RELATIVE 432 AND ON MEETING SPECIäED 'ROUP 2/#% TARGETS 4HE 2/#% TARGETS ARE A FUNCTION OF TARGETED IMPROVEMENT IN RETURNS ON EXISTING CAPITAL EMPLOYED AT THE START OF THE PERFORMANCE PERIOD AND TARGETED RETURNS IN EXCESS OF THE COST OF CAPITAL ON NEW CAPITAL INVESTMENT OVER THAT PERIOD 4HE ENTRY LEVEL TARGET FOR ANY ,4)0 HAS BEEN THE ACTUAL RETURN ACHIEVED ON THE CAPITAL EMPLOYED EXCLUDING CAPITAL WORK IN PROGRESS IN THE YEAR IMMEDIATELY PRECEDING THE COMMENCEMENT OF THE PERFORMANCE PERIOD )N ORDER TO MAINTAIN THE EFFECTIVENESS OF THE PLAN IN DRIVING LONG TERM PERFORMANCE THE ACTUAL RETURNS IN THE äNAL PERFORMANCE YEAR ARE ADJUSTED FOR MOVEMENTS IN COMMODITY PRICES CERTAIN FOREIGN EXCHANGE RATE EFFECTS EG TRANSLATION WINDFALLS CAPITAL IN PROGRESS TO REåECT THE FACT THAT MINES UNDER CONSTRUCTION ABSORB LARGE AMOUNTS OF CAPITAL BEFORE PRODUCING A RETURN FOR RELEVANT CHANGES IN THE COMPOSITION OF THE 'ROUP EG SIGNIäCANT ACQUISITIONS AND DISPOSALS AND OTHER ONE OFF FACTORS WHICH WOULD OTHERWISE RESULT IN A MISLEADING OUTCOME 4HE THRESHOLD BLENDED TARGET IE THE TARGET ON EXISTING AND NEW CAPITAL FOR THE PERFORMANCE PERIOD FOR THE ,4)0 WAS AND THE UPPER BLENDED TARGET 4HE 2/#% ACHIEVED WAS AND THE OUTCOME ON THIS ELEMENT OF THE ,4)0 WAS THUS /N THE 432 MEASURE !NGLO !MERICAN ACHIEVED A 432 OVER THE THREE YEAR PERFORMANCE PERIOD OF WHICH GENERATED A NIL VESTING IN TERMS OF THE 3ECTOR )NDEX #OMPARATOR 'ROUP AGAINST A MEDIAN TARGET OF AND A NIL VESTING AGAINST THE &43% BEING BELOW THE TH PERCENTILE 4HE OVERALL VESTING LEVEL FOR THOSE DIRECTORS WITH A 'ROUP 2/#% 3ECTORAL 432 AND &43% 432 SPLIT WAS THEREFORE
Anglo American plc Annual Report 2009 87 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Governance Remuneration report continued
&IGURE $IRECTORSÓ SHARE OPTIONS
"ENEäCIAL "ENEäCIAL !NGLO !MERICAN HOLDING AT HOLDING AT 7EIGHTED *ANUARY $ECEMBER AVERAGE OPTION %ARLIEST DATE FROM OPTIONS 'RANTED %XERCISED ,APSED PRICE a WHICH EXERCISABLE ,ATEST EXPIRY DATE 2EN¤ -¤DORI Ð Ð Ð
"ENEäCIAL HOLDINGS COMPRISE 3!9% OPTIONS HELD IN RESPECT OF SHARES BY 2EN¤ -¤DORI OF OPTIONS WITH AN OPTION PRICE OF a 4HE MARKET PRICE OF THE #OMPANYÓS SHARES AT THE END OF THE YEAR AND THE HIGHEST AND LOWEST MID MARKET PRICES DURING THE PERIOD ARE DISCLOSED IN 3ECTION 4HERE ARE NO PERFORMANCE CONDITIONS ATTACHED TO THESE OPTIONS
&IGURE $EäNED CONTRIBUTION PENSION SCHEMES
.ORMAL CONTRIBUTIONS $IRECTORS a a #YNTHIA #ARROLL 2EN¤ -¤DORI
4HE CONTRIBUTIONS PAYABLE INTO PENSION ARRANGEMENTS FOR #YNTHIA #ARROLL AMOUNTED IN TO a a THE BALANCE BEING PAYABLE IN THE FORM OF A CASH ALLOWANCE TO AN EQUIVALENT COST TO THE EMPLOYER 4HE COST OF THIS ALLOWANCE IS INCLUDED IN THE PENSION äGURE ABOVE 4HE ALLOWANCE DOES NOT FORM PART OF BASIC SALARY DISCLOSED IN THE DIRECTORSÓ EMOLUMENTS TABLE ON PAGE NOR IS IT INCLUDED IN DETERMINING AWARDS UNDER THE "30
&IGURE 3HARES IN !NGLO !MERICAN PLC !S AT $ECEMBER OR IF EARLIER DATE OF RESIGNATION
"ENEäCIAL #ONDITIONAL "30 "30 %NHANCEMENT $IRECTORS 3)0 ,4)0 "ONUS 3HARES 3HARES /THER #YNTHIA #ARROLL 2EN¤ -¤DORI Ð 3IR -ARK -OODY 3TUART ÐÐÐÐÐ 3IR *OHN 0ARKER ÐÐÐÐ $AVID #HALLEN ÐÐÐÐÐ 3IR #+ #HOW ÐÐÐÐÐ #HRIS &AY ÐÐÐÐÐ 3IR 0HILIP (AMPTON ÐÐÐÐÐ 3IR 2OB -ARGETTS ÐÐÐÐÐ 2AY /Ó2OURKE ÐÐÐÐÐ .ICKY /PPENHEIMER ÐÐÐÐÐ &RED 0HASWANA ÐÐÐÐÐ -AMPHELA 2AMPHELE ÐÐÐÐÐ *ACK 4HOMPSON ÐÐÐÐÐ +AREL 6AN -IERT ÐÐÐÐÐ 0ETER 7OICKE ÐÐÐÐÐ
3EE PAGE FOR FOOTNOTES
88 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 &IGURE 3HARES IN !NGLO !MERICAN PLC !S AT *ANUARY OR IF LATER DATE OF APPOINTMENT
"ENEäCIAL #ONDITIONAL "30 "30 %NHANCEMENT $IRECTORS 3)0 ,4)0 "ONUS 3HARES 3HARES /THER #YNTHIA #ARROLL 2EN¤ -¤DORI Ð 3IR -ARK -OODY 3TUART ÐÐÐÐÐ 3IR *OHN 0ARKER ÐÐÐÐÐ $AVID #HALLEN ÐÐÐÐÐ 3IR #+ #HOW ÐÐÐÐÐ #HRIS &AY ÐÐÐÐÐ 3IR 0HILIP (AMPTON ÐÐÐÐÐ 3IR 2OB -ARGETTS ÐÐÐÐÐ 2AY /Ó2OURKE ÐÐÐÐÐ .ICKY /PPENHEIMER ÐÐÐÐÐ &RED 0HASWANA ÐÐÐÐÐ -AMPHELA 2AMPHELE ÐÐÐÐÐ *ACK 4HOMPSON ÐÐÐÐÐ +AREL 6AN -IERT ÐÐÐÐÐ 0ETER 7OICKE ÐÐÐÐÐ
3EE FOLLOWING PAGE FOR FOOTNOTES Governance
&IGURE 3HARES IN !NGLO !MERICAN PLC !S AT *ANUARY OR IF LATER DATE OF APPOINTMENT
"ENEäCIAL #ONDITIONAL "30 "30 %NHANCEMENT $IRECTORS 3)0 ,4)0 "ONUS 3HARES 3HARES /THER #YNTHIA #ARROLL 2EN¤ -¤DORI Ð 3IR *OHN 0ARKER ÐÐÐÐ $AVID #HALLEN ÐÐÐÐÐ 3IR #+ #HOW ÐÐÐÐÐ #HRIS &AY ÐÐÐÐÐ 3IR 0HILIP (AMPTON ÐÐÐÐÐ 3IR 2OB -ARGETTS ÐÐÐÐÐ 2AY /Ó2OURKE ÐÐÐÐÐ .ICKY /PPENHEIMER ÐÐÐÐÐ &RED 0HASWANA ÐÐÐÐÐ -AMPHELA 2AMPHELE ÐÐÐÐÐ *ACK 4HOMPSON ÐÐÐÐÐ 0ETER 7OICKE ÐÐÐÐÐ
3EE FOLLOWING PAGE FOR FOOTNOTES
Anglo American plc Annual Report 2009 89 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Governance Remuneration report continued
&IGURE 3HARES IN !NGLO !MERICAN PLC !S AT &EBRUARY OR IF EARLIER DATE OF RESIGNATION
"ENEäCIAL #ONDITIONAL "30 "30 %NHANCEMENT $IRECTORS 3)0 ,4)0 "ONUS 3HARES 3HARES /THER #YNTHIA #ARROLL 2EN¤ -¤DORI Ð 3IR *OHN 0ARKER ÐÐÐÐ $AVID #HALLEN ÐÐÐÐÐ 3IR #+ #HOW ÐÐÐÐÐ #HRIS &AY ÐÐÐÐÐ 3IR 0HILIP (AMPTON ÐÐÐÐÐ 3IR 2OB -ARGETTS ÐÐÐÐÐ 2AY /Ó2OURKE ÐÐÐÐÐ .ICKY /PPENHEIMER ÐÐÐÐÐ &RED 0HASWANA ÐÐÐÐÐ -AMPHELA 2AMPHELE ÐÐÐÐÐ *ACK 4HOMPSON ÐÐÐÐÐ 0ETER 7OICKE ÐÐÐÐÐ
&OLLOWING HER APPOINTMENT AS AN EXECUTIVE DIRECTOR ON *ANUARY #YNTHIA #ARROLL WAS GRANTED FORFEITABLE SHARES CONDITIONAL ON HER CONTINUED EMPLOYMENT TO THE 'ROUP AND IN PARTIAL COMPENSATION FOR LONG TERM INCENTIVES FORGONE AT HER PREVIOUS EMPLOYER !S A RESULT OF THE SHARE CONSOLIDATION FOLLOWING THE DEMERGER OF -ONDI SHARES LAPSED AND THE RESULTANT FORFEITABLE AWARD WAS FORFEITABLE SHARES OF WHICH WERE RELEASED TO HER IN &EBRUARY WERE RELEASED TO HER IN &EBRUARY AND WILL BE RELEASED TO HER IN &EBRUARY SUBJECT TO HER CONTINUED EMPLOYMENT 2EN¤ -¤DORIÓS BENEäCIAL INTEREST ARISES AS A RESULT OF HIS WIFEÓS INTEREST IN THESE 3HARES 3IR -ARK -OODY 3TUARTÓS BENEäCIAL INTEREST INCLUDES 3HARES ARISING AS A RESULT OF HIS INTEREST IN A FAMILY TRUST 3IR *OHN 0ARKER 3IR 0HILIP (AMPTON 2AY /Ó2OURKE AND *ACK 4HOMPSON WERE APPOINTED TO THE "OARD ON *ULY .OVEMBER $ECEMBER AND .OVEMBER RESPECTIVELY AND WILL ALL BE NOMINATED FOR ELECTION AT THE !'- IN !PRIL 3IR -ARK -OODY 3TUART AND &RED 0HASWANA RESIGNED FROM THE "OARD AS AT !UGUST AND *ANUARY RESPECTIVELY &OLLOWING HIS APPOINTMENT AS CHAIRMAN OF THE #OMPANY ON !UGUST 3IR *OHN 0ARKER WAS AWARDED ORDINARY SHARES IN THE #OMPANY WHICH WILL BE RELEASED IN FULL ON THE THIRD ANNIVERSARY OF HIS APPOINTMENT SUBJECT TO HIS CONTINUED CHAIRMANSHIP 3IR 2OB -ARGETTSÓ BENEäCIAL INTEREST ARISES AS A RESULT OF HIS WIFEÓS INTEREST IN THESE 3HARES .ICKY /PPENHEIMERÓS BENEäCIAL INTEREST IN OF THESE 3HARES ARISES AS A RESULT OF HIS INTEREST IN A DISCRETIONARY TRUST WHICH IS TREATED AS INTERESTED IN 3HARES IN WHICH % /PPENHEIMER 3ON (OLDINGS ,IMITED IS TREATED AS INTERESTED AND 3HARES IN WHICH #ENTRAL (OLDINGS ,IMITED IS TREATED AS INTERESTED 4HE 3HARES REFERRED TO ABOVE ARE 3HARES HELD BY $EBSWANA $IAMOND #OMPANY 0TY ,IMITED IN WHICH .ICKY /PPENHEIMER AND #ENTRAL (OLDINGS ,IMITED HAVE NO ECONOMIC INTEREST (IS INTEREST IN OF THESE 3HARES ARISES AS A RESULT OF HIS WIFEÓS INTEREST IN A TRUST WHICH HAS AN INDIRECT ECONOMIC INTEREST IN THOSE 3HARES *ACK 4HOMPSON ACQUIRED UNSPONSORED !MERICAN $EPOSITARY 2ECEIPTS !$2S IN RESPECT OF THE #OMPANYÓS ORDINARY SHARES AT A PRICE OF PER !$2 /NE !$2 REPRESENTS ORDINARY SHARES OF EACH IN THE CAPITAL OF THE #OMPANY -R +AREL 6AN -IERT PASSED AWAY IN
90 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Independent remuneration report review
4HIS LETTER CONTAINS THE äNDINGS AND CONCLUSIONS 7E ARE SATISäED THAT THE #OMMITTEE CHALLENGES FROM OUR REVIEW OF THE PROCESSES FOLLOWED BY THE PROPOSALS PUT FORWARD BY EXECUTIVE !NGLO !MERICANÓS 2EMUNERATION #OMMITTEE MANAGEMENT AND ADOPTS A RIGOROUS AND ROBUST THE #OMMITTEE DURING 4HE REVIEW WAS APPROACH TO DECISION MAKING UNDERTAKEN AT YOUR REQUEST AS #HAIRMAN OF THE 7E ARE ALSO SATISäED THAT THE #OMMITTEE #OMMITTEE IN ORDER TO PROVIDE SHAREHOLDERS SEEKS THE ADVICE OF EXTERNAL CONSULTANTS ON WITH ASSURANCE THAT THE PROCESSES FOLLOWED BY TECHNICAL ISSUES WHERE APPROPRIATE AND GIVES THE #OMMITTEE SUPPORTED THE POLICY STATED IN CAREFUL CONSIDERATION TO THE INFORMATION AND !NGLO !MERICANÓS 2EMUNERATION 2EPORT RECOMMENDATIONS THAT IT RECEIVES BEFORE )T IS OUR VIEW THAT THE PROCESSES FOLLOWED BY REACHING AN INFORMED DECISION THE #OMMITTEE DURING FULLY SUPPORTED THE #OMPANYÓS REMUNERATION POLICY 0LEASE Conclusions äND BELOW A DESCRIPTION OF THE PROCESS THAT /N THE BASIS OF THE DOCUMENT REVIEW REFERRED WE FOLLOWED IN COMING TO OUR CONCLUSION TO ABOVE AND THE INTERVIEWS WITH THE #HAIRMAN ALONG WITH OUR DETAILED OBSERVATIONS AND AND 3ECRETARY OF THE #OMMITTEE WE ARE RECOMMENDATIONS COMFORTABLE THAT THE #OMMITTEE HAS DISCHARGED ITS DUTIES IN LINE WITH THE 0OLICY ON %XECUTIVE Review process 2EMUNERATION STATED IN !NGLO !MERICANÓS )N ORDER TO REACH OUR VIEW WE UNDERTOOK THE !NNUAL 2EPORT FOLLOWING !S NOTED IN PREVIOUS YEARS WE CONSIDER THAT Ú ! REVIEW OF THE #OMMITTEEÓS TERMS OF THE MEMBERS OF THE #OMMITTEE CONTINUE TO BE REFERENCE AN EFFECTIVE AND COHESIVE TEAM AND THAT THE #OMMITTEE IS AN EXEMPLAR OF BEST PRACTICE Governance Ú ! REVIEW OF THE MINUTES OF THE #OMMITTEE COVERING THE PERIOD FROM *ANUARY TO 7E NOTE THAT IN LINE WITH THE REQUIREMENTS OF $ECEMBER THE #OMBINED #ODE THE COMPOSITION OF THE #OMMITTEE HAS BEEN CHANGED Ú ! REVIEW OF ANY BRIEäNG MATERIALS PREPARED FOR THE #OMMITTEE DURING THE YEAR &URTHER DETAIL REGARDING THE -ERCER 2EVIEW IS INCLUDED IN A LETTER OF THIS DATE ADDRESSED TO THE Ú !N INTERVIEW WITH #HRIS #ORRIN IN HIS CAPACITY #OMMITTEE #HAIRMAN WHICH WE UNDERSTAND WILL AS 3ECRETARY TO THE #OMMITTEE AND BE MADE AVAILABLE ON THE #OMPANYÓS WEBSITE Ú !N INTERVIEW WITH THE #HAIRMAN OF THE #OMMITTEE 9OURS SINCERELY Findings 4HE #OMMITTEE COMPRISES ENTIRELY OF INDEPENDENT NON %XECUTIVE $IRECTORS )T MET FORMALLY ON THREE OCCASIONS IN Mark Hoble 7E REVIEWED THE MINUTES OF EACH MEETING 0RINCIPAL ALONG WITH ANY SUPPORTING PAPERS OR -ERCER ,IMITED DOCUMENTATION THAT WAS TABLED 7E FOUND THAT 4OWER 0LACE THE DECISIONS TAKEN BY THE #OMMITTEE WERE IN ,ONDON %#2 "5 LINE WITH !NGLO !MERICANÓS STATED REMUNERATION &EBRUARY POLICY NAMELY THAT LEVELS OF REWARD WHILST COMPETITIVE REQUIRE DEMANDING PERFORMANCE CONDITIONS TO BE MET WHICH ARE CONSISTENT WITH SHAREHOLDER INTERESTS 7E ARE SATISäED THAT THE #OMMITTEE CLOSELY ADHERES TO THE STATED POLICY OF SETTING BASE PAY LEVELS AT THE MEDIAN OF COMPARABLE COMPANIES THAT AT LEAST OF REMUNERATION FOR THE EXECUTIVE DIRECTORS IS PERFORMANCE RELATED AND THAT VARIABLE PAY IS CONSISTENT WITH BUSINESS PERFORMANCE MARKET CONDITIONS AND RETENTION OF TALENT
Anglo American plc Annual Report 2009 91 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Governance Statement of directors’ responsibilities
4HE DIRECTORS ARE RESPONSIBLE FOR PREPARING THE 4HE DIRECTORS HAVE ELECTED TO PREPARE THE !NNUAL 2EPORT AND THE äNANCIAL STATEMENTS IN PARENT COMPANY äNANCIAL STATEMENTS IN ACCORDANCE WITH APPLICABLE LAW AND REGULATIONS ACCORDANCE WITH 5NITED +INGDOM 'ENERALLY !CCEPTED !CCOUNTING 0RACTICE 5NITED +INGDOM #OMPANY LAW REQUIRES THE DIRECTORS TO PREPARE !CCOUNTING 3TANDARDS AND APPLICABLE LAW äNANCIAL STATEMENTS FOR EACH äNANCIAL YEAR 4HE PARENT COMPANY äNANCIAL STATEMENTS 4HE DIRECTORS ARE REQUIRED BY THE )!3 2EGULATION ARE REQUIRED BY LAW TO GIVE A TRUE AND FAIR TO PREPARE THE 'ROUP äNANCIAL STATEMENTS UNDER VIEW OF THE STATE OF AFFAIRS OF THE #OMPANY )NTERNATIONAL &INANCIAL 2EPORTING 3TANDARDS )N PREPARING THESE äNANCIAL STATEMENTS THE )&23 AS ADOPTED BY THE %UROPEAN 5NION 4HE DIRECTORS ARE REQUIRED TO 'ROUP äNANCIAL STATEMENTS ARE ALSO REQUIRED BY LAW TO BE PROPERLY PREPARED IN ACCORDANCE WITH Ú SELECT SUITABLE ACCOUNTING POLICIES AND THEN THE #OMPANIES !CT AND !RTICLE OF THE APPLY THEM CONSISTENTLY )!3 2EGULATION Ú MAKE JUDGEMENTS AND ESTIMATES THAT ARE )NTERNATIONAL !CCOUNTING 3TANDARD REQUIRES REASONABLE AND PRUDENT AND THAT )&23 äNANCIAL STATEMENTS PRESENT Ú STATE WHETHER APPLICABLE 5+ !CCOUNTING FAIRLY FOR EACH äNANCIAL YEAR THE #OMPANYÓS 3TANDARDS HAVE BEEN FOLLOWED SUBJECT TO ANY äNANCIAL POSITION äNANCIAL PERFORMANCE MATERIAL DEPARTURES DISCLOSED AND EXPLAINED IN AND CASH åOWS 4HIS REQUIRES THE FAITHFUL THE äNANCIAL STATEMENTS REPRESENTATION OF THE EFFECTS OF TRANSACTIONS OTHER EVENTS AND CONDITIONS IN ACCORDANCE 4HE DIRECTORS ARE RESPONSIBLE FOR KEEPING WITH THE DEäNITIONS AND RECOGNITION CRITERIA FOR PROPER ACCOUNTING RECORDS THAT DISCLOSE WITH ASSETS LIABILITIES INCOME AND EXPENSES SET REASONABLE ACCURACY AT ANY TIME THE äNANCIAL OUT IN THE )NTERNATIONAL !CCOUNTING 3TANDARDS POSITION OF THE #OMPANY AND ENABLE THEM "OARDÓS Ò&RAMEWORK FOR THE PREPARATION AND TO ENSURE THAT THE PARENT COMPANY äNANCIAL PRESENTATION OF äNANCIAL STATEMENTSÓ )N STATEMENTS COMPLY WITH THE #OMPANIES VIRTUALLY ALL CIRCUMSTANCES A FAIR PRESENTATION !CT 4HEY ARE ALSO RESPONSIBLE FOR WILL BE ACHIEVED BY COMPLIANCE WITH ALL SAFEGUARDING THE ASSETS OF THE #OMPANY AND APPLICABLE )&23 (OWEVER DIRECTORS ARE ALSO HENCE FOR TAKING REASONABLE STEPS FOR THE REQUIRED TO PREVENTION AND DETECTION OF FRAUD AND OTHER IRREGULARITIES Ú PROPERLY SELECT AND APPLY ACCOUNTING POLICIES 4HE DIRECTORS ARE RESPONSIBLE FOR THE Ú PRESENT INFORMATION INCLUDING ACCOUNTING MAINTENANCE AND INTEGRITY OF THE CORPORATE POLICIES IN A MANNER THAT PROVIDES RELEVANT AND äNANCIAL INFORMATION INCLUDED ON THE RELIABLE COMPARABLE AND UNDERSTANDABLE #OMPANYÓS WEBSITE ,EGISLATION IN THE 5NITED INFORMATION AND +INGDOM GOVERNING THE PREPARATION AND Ú PROVIDE ADDITIONAL DISCLOSURES WHEN DISSEMINATION OF äNANCIAL STATEMENTS MAY COMPLIANCE WITH THE SPECIäC REQUIREMENTS DIFFER FROM LEGISLATION IN OTHER JURISDICTIONS IN )&23 ARE INSUFäCIENT TO ENABLE USERS TO UNDERSTAND THE IMPACT OF PARTICULAR TRANSACTIONS OTHER EVENTS AND CONDITIONS ON THE ENTITYÓS äNANCIAL POSITION AND äNANCIAL PERFORMANCE
92 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements
Contents
2ESPONSIBILITY STATEMENTS )NDEPENDENT AUDITORSÓ REPORT TO THE MEMBERS OF !NGLO !MERICAN PLC
Principal statements #ONSOLIDATED INCOME STATEMENT #ONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME #ONSOLIDATED BALANCE SHEET #ONSOLIDATED CASH åOW STATEMENT #ONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Notes to the financial statements !CCOUNTING POLICIES 3EGMENTAL INFORMATION 2ECONCILIATION OF 5NDERLYING EARNINGS TO 0ROäT FOR THE äNANCIAL YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY /PERATING PROäT FROM SUBSIDIARIES AND JOINT VENTURES %XPLORATION EXPENDITURE %MPLOYEE NUMBERS AND COSTS 3PECIAL ITEMS AND REMEASUREMENTS .ET äNANCE COSTS &INANCIAL INSTRUMENT GAINS AND LOSSES 4AX ON PROäT ON ORDINARY ACTIVITIES $IVIDENDS %ARNINGS PER SHARE )NTANGIBLE ASSETS 4ANGIBLE ASSETS %NVIRONMENTAL REHABILITATION TRUSTS )NVESTMENTS IN ASSOCIATES *OINT VENTURES &INANCIAL ASSET INVESTMENTS )NVENTORIES
4RADE AND OTHER RECEIVABLES Financial statements 4RADE AND OTHER PAYABLES &INANCIAL ASSETS &INANCIAL LIABILITIES &INANCIAL RISK MANAGEMENT AND DERIVATIVE äNANCIAL ASSETSLIABILITIES 0ROVISIONS FOR LIABILITIES AND CHARGES $EFERRED TAX 2ETIREMENT BENEäTS #ALLED UP SHARE CAPITAL AND SHARE BASED PAYMENTS #ONSOLIDATED EQUITY ANALYSIS #ONSOLIDATED CASH åOW ANALYSIS %")4$! BY SEGMENT !CQUISITIONS $ISPOSALS OF SUBSIDIARIES AND BUSINESSES $ISPOSAL GROUPS AND NON CURRENT ASSETS HELD FOR SALE #APITAL COMMITMENTS #ONTINGENT LIABILITIES AND CONTINGENT ASSETS /PERATING LEASES 2ELATED PARTY TRANSACTIONS 'ROUP COMPANIES %VENTS OCCURRING AFTER END OF YEAR &INANCIAL STATEMENTS OF THE PARENT COMPANY
Anglo American plc Annual Report 2009 93 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Responsibility statements for the year ended 31 December 2009
7E CONäRM THAT TO THE BEST OF OUR KNOWLEDGE
A THE äNANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH THE APPLIC ABLE SET OF ACCOUNTING STANDARDS GIVE A TRUE AND FAIR VIEW OF THE ASSETS LIABILITIES äNANCIAL POSITION AND PROäT OF !NGLO !MERICAN PLC AND THE UNDERTAKINGS INCLUDED IN THE CONSOLIDATION TAKEN AS A WHOLE AND
B THE /PERATING AND äNANCIAL REVIEW INCLUDES A FAIR REVIEW OF THE DEVELOPMENT AND PERFORMANCE OF THE BUSINESS AND THE POSITION OF !NGLO !MERICAN PLC AND THE UNDERTAKINGS INCLUDED IN THE CONSOLIDATION TAKEN AS A WHOLE TOGETHER WITH A DESCRIPTION OF THE PRINCIPAL RISKS AND UNCERTAINTIES THAT THEY FACE
"Y ORDER OF THE "OARD
Cynthia Carroll René Médori #HIEF EXECUTIVE &INANCE DIRECTOR
94 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Independent auditors’ report to the members of Anglo American plc
7E HAVE AUDITED THE äNANCIAL STATEMENTS OF #OMPANYÓS AFFAIRS AS AT $ECEMBER !NGLO !MERICAN PLC FOR THE YEAR ENDED AND OF THE 'ROUPÓS PROäT FOR THE YEAR THEN $ECEMBER WHICH COMPRISE THE ENDED #ONSOLIDATED INCOME STATEMENT THE #ONSOLIDATED Ú THE 'ROUP äNANCIAL STATEMENTS HAVE BEEN STATEMENT OF COMPREHENSIVE INCOME THE PROPERLY PREPARED IN ACCORDANCE WITH )&23S #ONSOLIDATED BALANCE SHEET THE #ONSOLIDATED AS ADOPTED BY THE %UROPEAN 5NION CASH åOW STATEMENT THE #ONSOLIDATED STATEMENT Ú THE #OMPANY äNANCIAL STATEMENTS HAVE BEEN OF CHANGES IN EQUITY THE !CCOUNTING POLICIES THE PROPERLY PREPARED IN ACCORDANCE WITH 5NITED RELATED NOTES TO AND THE "ALANCE SHEET OF +INGDOM 'ENERALLY !CCEPTED !CCOUNTING THE #OMPANY AND RELATED INFORMATION IN NOTE 0RACTICE AND 4HE äNANCIAL REPORTING FRAMEWORK THAT HAS BEEN Ú THE äNANCIAL STATEMENTS HAVE BEEN PREPARED APPLIED IN THE PREPARATION OF THE 'ROUP äNANCIAL IN ACCORDANCE WITH THE REQUIREMENTS OF THE STATEMENTS IS APPLICABLE LAW AND )NTERNATIONAL #OMPANIES !CT AND AS REGARDS THE &INANCIAL 2EPORTING 3TANDARDS )&23S AS ADOPTED 'ROUP äNANCIAL STATEMENTS !RTICLE OF THE BY THE %UROPEAN 5NION 4HE äNANCIAL REPORTING )!3 2EGULATION FRAMEWORK THAT HAS BEEN APPLIED IN THE PREPARATION OF THE #OMPANY äNANCIAL STATEMENTS Opinion on other matters prescribed by the IS APPLICABLE LAW AND 5NITED +INGDOM !CCOUNTING Companies Act 2006 3TANDARDS 5NITED +INGDOM 'ENERALLY !CCEPTED )N OUR OPINION !CCOUNTING 0RACTICE Ú THE PART OF THE 2EMUNERATION REPORT TO BE AUDITED HAS BEEN PROPERLY PREPARED IN 4HIS REPORT IS MADE SOLELY TO THE #OMPANYÓS ACCORDANCE WITH THE #OMPANIES !CT AND MEMBERS AS A BODY IN ACCORDANCE WITH #HAPTER Ú THE INFORMATION GIVEN IN THE $IRECTORSÓ REPORT OF 0ART OF THE #OMPANIES !CT /UR FOR THE äNANCIAL YEAR FOR WHICH THE äNANCIAL AUDIT WORK HAS BEEN UNDERTAKEN SO THAT WE MIGHT STATEMENTS ARE PREPARED IS CONSISTENT WITH THE STATE TO THE #OMPANYÓS MEMBERS THOSE MATTERS äNANCIAL STATEMENTS WE ARE REQUIRED TO STATE TO THEM IN AN AUDITORSÓ REPORT AND FOR NO OTHER PURPOSE 4O THE FULLEST Matters on which we are required to report EXTENT PERMITTED BY LAW WE DO NOT ACCEPT OR by exception ASSUME RESPONSIBILITY TO ANYONE OTHER THAN THE 7E HAVE NOTHING TO REPORT IN RESPECT OF THE #OMPANY AND THE #OMPANYÓS MEMBERS AS A BODY FOLLOWING FOR OUR AUDIT WORK FOR THIS REPORT OR FOR THE OPINIONS WE HAVE FORMED 5NDER THE #OMPANIES !CT WE ARE REQUIRED TO REPORT TO YOU IF IN OUR OPINION Financial statements Respective responsibilities of directors Ú ADEQUATE ACCOUNTING RECORDS HAVE NOT BEEN and auditors KEPT BY THE #OMPANY OR RETURNS ADEQUATE FOR !S EXPLAINED MORE FULLY IN THE 3TATEMENT OF OUR AUDIT HAVE NOT BEEN RECEIVED FROM BRANCHES DIRECTORSÓ RESPONSIBILITIES THE DIRECTORS ARE NOT VISITED BY US OR RESPONSIBLE FOR THE PREPARATION OF THE äNANCIAL Ú THE #OMPANY äNANCIAL STATEMENTS AND THE PART STATEMENTS AND FOR BEING SATISäED THAT THEY GIVE OF THE 2EMUNERATION REPORT TO BE AUDITED ARE A TRUE AND FAIR VIEW /UR RESPONSIBILITY IS TO AUDIT NOT IN AGREEMENT WITH THE ACCOUNTING RECORDS THE äNANCIAL STATEMENTS IN ACCORDANCE WITH AND RETURNS OR APPLICABLE LAW AND )NTERNATIONAL 3TANDARDS ON Ú CERTAIN DISCLOSURES OF DIRECTORSÓ REMUNERATION !UDITING 5+ AND )RELAND 4HOSE STANDARDS SPECIäED BY LAW ARE NOT MADE OR REQUIRE US TO COMPLY WITH THE !UDITING 0RACTICES Ú WE HAVE NOT RECEIVED ALL THE INFORMATION AND "OARDÓS !0"ÓS %THICAL 3TANDARDS FOR !UDITORS EXPLANATIONS WE REQUIRE FOR OUR AUDIT
Scope of the audit of the financial 5NDER THE ,ISTING RULES WE ARE REQUIRED TO REVIEW statements Ú THE DIRECTORSÓ STATEMENT CONTAINED WITHIN THE !N AUDIT INVOLVES OBTAINING EVIDENCE ABOUT $IRECTORSÓ REPORT IN RELATION TO GOING CONCERN THE AMOUNTS AND DISCLOSURES IN THE äNANCIAL AND STATEMENTS SUFäCIENT TO GIVE REASONABLE Ú THE PART OF THE #ORPORATE GOVERNANCE SECTION ASSURANCE THAT THE äNANCIAL STATEMENTS ARE FREE RELATING TO THE #OMPANYÓS COMPLIANCE WITH THE FROM MATERIAL MISSTATEMENT WHETHER CAUSED BY NINE PROVISIONS OF THE *UNE #OMBINED FRAUD OR ERROR 4HIS INCLUDES AN ASSESSMENT OF #ODE SPECIäED FOR OUR REVIEW WHETHER THE ACCOUNTING POLICIES ARE APPROPRIATE TO THE 'ROUPÓS AND THE #OMPANYÓS CIRCUMSTANCES AND HAVE BEEN CONSISTENTLY APPLIED AND Timothy Powell (Senior Statutory Auditor) ADEQUATELY DISCLOSED THE REASONABLENESS OF for and on behalf of Deloitte LLP SIGNIäCANT ACCOUNTING ESTIMATES MADE BY THE #HARTERED !CCOUNTANTS AND 3TATUTORY !UDITORS DIRECTORS AND THE OVERALL PRESENTATION OF THE ,ONDON 5NITED +INGDOM äNANCIAL STATEMENTS &EBRUARY Opinion on financial statements )N OUR OPINION Ú THE äNANCIAL STATEMENTS GIVE A TRUE AND FAIR VIEW OF THE STATE OF THE 'ROUPÓS AND OF THE
Anglo American plc Annual Report 2009 95 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Consolidated income statement for the year ended 31 December 2009
3PECIAL 3PECIAL "EFORE SPECIAL ITEMS AND "EFORE SPECIAL ITEMS AND ITEMS AND REMEASUREMENTS ITEMS AND REMEASUREMENTS 53 MILLION .OTE REMEASUREMENTS NOTE 4OTAL REMEASUREMENTS NOTE 4OTAL 'ROUP REVENUE Ð Ð 4OTAL OPERATING COSTS /PERATING PROäT FROM SUBSIDIARIES AND JOINT VENTURES .ET PROäT ON DISPOSALS Ð Ð 3HARE OF NET INCOME FROM ASSOCIATES 4OTAL PROäT FROM OPERATIONS AND ASSOCIATES )NVESTMENT INCOME Ð Ð )NTEREST EXPENSE Ð Ð /THER äNANCING LOSSES .ET äNANCE COSTS 0ROäT BEFORE TAX )NCOME TAX EXPENSE 0ROäT FOR THE äNANCIAL YEAR !TTRIBUTABLE TO -INORITY INTERESTS %QUITY SHAREHOLDERS OF THE #OMPANY
%ARNINGS PER SHARE 53 "ASIC $ILUTED
5NDERLYING EARNINGS AND UNDERLYING EARNINGS PER SHARE ARE SET OUT IN NOTE
Consolidated statement of comprehensive income for the year ended 31 December 2009
53 MILLION .OTE 0ROäT FOR THE äNANCIAL YEAR .ET GAINLOSS ON REVALUATION OF AVAILABLE FOR SALE INVESTMENTS .ET GAINLOSS ON CASH åOW HEDGES .ET LOSS GAIN ON CASH åOW HEDGES Ð ASSOCIATES .ET EXCHANGE GAINLOSS ON TRANSLATION OF FOREIGN OPERATIONS !CTUARIAL NET LOSS ON POST RETIREMENT BENEäT SCHEMES !CTUARIAL NET LOSS ON POST RETIREMENT BENEäT SCHEMES Ð ASSOCIATES $EFERRED TAX .ET INCOMEEXPENSE RECOGNISED DIRECTLY IN EQUITY 4RANSFERRED TO INCOME STATEMENT SALE OF AVAILABLE FOR SALE INVESTMENTS 4RANSFERRED TO INCOME STATEMENT CASH åOW HEDGES 4RANSFERRED TO INITIAL CARRYING AMOUNT OF HEDGED ITEMS CASH åOW HEDGES 4RANSFERRED TO INCOME STATEMENT EXCHANGE DIFFERENCES ON DISPOSAL OF FOREIGN OPERATIONS 4AX ON ITEMS TRANSFERRED FROM EQUITY 4OTAL TRANSFERRED FROM EQUITY 4OTAL COMPREHENSIVE INCOME FOR THE äNANCIAL YEAR !TTRIBUTABLE TO -INORITY INTERESTS %QUITY SHAREHOLDERS OF THE #OMPANY
96 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Consolidated balance sheet as at 31 December 2009
53 MILLION .OTE )NTANGIBLE ASSETS 4ANGIBLE ASSETS %NVIRONMENTAL REHABILITATION TRUSTS )NVESTMENTS IN ASSOCIATES &INANCIAL ASSET INVESTMENTS 4RADE AND OTHER RECEIVABLES $EFERRED TAX ASSETS /THER äNANCIAL ASSETS DERIVATIVES /THER NON CURRENT ASSETS 4OTAL NON CURRENT ASSETS )NVENTORIES 4RADE AND OTHER RECEIVABLES #URRENT TAX ASSETS /THER äNANCIAL ASSETS DERIVATIVES &INANCIAL ASSET INVESTMENTS B Ð #ASH AND CASH EQUIVALENTS B 4OTAL CURRENT ASSETS !SSETS CLASSIäED AS HELD FOR SALE 4OTAL ASSETS 4RADE AND OTHER PAYABLES 3HORT TERM BORROWINGS B 3HORT TERM PROVISIONS #URRENT TAX LIABILITIES /THER äNANCIAL LIABILITIES DERIVATIVES 4OTAL CURRENT LIABILITIES -EDIUM AND LONG TERM BORROWINGS B 2ETIREMENT BENEäT OBLIGATIONS /THER äNANCIAL LIABILITIES DERIVATIVES
$EFERRED TAX LIABILITIES Financial statements 0ROVISIONS FOR LIABILITIES AND CHARGES /THER NON CURRENT LIABILITIES Ð 4OTAL NON CURRENT LIABILITIES ,IABILITIES DIRECTLY ASSOCIATED WITH ASSETS CLASSIäED AS HELD FOR SALE 4OTAL LIABILITIES .ET ASSETS
%QUITY #ALLED UP SHARE CAPITAL 3HARE PREMIUM ACCOUNT /THER RESERVES 2ETAINED EARNINGS %QUITY ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY -INORITY INTERESTS 4OTAL EQUITY
#OMPARATIVES HAVE BEEN ADJUSTED IN ACCORDANCE WITH )!3 0RESENTATION OF &INANCIAL 3TATEMENTS Ð )MPROVEMENTS AS DESCRIBED IN NOTE
4HE äNANCIAL STATEMENTS OF !NGLO !MERICAN PLC REGISTERED NUMBER WERE APPROVED BY THE "OARD OF DIRECTORS ON &EBRUARY
Cynthia Carroll René Médori #HIEF EXECUTIVE &INANCE DIRECTOR
Anglo American plc Annual Report 2009 97 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Consolidated cash flow statement for the year ended 31 December 2009
53 MILLION .OTE #ASH INåOWS FROM OPERATIONS A $IVIDENDS FROM ASSOCIATES $IVIDENDS FROM äNANCIAL ASSET INVESTMENTS )NCOME TAX PAID .ET CASH INåOWS FROM OPERATING ACTIVITIES
#ASH åOWS FROM INVESTING ACTIVITIES !CQUISITION OF SUBSIDIARIES NET OF CASH AND CASH EQUIVALENTS ACQUIRED )NVESTMENT IN JOINT VENTURES )NVESTMENT IN ASSOCIATES #ASH åOWS FROM DERIVATIVES RELATED TO ACQUISITIONS Ð 0URCHASE OF TANGIBLE ASSETS 0URCHASE OF äNANCIAL ASSET INVESTMENTS )NVESTMENT OF ADVANCE RECEIVED IN ANTICIPATION OF DISPOSAL Ð ,OANS GRANTED )NTEREST RECEIVED AND OTHER INVESTMENT INCOME $ISPOSAL OF SUBSIDIARIES NET OF CASH AND CASH EQUIVALENTS DISPOSED 3ALE OF INTERESTS IN ASSOCIATES 2EPAYMENT OF LOANS AND CAPITAL BY ASSOCIATES Ð 0ROCEEDS FROM DISPOSAL OF TANGIBLE ASSETS 0ROCEEDS FROM SALE OF äNANCIAL ASSET INVESTMENTS #ASH åOWS FROM DERIVATIVES RELATED TO INVESTING ACTIVITIES EXCLUDING ACQUISITIONS /THER INVESTING ACTIVITIES .ET CASH USED IN INVESTING ACTIVITIES
#ASH åOWS FROM äNANCING ACTIVITIES )SSUE OF SHARES BY SUBSIDIARIES TO MINORITY INTERESTS 3ALE OF TREASURY SHARES TO EMPLOYEES 0URCHASE OF TREASURY SHARES )NTEREST PAID $IVIDENDS PAID TO MINORITY INTERESTS $IVIDENDS PAID TO #OMPANY SHAREHOLDERS Ð 2EPAYMENT RECEIPT OF SHORT TERM BORROWINGS .ET PROCEEDS FROM ISSUE OF CONVERTIBLE BOND Ð .ET PROCEEDS FROM ISSUE OF 53 BOND Ð .ET PROCEEDS FROM BONDS ISSUED UNDER %-4. PROGRAMME 2ECEIPT OF OTHER MEDIUM AND LONG TERM BORROWINGS #ASH åOWS FROM DERIVATIVES RELATED TO NET DEBT !DVANCE RECEIVED IN ANTICIPATION OF DISPOSAL Ð /THER äNANCING ACTIVITIES .ET CASH USED IN INåOWS FROM äNANCING ACTIVITIES .ET INCREASEDECREASE IN CASH AND CASH EQUIVALENTS
#ASH AND CASH EQUIVALENTS AT START OF YEAR C #ASH MOVEMENTS IN THE YEAR %FFECTS OF CHANGES IN FOREIGN EXCHANGE RATES #ASH AND CASH EQUIVALENTS AT END OF YEAR C
)NCLUDES AMOUNTS PAID TO ACQUIRE MINORITY INTERESTS IN SUBSIDIARIES !DVANCE RECEIVED IN THE YEAR ENDED $ECEMBER IN RESPECT OF ANTICIPATED DISPOSAL OF THE 'ROUPÓS INTEREST IN THE "OOYSENDAL JOINT VENTURE INVESTED IN UNLISTED PREFERENCE SHARES AND AN ESCROW ACCOUNT PENDING COMPLETION OF THE TRANSACTION WHICH OCCURRED IN *UNE &OLLOWING COMPLETION OF THE TRANSACTION THE PREFERENCE SHARES WERE SOLD AND THE PROCEEDS ARE SHOWN WITHIN Ò0ROCEEDS FROM SALE OF äNANCIAL ASSET INVESTMENTSÓ !T $ECEMBER A FURTHER AMOUNT OF MILLION REMAINS IN AN ESCROW ACCOUNT PENDING COMPLETION OF DOCUMENTATION
98 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Consolidated statement of changes in equity for the year ended 31 December 2009
4OTAL EQUITY ATTRIBUTABLE 3HARE #UMULATIVE &AIR VALUE TO EQUITY 4OTAL BASED TRANSLATION AND OTHER SHAREHOLDERS SHARE 2ETAINED PAYMENT ADJUSTMENT RESERVES OF THE -INORITY 4OTAL 53 MILLION CAPITAL EARNINGS RESERVE RESERVE NOTE #OMPANY INTERESTS EQUITY "ALANCE AT *ANUARY 4OTAL COMPREHENSIVE INCOME Ð Ð $IVIDENDS PAID Ð Ð Ð Ð Ð $IVIDENDS PAID TO MINORITY INTERESTS ÐÐÐÐÐÐ !CQUISITION AND DISPOSAL OF BUSINESSES INCLUDING ISSUE OF SHARES TO MINORITY INTERESTS ÐÐÐÐ -INORITY CONVERSION OF !NGLO 0LATINUMÓS PREFERENCE SHARESÐÐÐÐ Ð 3HARE BUYBACKS Ð Ð Ð Ð Ð 0URCHASE OF SHARES FOR SHARE SCHEMES Ð Ð Ð Ð Ð 3HARE BASED PAYMENT CHARGES ON EQUITY SETTLED SCHEMES Ð Ð Ð Ð )SSUE OF SHARES UNDER EMPLOYEE SHARE SCHEMES Ð Ð Ð Ð #URRENT TAX ON EXERCISED EMPLOYEE SHARE SCHEMESÐÐÐÐÐ )SSUEPURCHASE OF TREASURY SHARES IN SUBSIDIARY ENTITIESÐÐÐÐÐ /THER Ð Ð "ALANCE AT *ANUARY 4OTAL COMPREHENSIVE INCOME Ð Ð $IVIDENDS PAID TO MINORITY INTERESTS ÐÐÐÐÐÐ !CQUISITION AND DISPOSAL OF BUSINESSES INCLUDING ISSUE OF SHARES TO MINORITY INTERESTS Ð Ð Ð 0URCHASE OF SHARES FOR SHARE SCHEMES Ð Ð Ð Ð Ð 3HARE BASED PAYMENT CHARGES ON EQUITY SETTLED SCHEMES Ð Ð Ð Ð )SSUE OF SHARES UNDER EMPLOYEE SHARE SCHEMES Ð Ð Ð Ð #URRENT TAX ON EXERCISED EMPLOYEE SHARE SCHEMES Ð Ð Ð Ð Ð )SSUEPURCHASE OF TREASURY SHARES IN SUBSIDIARY ENTITIES Ð Ð Ð Ð )SSUE OF CONVERTIBLE BOND ÐÐÐÐÐ /THER Ð Ð Ð Financial statements "ALANCE AT $ECEMBER
4OTAL SHARE CAPITAL COMPRISES CALLED UP SHARE CAPITAL OF MILLION MILLION AND THE SHARE PREMIUM ACCOUNT OF MILLION MILLION
$IVIDENDS
.OTE 0ROPOSED ORDINARY DIVIDEND PER SHARE 53 CENTS Ð Ð 0ROPOSED ORDINARY DIVIDEND 53 MILLION Ð Ð
/RDINARY DIVIDENDS PAID DURING THE YEAR PER SHARE 53 CENTS Ð /RDINARY DIVIDENDS PAID DURING THE YEAR 53 MILLION Ð
Anglo American plc Annual Report 2009 99 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements
1. Accounting policies "ASIS OF PREPARATION .ON .ON 53 MILLION #URRENT CURRENT #URRENT CURRENT 4HE äNANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH )NTERNATIONAL &INANCIAL 2EPORTING 3TANDARDS )&23 AND )NTERNATIONAL &INANCIAL 2EPORTING )NTERPRETATION /THER äNANCIAL ASSETS DERIVATIVES #OMMITTEE )&2)# INTERPRETATIONS ADOPTED FOR USE BY THE %UROPEAN 5NION WITH !S PREVIOUSLY REPORTED Ð THOSE PARTS OF THE #OMPANIES !CT APPLICABLE TO COMPANIES REPORTING UNDER 2ECLASSIäCATION )&23 AND WITH THE REQUIREMENTS OF THE $ISCLOSURE AND 4RANSPARENCY RULES OF THE !S REPORTED &INANCIAL 3ERVICES !UTHORITY IN THE 5NITED +INGDOM AS APPLICABLE TO PERIODIC äNANCIAL /THER äNANCIAL LIABILITIES DERIVATIVES REPORTING 4HE äNANCIAL STATEMENTS HAVE BEEN PREPARED UNDER THE HISTORICAL COST !S PREVIOUSLY REPORTED CONVENTION AS MODIäED BY THE REVALUATION OF PENSION ASSETS AND LIABILITIES AND 2ECLASSIäCATION CERTAIN äNANCIAL INSTRUMENTS ! SUMMARY OF THE PRINCIPAL 'ROUP ACCOUNTING POLICIES !S REPORTED IS SET OUT BELOW WITH AN EXPLANATION OF CHANGES TO PREVIOUS POLICIES FOLLOWING !SSETS ADOPTION OF NEW ACCOUNTING STANDARDS AND INTERPRETATIONS IN THE YEAR !S PREVIOUSLY REPORTED 4HE DETAILS OF THE ELECTIONS MADE ON CONVERSION TO )&23 WERE SET OUT IN THE 2ECLASSIäCATION $ECEMBER !NNUAL 2EPORT !S REPORTED ,IABILITIES 4HE PREPARATION OF äNANCIAL STATEMENTS IN CONFORMITY WITH GENERALLY ACCEPTED !S PREVIOUSLY REPORTED ACCOUNTING PRINCIPLES REQUIRES THE USE OF ESTIMATES AND ASSUMPTIONS THAT AFFECT THE 2ECLASSIäCATION REPORTED AMOUNTS OF ASSETS AND LIABILITIES AT THE DATE OF THE äNANCIAL STATEMENTS AND !S REPORTED THE REPORTED AMOUNTS OF REVENUES AND EXPENSES DURING THE REPORTING PERIOD !LTHOUGH THESE ESTIMATES ARE BASED ON MANAGEMENTÓS BEST KNOWLEDGE OF THE AMOUNT EVENT OR ACTIONS ACTUAL RESULTS ULTIMATELY MAY DIFFER FROM THOSE ESTIMATES $UE TO THE ADOPTION OF THE REVISION AND IMPROVEMENTS TO )!3 CERTAIN INFORMATION HAS BEEN INCLUDED IN THE &INANCIAL STATEMENTS $ETAILS OF THE 'ROUPÓS SIGNIäCANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES ARE SET OUT IN THE Ò/PERATING AND äNANCIAL REVIEWÓ AND FORM PART OF THESE )&23 &INANCIAL )NSTRUMENTS $ISCLOSURES Ð !MENDMENT HAS RESULTED IN ADDITIONAL äNANCIAL STATEMENTS THESE ARE SET OUT ON PAGES AND DISCLOSURES IN RELATION TO äNANCIAL ASSETS AND LIABILITIES WHICH ARE CARRIED AT FAIR VALUE ON THE BALANCE SHEET 4HE AMENDMENT ALSO REINFORCES EXISTING PRINCIPLES FOR 3IGNIäCANT AREAS OF ESTIMATION UNCERTAINTY INCLUDE DISCLOSURE ABOUT LIQUIDITY RISK 4HE AMENDMENT DOES NOT REQUIRE COMPARATIVE Ú USEFUL ECONOMIC LIVES OF ASSETS AND ORE RESERVES ESTIMATES INFORMATION TO BE PROVIDED IN RESPECT OF THE ADDITIONAL DISCLOSURES Ú IMPAIRMENT OF ASSETS Ú RESTORATION REHABILITATION AND ENVIRONMENTAL COSTS AND ! NUMBER OF OTHER AMENDMENTS TO ACCOUNTING STANDARDS AND NEW INTERPRETATIONS Ú RETIREMENT BENEäTS ISSUED BY THE )NTERNATIONAL !CCOUNTING 3TANDARDS "OARD )!3" WERE APPLICABLE FROM *ANUARY 4HEY HAVE NOT HAD A MATERIAL IMPACT ON THE ACCOUNTING POLICIES METHODS OF COMPUTATION OR PRESENTATION APPLIED BY THE 'ROUP 'OING CONCERN 4HE DIRECTORS HAVE AT THE TIME OF APPROVING THE äNANCIAL STATEMENTS A REASONABLE EXPECTATION THAT THE #OMPANY AND THE 'ROUP HAVE ADEQUATE RESOURCES TO CONTINUE "ASIS OF CONSOLIDATION 4HE äNANCIAL STATEMENTS INCORPORATE A CONSOLIDATION OF THE äNANCIAL STATEMENTS OF IN OPERATIONAL EXISTENCE FOR THE FORESEEABLE FUTURE 4HUS THE GOING CONCERN BASIS OF THE #OMPANY AND ENTITIES CONTROLLED BY THE #OMPANY ITS SUBSIDIARIES MADE UP TO ACCOUNTING IN PREPARING THE äNANCIAL STATEMENTS CONTINUES TO BE ADOPTED &URTHER $ECEMBER EACH YEAR #ONTROL IS ACHIEVED WHERE THE #OMPANY HAS THE POWER TO DETAILS ARE CONTAINED IN THE $IRECTORSÓ REPORT ON PAGE GOVERN THE äNANCIAL AND OPERATING POLICIES OF AN INVESTEE ENTITY SO AS TO OBTAIN BENEäTS FROM ITS ACTIVITIES !DOPTION OF STANDARDS AND CHANGES IN ACCOUNTING POLICIES 4HE 'ROUP HAS ADOPTED WITH EFFECT FROM *ANUARY )&23 /PERATING 4HE RESULTS OF SUBSIDIARIES ACQUIRED OR DISPOSED OF DURING THE YEAR ARE INCLUDED IN 3EGMENTS )!3 0RESENTATION OF &INANCIAL 3TATEMENTS Ð 2EVISED )!3 0RESENTATION THE #ONSOLIDATED INCOME STATEMENT FROM THE EFFECTIVE DATE OF ACQUISITION OR UP TO OF &INANCIAL 3TATEMENTS Ð )MPROVEMENTS AND )&23 &INANCIAL )NSTRUMENTS THE EFFECTIVE DATE OF DISPOSAL AS APPROPRIATE $ISCLOSURES Ð !MENDMENT 7HERE NECESSARY ADJUSTMENTS ARE MADE TO THE RESULTS OF SUBSIDIARIES JOINT 4HE ADOPTION OF )&23 HAS RESULTED IN THE SEGMENTAL DISCLOSURES PREVIOUSLY REQUIRED VENTURES AND ASSOCIATES TO BRING THEIR ACCOUNTING POLICIES INTO LINE WITH THOSE USED BY )!3 3EGMENT 2EPORTING BEING REPLACED BY THOSE REQUIRED UNDER )&23 4HE BY THE 'ROUP )NTRA GROUP TRANSACTIONS BALANCES INCOME AND EXPENSES ARE SEGMENTS IDENTIäED IN ACCORDANCE WITH )&23 ARE ALIGNED TO THE 'ROUPÓS STRUCTURE ELIMINATED ON CONSOLIDATION WHERE APPROPRIATE OF "USINESS 5NITS BASED AROUND CORE COMMODITIES )N ADDITION ASSETS IDENTIäED FOR DIVESTMENT ARE MANAGED AS A SEPARATE "USINESS 5NIT /THER -INING AND )NDUSTRIAL &OR NON WHOLLY OWNED SUBSIDIARIES A SHARE OF THE PROäT FOR THE äNANCIAL YEAR AND NET ASSETS IS ATTRIBUTED TO THE MINORITY INTERESTS AS SHOWN IN THE #ONSOLIDATED 4HE ADOPTION OF THE REVISION TO )!3 HAS RESULTED IN THE #ONSOLIDATED STATEMENT OF INCOME STATEMENT AND #ONSOLIDATED BALANCE SHEET !NY LOSSES APPLICABLE TO THE CHANGES IN EQUITY BEING PRESENTED AS A PRIMARY STATEMENT PREVIOUSLY DISCLOSED AS MINORITY INTERESTS IN EXCESS OF THE TOTAL RECOGNISED MINORITY INTERESTS ARE ALLOCATED A NOTE TITLED Ò2ECONCILIATION OF CHANGES IN EQUITYÓ AND DISCLOSURE OF THE TAX IMPACT AGAINST THE INTERESTS OF THE PARENT UNTIL SUCH TIME AS FUTURE PROäTS HAVE EXCEEDED OF INDIVIDUAL ITEMS IN THE #ONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME BY WAY THE LOSSES PREVIOUSLY ABSORBED OF NOTE )N ADDITION THE 'ROUP HAS ELECTED TO CONTINUE TO PRESENT A SEPARATE INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME !SSOCIATES !SSOCIATES ARE INVESTMENTS OVER WHICH THE 'ROUP IS IN A POSITION TO EXERCISE SIGNIäCANT 4HE ADOPTION OF THE IMPROVEMENTS TO )!3 HAS RESULTED IN NON HEDGE DERIVATIVES INåUENCE BUT NOT CONTROL OR JOINT CONTROL THROUGH PARTICIPATION IN THE äNANCIAL AND WHOSE EXPECTED SETTLEMENT DATE IS MORE THAN ONE YEAR FROM THE PERIOD END BEING OPERATING POLICY DECISIONS OF THE INVESTEE 4YPICALLY THE 'ROUP OWNS BETWEEN AND RECLASSIäED FROM CURRENT TO NON CURRENT AND THEREFORE THE COMPARATIVE INFORMATION OF THE VOTING EQUITY OF ITS ASSOCIATES )NVESTMENTS IN ASSOCIATES ARE ACCOUNTED IN THE #ONSOLIDATED BALANCE SHEET HAS BEEN ADJUSTED AS FOLLOWS FOR USING THE EQUITY METHOD OF ACCOUNTING EXCEPT WHEN CLASSIäED AS HELD FOR SALE
4HE 'ROUPÓS SHARE OF ASSOCIATESÓ NET INCOME IS BASED ON THEIR MOST RECENT AUDITED äNANCIAL STATEMENTS OR UNAUDITED INTERIM STATEMENTS DRAWN UP TO THE 'ROUPÓS BALANCE SHEET DATE
100 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 1. Accounting policies CONTINUED &OR NON WHOLLY OWNED SUBSIDIARIES MINORITY INTERESTS ARE INITIALLY RECORDED AT THE 4HE TOTAL CARRYING VALUES OF INVESTMENTS IN ASSOCIATES REPRESENT THE COST OF EACH MINORITIESÓ PROPORTION OF THE FAIR VALUES OF THE ASSETS AND LIABILITIES RECOGNISED INVESTMENT INCLUDING THE CARRYING VALUE OF GOODWILL THE SHARE OF POST ACQUISITION AT ACQUISITION RETAINED EARNINGS ANY OTHER MOVEMENTS IN RESERVES AND ANY LONG TERM DEBT INTERESTS WHICH IN SUBSTANCE FORM PART OF THE 'ROUPÓS NET INVESTMENT 4HE CARRYING VALUES OF 4ANGIBLE ASSETS ASSOCIATES ARE REVIEWED ON A REGULAR BASIS AND IF AN IMPAIRMENT IN VALUE HAS -INING PROPERTIES AND LEASES INCLUDE THE COST OF ACQUIRING AND DEVELOPING MINING OCCURRED IT IS WRITTEN OFF IN THE PERIOD IN WHICH THOSE CIRCUMSTANCES ARE IDENTIäED PROPERTIES AND MINERAL RIGHTS 4HE 'ROUPÓS SHARE OF AN ASSOCIATEÓS LOSSES IN EXCESS OF ITS INTEREST IN THAT ASSOCIATE IS NOT RECOGNISED UNLESS THE 'ROUP HAS AN OBLIGATION TO FUND SUCH LOSSES -INING PROPERTIES ARE DEPRECIATED DOWN TO THEIR RESIDUAL VALUES USING THE UNIT OF PRODUCTION METHOD BASED ON PROVEN AND PROBABLE RESERVES $EPRECIATION IS CHARGED *OINT VENTURE ENTITIES ON NEW MINING VENTURES FROM THE DATE THAT THE MINING PROPERTY IS CAPABLE OF ! JOINT VENTURE ENTITY IS AN ENTITY IN WHICH THE 'ROUP HOLDS A LONG TERM INTEREST AND COMMERCIAL PRODUCTION 7HEN THERE IS LITTLE LIKELIHOOD OF A MINERAL RIGHT BEING SHARES JOINT CONTROL OVER STRATEGIC äNANCIAL AND OPERATING DECISIONS WITH ONE OR EXPLOITED OR THE VALUE OF THE EXPLOITABLE MINERAL RIGHT HAS DIMINISHED BELOW COST MORE OTHER VENTURERS UNDER A CONTRACTUAL ARRANGEMENT A WRITE DOWN TO THE RECOVERABLE AMOUNT IS CHARGED TO THE INCOME STATEMENT
4HE 'ROUPÓS SHARE OF THE ASSETS LIABILITIES INCOME EXPENDITURE AND CASH åOWS OF &OR OPEN PIT OPERATIONS THE REMOVAL OF OVERBURDEN OR WASTE ORE IS REQUIRED TO OBTAIN SUCH JOINTLY CONTROLLED ENTITIES ARE ACCOUNTED FOR USING PROPORTIONATE CONSOLIDATION ACCESS TO THE OREBODY 4O THE EXTENT THAT THE ACTUAL WASTE MATERIAL REMOVED PER 0ROPORTIONATE CONSOLIDATION COMBINES THE 'ROUPÓS SHARE OF THE RESULTS OF THE JOINT TONNE OF ORE MINED KNOWN AS THE STRIPPING RATIO IS HIGHER THAN THE AVERAGE VENTURE ENTITY ON A LINE BY LINE BASIS WITH SIMILAR ITEMS IN THE 'ROUPÓS äNANCIAL STRIPPING RATIO IN THE EARLY YEARS OF A MINEÓS PRODUCTION PHASE THE COSTS ASSOCIATED STATEMENTS WITH THIS PROCESS ARE DEFERRED AND CHARGED TO OPERATING COSTS USING THE EXPECTED AVERAGE STRIPPING RATIO OVER THE LIFE OF THE AREA BEING MINED 4HIS REåECTS THE FACT *OINT VENTURE OPERATIONS THAT WASTE REMOVAL IS NECESSARY TO GAIN ACCESS TO THE OREBODY AND THEREFORE REALISE 4HE 'ROUP HAS CONTRACTUAL ARRANGEMENTS WITH OTHER PARTICIPANTS TO ENGAGE IN JOINT FUTURE ECONOMIC BENEäT 4HE AVERAGE STRIPPING RATIO IS CALCULATED AS THE NUMBER OF ACTIVITIES OTHER THAN THROUGH A SEPARATE ENTITY 4HE 'ROUP INCLUDES ITS ASSETS TONNES OF WASTE MATERIAL EXPECTED TO BE REMOVED DURING THE LIFE OF MINE PER TONNE LIABILITIES EXPENDITURE AND ITS SHARE OF REVENUE IN SUCH JOINT VENTURE OPERATIONS OF ORE MINED 4HE AVERAGE LIFE OF MINE COST PER TONNE IS CALCULATED AS THE TOTAL WITH SIMILAR ITEMS IN THE 'ROUPÓS äNANCIAL STATEMENTS EXPECTED COSTS TO BE INCURRED TO MINE THE OREBODY DIVIDED BY THE NUMBER OF TONNES EXPECTED TO BE MINED 4HE COST OF STRIPPING IN ANY PERIOD WILL THEREFORE BE REåECTIVE 2EVENUE RECOGNITION OF THE AVERAGE STRIPPING RATES FOR THE OREBODY AS A WHOLE (OWEVER WHERE THE PIT 2EVENUE IS DERIVED PRINCIPALLY FROM THE SALE OF GOODS AND IS MEASURED AT THE FAIR PROäLE IS SUCH THAT THE ACTUAL STRIPPING RATIO IS BELOW THE AVERAGE IN THE EARLY YEARS VALUE OF CONSIDERATION RECEIVED OR RECEIVABLE AFTER DEDUCTING DISCOUNTS VOLUME NO DEFERRAL TAKES PLACE AS THIS WOULD RESULT IN RECOGNITION OF A LIABILITY FOR WHICH REBATES VALUE ADDED TAX AND OTHER SALES TAXES 3ALES OF CONCENTRATE ARE STATED AT THERE IS NO OBLIGATION )NSTEAD THIS POSITION IS MONITORED AND WHEN THE CUMULATIVE THEIR INVOICED AMOUNT WHICH IS NET OF TREATMENT AND REäNING CHARGES ! SALE CALCULATION REåECTS A DEBIT BALANCE DEFERRAL COMMENCES 4HE AVERAGE LIFE OF MINE IS RECOGNISED WHEN THE SIGNIäCANT RISKS AND REWARDS OF OWNERSHIP HAVE PASSED STRIPPING RATIO AND THE AVERAGE LIFE OF MINE COST PER TONNE ARE RECALCULATED ANNUALLY 4HIS IS USUALLY WHEN TITLE AND INSURANCE RISK HAVE PASSED TO THE CUSTOMER AND THE IN LIGHT OF ADDITIONAL KNOWLEDGE AND CHANGES IN ESTIMATES #HANGES IN THE LIFE OF GOODS HAVE BEEN DELIVERED TO A CONTRACTUALLY AGREED LOCATION MINE STRIPPING RATIO ARE ACCOUNTED FOR PROSPECTIVELY AS A CHANGE IN ESTIMATE
2EVENUE FROM METAL MINING ACTIVITIES IS BASED ON THE PAYABLE METAL SOLD ,AND AND PROPERTIES IN THE COURSE OF CONSTRUCTION ARE CARRIED AT COST LESS ANY RECOGNISED IMPAIRMENT $EPRECIATION COMMENCES WHEN THE ASSETS ARE READY FOR Financial statements 3ALES OF CERTAIN COMMODITIES ARE ÒPROVISIONALLY PRICEDÓ SUCH THAT THE PRICE IS NOT THEIR INTENDED USE "UILDINGS AND PLANT AND EQUIPMENT ARE DEPRECIATED DOWN TO THEIR SETTLED UNTIL A PREDETERMINED FUTURE DATE BASED ON THE MARKET PRICE AT THAT TIME RESIDUAL VALUES AT VARYING RATES ON A STRAIGHT LINE BASIS OVER THEIR ESTIMATED USEFUL 2EVENUE ON THESE SALES IS INITIALLY RECOGNISED WHEN THE ABOVE CRITERIA ARE MET LIVES OR THE LIFE OF MINE WHICHEVER IS SHORTER %STIMATED USEFUL LIVES NORMALLY VARY AT THE CURRENT MARKET PRICE Ò0ROVISIONALLY PRICEDÓ SALES ARE MARKED TO MARKET AT EACH FROM UP TO YEARS FOR ITEMS OF PLANT AND EQUIPMENT TO A MAXIMUM OF YEARS FOR REPORTING DATE USING THE FORWARD PRICE FOR THE PERIOD EQUIVALENT TO THAT OUTLINED IN BUILDINGS THE CONTRACT 4HIS MARK TO MARKET ADJUSTMENT IS RECORDED IN REVENUE 2ESIDUAL VALUES AND ESTIMATED USEFUL LIVES ARE REVIEWED AT LEAST ANNUALLY 2EVENUES FROM THE SALE OF MATERIAL BY PRODUCTS ARE INCLUDED WITHIN REVENUE 7HERE A BY PRODUCT IS NOT REGARDED AS SIGNIäCANT REVENUE MAY BE CREDITED AGAINST !SSETS HELD UNDER äNANCE LEASES ARE DEPRECIATED OVER THE SHORTER OF THE LEASE TERM THE COST OF SALES AND THE ESTIMATED USEFUL LIVES OF THE ASSETS
)NTEREST INCOME IS ACCRUED ON A TIME BASIS BY REFERENCE TO THE PRINCIPAL OUTSTANDING .ON MINING LICENCES AND OTHER INTANGIBLES AND AT THE EFFECTIVE INTEREST RATE APPLICABLE .ON MINING LICENCES AND OTHER INTANGIBLES ARE MEASURED INITIALLY AT PURCHASE COST AND ARE AMORTISED ON A STRAIGHT LINE BASIS OVER THEIR ESTIMATED USEFUL LIVES $IVIDEND INCOME FROM INVESTMENTS IS RECOGNISED WHEN THE SHAREHOLDERSÓ RIGHTS TO %STIMATED USEFUL LIVES ARE USUALLY BETWEEN THREE AND äVE YEARS RECEIVE PAYMENT HAVE BEEN ESTABLISHED )MPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL "USINESS COMBINATIONS AND GOODWILL ARISING THEREON !T EACH BALANCE SHEET DATE THE 'ROUP REVIEWS THE CARRYING AMOUNTS OF ITS TANGIBLE 4HE IDENTIäABLE ASSETS LIABILITIES AND CONTINGENT LIABILITIES OF A SUBSIDIARY JOINT AND INTANGIBLE ASSETS TO DETERMINE WHETHER THERE IS ANY INDICATION THAT THOSE VENTURE ENTITY OR AN ASSOCIATE WHICH CAN BE MEASURED RELIABLY ARE RECORDED AT THEIR ASSETS ARE IMPAIRED )F SUCH AN INDICATION EXISTS THE RECOVERABLE AMOUNT OF THE PROVISIONAL FAIR VALUES AT THE DATE OF ACQUISITION !NY EXCESS OF THE COST OF ACQUISITION ASSET IS ESTIMATED IN ORDER TO DETERMINE THE EXTENT OF ANY IMPAIRMENT 7HERE THE OVER THE FAIR VALUES OF THE IDENTIäABLE NET ASSETS ACQUIRED IS ATTRIBUTED TO GOODWILL ASSET DOES NOT GENERATE CASH åOWS THAT ARE INDEPENDENT FROM OTHER ASSETS THE 0ROVISIONAL FAIR VALUES ARE äNALISED WITHIN MONTHS OF THE ACQUISITION DATE 'ROUP ESTIMATES THE RECOVERABLE AMOUNT OF THE CASH GENERATING UNIT #'5 TO WHICH THE ASSET BELONGS !N INTANGIBLE ASSET WITH AN INDEäNITE USEFUL LIFE IS TESTED 'OODWILL IN RESPECT OF SUBSIDIARIES AND JOINT VENTURES IS INCLUDED WITHIN INTANGIBLE FOR IMPAIRMENT ANNUALLY AND WHENEVER THERE IS AN INDICATION THAT THE ASSET MAY ASSETS 'OODWILL RELATING TO ASSOCIATES IS INCLUDED WITHIN THE CARRYING VALUE OF BE IMPAIRED THE ASSOCIATE
7HERE THE FAIR VALUE OF THE IDENTIäABLE NET ASSETS ACQUIRED EXCEEDS THE COST OF THE ACQUISITION THE SURPLUS WHICH REPRESENTS THE DISCOUNT ON THE ACQUISITION IS CREDITED TO THE INCOME STATEMENT IN THE PERIOD OF ACQUISITION
Anglo American plc Annual Report 2009 101 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
1. Accounting policies CONTINUED 2ETIREMENT BENEäTS 2ECOVERABLE AMOUNT IS THE HIGHER OF FAIR VALUE LESS COSTS TO SELL AND VALUE IN USE 4HE 'ROUP OPERATES BOTH DEäNED BENEäT AND DEäNED CONTRIBUTION SCHEMES FOR ITS )N ASSESSING VALUE IN USE THE ESTIMATED FUTURE CASH åOWS ARE DISCOUNTED TO THEIR EMPLOYEES AS WELL AS POST RETIREMENT MEDICAL PLANS &OR DEäNED CONTRIBUTION PRESENT VALUE USING A PRE TAX DISCOUNT RATE THAT REåECTS CURRENT MARKET SCHEMES THE AMOUNT CHARGED TO THE INCOME STATEMENT IS THE CONTRIBUTIONS PAID ASSESSMENTS OF THE TIME VALUE OF MONEY AND THE RISKS SPECIäC TO THE ASSET FOR OR PAYABLE DURING THE YEAR WHICH ESTIMATES OF FUTURE CASH åOWS HAVE NOT BEEN ADJUSTED &OR DEäNED BENEäT PENSION AND POST RETIREMENT MEDICAL PLANS FULL ACTUARIAL )F THE RECOVERABLE AMOUNT OF AN ASSET OR #'5 IS ESTIMATED TO BE LESS THAN ITS CARRYING VALUATIONS ARE CARRIED OUT EVERY THREE YEARS USING THE PROJECTED UNIT CREDIT AMOUNT THE CARRYING AMOUNT OF THE ASSET OR #'5 IS REDUCED TO ITS RECOVERABLE METHOD AND UPDATES ARE PERFORMED FOR EACH äNANCIAL YEAR END 4HE AVERAGE AMOUNT !N IMPAIRMENT IS REPORTED THROUGH THE INCOME STATEMENT AS A SPECIAL ITEM DISCOUNT RATE FOR THE PLANSÓ LIABILITIES IS BASED ON !! RATED CORPORATE BONDS OF A SUITABLE DURATION AND CURRENCY OR WHERE THERE IS NO ÒDEEP MARKETÓ FOR SUCH BONDS 7HERE AN IMPAIRMENT SUBSEQUENTLY REVERSES THE CARRYING AMOUNT OF THE ASSET OR BASED ON GOVERNMENT BONDS 0ENSION PLAN ASSETS ARE MEASURED USING YEAR END #'5 IS INCREASED TO THE REVISED ESTIMATE OF ITS RECOVERABLE AMOUNT BUT SO THAT THE MARKET VALUES INCREASED CARRYING AMOUNT DOES NOT EXCEED THE CARRYING AMOUNT THAT WOULD HAVE BEEN DETERMINED HAD NO IMPAIRMENT BEEN RECOGNISED FOR THE ASSET OR #'5 IN PRIOR !CTUARIAL GAINS AND LOSSES WHICH CAN ARISE FROM DIFFERENCES BETWEEN EXPECTED AND YEARS ! REVERSAL OF AN IMPAIRMENT IS REPORTED THROUGH THE INCOME STATEMENT AS A ACTUAL OUTCOMES OR CHANGES IN ACTUARIAL ASSUMPTIONS ARE RECOGNISED IMMEDIATELY IN SPECIAL ITEM THE #ONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME !NY INCREASE IN THE PRESENT VALUE OF PLAN LIABILITIES EXPECTED TO ARISE FROM EMPLOYEE SERVICE DURING THE YEAR IS )MPAIRMENT OF GOODWILL CHARGED TO OPERATING PROäT 4HE EXPECTED RETURN ON PLAN ASSETS AND THE EXPECTED 'OODWILL ARISING ON BUSINESS COMBINATIONS IS ALLOCATED TO THE GROUP OF #'5S THAT INCREASE DURING THE YEAR IN THE PRESENT VALUE OF PLAN LIABILITIES ARE INCLUDED IN IS EXPECTED TO BENEäT FROM SYNERGIES OF THE COMBINATION AND REPRESENTS THE LOWEST INVESTMENT INCOME AND INTEREST EXPENSE RESPECTIVELY LEVEL AT WHICH GOODWILL IS MONITORED BY THE 'ROUPÓS BOARD OF DIRECTORS FOR INTERNAL MANAGEMENT PURPOSES $ETAILS OF THE #'5S TO WHICH GOODWILL IS ALLOCATED ARE 0AST SERVICE COST IS RECOGNISED IMMEDIATELY TO THE EXTENT THAT THE BENEäTS ARE PROVIDED IN NOTE 4HE RECOVERABLE AMOUNT OF THE #'5 OR GROUP OF #'5S TO WHICH ALREADY VESTED AND OTHERWISE IS AMORTISED ON A STRAIGHT LINE BASIS OVER THE AVERAGE GOODWILL HAS BEEN ALLOCATED IS TESTED FOR IMPAIRMENT ANNUALLY ON A CONSISTENT DATE PERIOD UNTIL THE BENEäTS BECOME VESTED DURING EACH äNANCIAL YEAR OR WHEN EVENTS OR CHANGES IN CIRCUMSTANCES INDICATE THAT IT MAY BE IMPAIRED 4HE RETIREMENT BENEäT OBLIGATION RECOGNISED IN THE BALANCE SHEET REPRESENTS THE PRESENT VALUE OF THE DEäNED BENEäT OBLIGATION AS ADJUSTED FOR UNRECOGNISED PAST !NY IMPAIRMENT IS RECOGNISED IMMEDIATELY IN THE INCOME STATEMENT )MPAIRMENTS SERVICE COSTS AND AS REDUCED BY THE FAIR VALUE OF SCHEME ASSETS !NY ASSET OF GOODWILL ARE NOT SUBSEQUENTLY REVERSED RESULTING FROM THIS CALCULATION IS LIMITED TO PAST SERVICE COST PLUS THE PRESENT VALUE OF AVAILABLE REFUNDS AND REDUCTIONS IN FUTURE CONTRIBUTIONS TO THE PLAN 2ESEARCH AND EXPLORATION EXPENDITURE 2ESEARCH AND EXPLORATION EXPENDITURE IS WRITTEN OFF IN THE YEAR IN WHICH IT IS 4AX INCURRED 7HEN A DECISION IS TAKEN THAT A MINING PROPERTY IS ECONOMICALLY FEASIBLE 4HE TAX EXPENSE INCLUDES THE CURRENT TAX CHARGE AND DEFERRED TAX CHARGED TO THE AND SHOULD BE DEVELOPED FOR COMMERCIAL PRODUCTION ALL FURTHER DIRECTLY ATTRIBUTABLE INCOME STATEMENT PRE PRODUCTION EXPENDITURE IS CAPITALISED WITHIN TANGIBLE ASSETS #APITALISATION OF PRE PRODUCTION EXPENDITURE CEASES WHEN THE MINING PROPERTY IS CAPABLE OF #URRENT TAX PAYABLE IS BASED ON TAXABLE PROäT FOR THE YEAR 4AXABLE PROäT DIFFERS COMMERCIAL PRODUCTION FROM NET PROäT AS REPORTED IN THE INCOME STATEMENT BECAUSE IT EXCLUDES ITEMS OF INCOME OR EXPENSE THAT ARE TAXABLE OR DEDUCTIBLE IN OTHER YEARS AND IT FURTHER %XPLORATION PROPERTIES ACQUIRED ARE RECOGNISED IN THE BALANCE SHEET AT COST LESS EXCLUDES ITEMS THAT ARE NOT TAXABLE OR DEDUCTIBLE 4HE 'ROUPÓS LIABILITY FOR CURRENT PROVISION FOR ANY IMPAIRMENT 3UCH PROPERTIES AND CAPITALISED PRE PRODUCTION TAX IS CALCULATED USING TAX RATES THAT HAVE BEEN ENACTED OR SUBSTANTIVELY ENACTED BY EXPENDITURE PRIOR TO COMMERCIAL PRODUCTION ARE ASSESSED FOR IMPAIRMENT IN THE BALANCE SHEET DATE ACCORDANCE WITH THE 'ROUPÓS ACCOUNTING POLICY STATED ABOVE $EFERRED TAX IS THE TAX EXPECTED TO BE PAYABLE OR RECOVERABLE ON DIFFERENCES )NVENTORY BETWEEN THE CARRYING AMOUNT OF ASSETS AND LIABILITIES IN THE äNANCIAL STATEMENTS )NVENTORY AND WORK IN PROGRESS ARE VALUED AT THE LOWER OF COST AND NET REALISABLE AND THE CORRESPONDING TAX BASIS USED IN THE COMPUTATION OF TAXABLE PROäT AND IS VALUE 4HE PRODUCTION COST OF INVENTORY INCLUDES AN APPROPRIATE PROPORTION OF ACCOUNTED FOR USING THE BALANCE SHEET LIABILITY METHOD $EFERRED TAX LIABILITIES ARE DEPRECIATION AND PRODUCTION OVERHEADS #OST IS DETERMINED ON THE FOLLOWING BASES GENERALLY RECOGNISED FOR ALL TAXABLE TEMPORARY DIFFERENCES AND DEFERRED TAX ASSETS ARE RECOGNISED TO THE EXTENT THAT IT IS PROBABLE THAT TAXABLE PROäTS WILL BE AVAILABLE Ú 2AW MATERIALS AND CONSUMABLES ARE VALUED AT COST ON A äRST IN äRST OUT AGAINST WHICH DEDUCTIBLE TEMPORARY DIFFERENCES CAN BE UTILISED 3UCH ASSETS AND &)&/ BASIS LIABILITIES ARE NOT RECOGNISED IF THE TEMPORARY DIFFERENCES ARISE FROM THE INITIAL Ú &INISHED PRODUCTS ARE VALUED AT RAW MATERIAL COST LABOUR COST AND A PROPORTION RECOGNITION OF GOODWILL OR AN ASSET OR LIABILITY IN A TRANSACTION OTHER THAN IN A OF MANUFACTURING OVERHEAD EXPENSES BUSINESS COMBINATION THAT AFFECTS NEITHER TAXABLE PROäT NOR ACCOUNTING PROäT Ú -ETAL AND COAL STOCKS ARE INCLUDED WITHIN äNISHED PRODUCTS AND ARE VALUED AT AVERAGE COST $EFERRED TAX LIABILITIES ARE RECOGNISED FOR TAXABLE TEMPORARY DIFFERENCES ARISING ON INVESTMENTS IN SUBSIDIARIES JOINT VENTURES AND ASSOCIATES EXCEPT WHERE THE 'ROUP !T PRECIOUS METALS OPERATIONS THAT PRODUCE ÒJOINT PRODUCTSÓ COST IS ALLOCATED IS ABLE TO CONTROL THE REVERSAL OF THE TEMPORARY DIFFERENCE AND IT IS PROBABLE THAT THE BETWEEN PRODUCTS ACCORDING TO THE RATIO OF CONTRIBUTION OF THESE METALS TO GROSS TEMPORARY DIFFERENCE WILL NOT REVERSE IN THE FORESEEABLE FUTURE SALES REVENUES 4HE CARRYING AMOUNT OF DEFERRED TAX ASSETS IS REVIEWED AT EACH BALANCE SHEET DATE AND IS ADJUSTED TO THE EXTENT THAT IT IS NO LONGER PROBABLE THAT SUFäCIENT TAXABLE PROäT WILL BE AVAILABLE TO ALLOW ALL OR PART OF THE ASSET TO BE RECOVERED
102 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 1. Accounting policies CONTINUED #HANGES IN THE MEASUREMENT OF A LIABILITY RELATING TO THE DECOMMISSIONING OF PLANT $EFERRED TAX IS CALCULATED AT THE TAX RATES THAT ARE EXPECTED TO APPLY IN THE PERIOD OR OTHER SITE PREPARATION WORK THAT RESULT FROM CHANGES IN THE ESTIMATED TIMING OR WHEN THE LIABILITY IS SETTLED OR THE ASSET IS REALISED $EFERRED TAX IS CHARGED OR AMOUNT OF THE CASH åOW OR A CHANGE IN THE DISCOUNT RATE ARE ADDED TO OR DEDUCTED CREDITED TO THE INCOME STATEMENT EXCEPT WHEN IT RELATES TO ITEMS CHARGED OR CREDITED FROM THE COST OF THE RELATED ASSET IN THE CURRENT PERIOD )F A DECREASE IN THE LIABILITY DIRECTLY TO EQUITY IN WHICH CASE THE DEFERRED TAX IS ALSO TAKEN DIRECTLY TO EQUITY EXCEEDS THE CARRYING AMOUNT OF THE ASSET THE EXCESS IS RECOGNISED IMMEDIATELY IN THE INCOME STATEMENT )F THE ASSET VALUE IS INCREASED AND THERE IS AN INDICATION THAT $EFERRED TAX ASSETS AND LIABILITIES ARE OFFSET WHEN THEY RELATE TO INCOME TAXES THE REVISED CARRYING VALUE IS NOT RECOVERABLE AN IMPAIRMENT TEST IS PERFORMED IN LEVIED BY THE SAME TAXATION AUTHORITY AND THE 'ROUP INTENDS TO SETTLE ITS CURRENT TAX ACCORDANCE WITH THE ACCOUNTING POLICY SET OUT ON PAGES AND ASSETS AND LIABILITIES ON A NET BASIS &OR SOME 3OUTH !FRICAN OPERATIONS ANNUAL CONTRIBUTIONS ARE MADE TO DEDICATED ,EASES ENVIRONMENTAL REHABILITATION TRUSTS TO FUND THE ESTIMATED COST OF REHABILITATION )N ADDITION TO LEASE CONTRACTS OTHER SIGNIäCANT CONTRACTS ARE ASSESSED TO DETERMINE DURING AND AT THE END OF THE LIFE OF THE RELEVANT MINE 4HE 'ROUP EXERCISES FULL WHETHER IN SUBSTANCE THEY ARE OR CONTAIN A LEASE 4HIS INCLUDES ASSESSMENT OF CONTROL OF THESE TRUSTS AND THEREFORE THE TRUSTS ARE CONSOLIDATED 4HE TRUSTSÓ ASSETS WHETHER THE ARRANGEMENT IS DEPENDENT ON USE OF A SPECIäC ASSET AND RIGHT TO USE ARE RECOGNISED SEPARATELY ON THE BALANCE SHEET AS NON CURRENT ASSETS AT FAIR VALUE THAT ASSET IS CONVEYED THROUGH THE CONTRACT )NTEREST EARNED ON FUNDS INVESTED IN THE ENVIRONMENTAL REHABILITATION TRUSTS IS ACCRUED ON A TIME PROPORTION BASIS AND RECOGNISED AS INTEREST INCOME 2ENTAL COSTS UNDER OPERATING LEASES ARE CHARGED TO THE INCOME STATEMENT IN EQUAL ANNUAL AMOUNTS OVER THE LEASE TERM &OREIGN CURRENCY TRANSACTIONS AND TRANSLATION &OREIGN CURRENCY TRANSACTIONS BY 'ROUP COMPANIES ARE BOOKED IN THE FUNCTIONAL !SSETS HELD UNDER äNANCE LEASES ARE RECOGNISED AS ASSETS OF THE 'ROUP ON INCEPTION CURRENCIES OF THE COMPANIES AT THE EXCHANGE RATE RULING ON THE DATE OF TRANSACTION OF THE LEASE AT THE LOWER OF FAIR VALUE OR THE PRESENT VALUE OF THE MINIMUM LEASE !T EACH BALANCE SHEET DATE MONETARY ASSETS AND LIABILITIES THAT ARE DENOMINATED PAYMENTS DISCOUNTED AT THE INTEREST RATE IMPLICIT IN THE LEASE 4HE INTEREST ELEMENT IN FOREIGN CURRENCIES ARE RETRANSLATED AT THE RATES PREVAILING ON THE BALANCE SHEET OF THE RENTAL IS CHARGED AGAINST PROäT SO AS TO PRODUCE A CONSTANT PERIODIC RATE OF DATE 'AINS AND LOSSES ARISING ON RETRANSLATION ARE INCLUDED IN PROäT OR LOSS FOR THE INTEREST ON THE REMAINING BALANCE OF THE LIABILITY UNLESS IT IS DIRECTLY ATTRIBUTABLE TO PERIOD AND ARE CLASSIäED AS EITHER OPERATING OR äNANCING DEPENDING ON THE NATURE OF QUALIFYING ASSETS IN WHICH CASE IT IS CAPITALISED IN ACCORDANCE WITH THE 'ROUPÓS THE MONETARY ITEM GIVING RISE TO THEM GENERAL POLICY ON BORROWING COSTS SET OUT BELOW /N CONSOLIDATION THE ASSETS AND LIABILITIES OF THE 'ROUPÓS OVERSEAS OPERATIONS ARE .ON CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS TRANSLATED INTO THE PRESENTATION CURRENCY OF THE 'ROUP AT EXCHANGE RATES PREVAILING .ON CURRENT ASSETS AND DISPOSAL GROUPS ARE CLASSIäED AS HELD FOR SALE IF THEIR ON THE BALANCE SHEET DATE )NCOME AND EXPENSE ITEMS ARE TRANSLATED AT THE AVERAGE CARRYING AMOUNT WILL BE RECOVERED THROUGH A SALE TRANSACTION RATHER THAN THROUGH EXCHANGE RATES FOR THE PERIOD WHERE THESE APPROXIMATE THE RATES AT THE DATES OF CONTINUING USE 4HIS CONDITION IS REGARDED AS MET ONLY WHEN A SALE IS HIGHLY TRANSACTIONS !NY EXCHANGE DIFFERENCES ARISING ARE CLASSIäED WITHIN EQUITY AND PROBABLE WITHIN ONE YEAR FROM THE DATE OF CLASSIäCATION MANAGEMENT ARE TRANSFERRED TO THE 'ROUPÓS CUMULATIVE TRANSLATION ADJUSTMENT RESERVE %XCHANGE COMMITTED TO THE SALE AND THE ASSET OR DISPOSAL GROUP IS AVAILABLE FOR IMMEDIATE DIFFERENCES ON FOREIGN CURRENCY BALANCES WITH FOREIGN OPERATIONS FOR WHICH SALE IN ITS PRESENT CONDITION SETTLEMENT IS NEITHER PLANNED NOR LIKELY TO OCCUR IN THE FORESEEABLE FUTURE AND THEREFORE FORM PART OF THE 'ROUPÓS NET INVESTMENT IN THESE FOREIGN OPERATIONS ARE .ON CURRENT ASSETS AND DISPOSAL GROUPS ARE CLASSIäED AS HELD FOR SALE FROM THE OFFSET IN THE CUMULATIVE TRANSLATION ADJUSTMENT RESERVE DATE THESE CONDITIONS ARE MET AND ARE MEASURED AT THE LOWER OF CARRYING AMOUNT AND FAIR VALUE LESS COSTS TO SELL !NY RESULTING IMPAIRMENT IS REPORTED THROUGH THE #UMULATIVE TRANSLATION DIFFERENCES ARE RECYCLED FROM EQUITY AND RECOGNISED AS Financial statements INCOME STATEMENT AS A SPECIAL ITEM /N CLASSIäCATION AS HELD FOR SALE THE ASSETS ARE INCOME OR EXPENSE ON DISPOSAL OF THE OPERATION TO WHICH THEY RELATE NO LONGER DEPRECIATED #OMPARATIVE AMOUNTS ARE NOT ADJUSTED 'OODWILL AND FAIR VALUE ADJUSTMENTS ARISING ON THE ACQUISITION OF A FOREIGN ENTITY ARE !N ASSET OR BUSINESS IS CONSIDERED TO BE A ÒDISCONTINUED OPERATIONÓ IF IT HAS BEEN TREATED AS ASSETS OF THE FOREIGN ENTITY AND TRANSLATED AT THE CLOSING RATE SOLD OR IS CLASSIäED AS HELD FOR SALE AND IS PART OF A SINGLE CO ORDINATED PLAN TO DISPOSE OF EITHER A SEPARATE MAJOR LINE OF BUSINESS OR GEOGRAPHICAL AREA OF OPERATION 0RESENTATION CURRENCY OR IS A SUBSIDIARY ACQUIRED EXCLUSIVELY WITH A VIEW TO SALE /NCE AN OPERATION HAS !S PERMITTED BY 5+ COMPANY LAW THE 'ROUPÓS RESULTS ARE PRESENTED IN 53 DOLLARS BEEN IDENTIäED AS DISCONTINUED ITS NET PROäT AND CASH åOWS ARE SEPARATELY THE CURRENCY IN WHICH MOST OF ITS BUSINESS IS CONDUCTED PRESENTED FROM CONTINUING OPERATIONS #OMPARATIVE INFORMATION IS RECLASSIäED SO THAT NET PROäT AND CASH åOWS OF PRIOR PERIODS ARE ALSO SEPARATELY PRESENTED "ORROWING COSTS )NTEREST ON BORROWINGS DIRECTLY RELATING TO THE äNANCING OF QUALIFYING CAPITAL PROJECTS 2ESTORATION REHABILITATION AND ENVIRONMENTAL COSTS UNDER CONSTRUCTION IS ADDED TO THE CAPITALISED COST OF THOSE PROJECTS DURING THE !N OBLIGATION TO INCUR RESTORATION REHABILITATION AND ENVIRONMENTAL COSTS ARISES CONSTRUCTION PHASE UNTIL SUCH TIME AS THE ASSETS ARE SUBSTANTIALLY READY FOR THEIR WHEN ENVIRONMENTAL DISTURBANCE IS CAUSED BY THE DEVELOPMENT OR ONGOING INTENDED USE OR SALE WHICH IN THE CASE OF MINING PROPERTIES IS WHEN THEY ARE PRODUCTION OF A MINING PROPERTY 3UCH COSTS ARISING FROM THE DECOMMISSIONING OF CAPABLE OF COMMERCIAL PRODUCTION 7HERE FUNDS HAVE BEEN BORROWED SPECIäCALLY TO PLANT AND OTHER SITE PREPARATION WORK DISCOUNTED TO THEIR NET PRESENT VALUE ARE äNANCE A PROJECT THE AMOUNT CAPITALISED REPRESENTS THE ACTUAL BORROWING COSTS PROVIDED FOR AND CAPITALISED AT THE START OF EACH PROJECT AS SOON AS THE OBLIGATION TO INCURRED 7HERE THE FUNDS USED TO äNANCE A PROJECT FORM PART OF GENERAL INCUR SUCH COSTS ARISES 4HESE COSTS ARE CHARGED AGAINST PROäTS OVER THE LIFE OF THE BORROWINGS THE AMOUNT CAPITALISED IS CALCULATED USING A WEIGHTED AVERAGE OF RATES OPERATION THROUGH THE DEPRECIATION OF THE ASSET AND THE UNWINDING OF THE DISCOUNT APPLICABLE TO RELEVANT GENERAL BORROWINGS OF THE 'ROUP DURING THE PERIOD ON THE PROVISION #OSTS FOR RESTORATION OF SUBSEQUENT SITE DAMAGE WHICH IS CREATED ON AN ONGOING BASIS DURING PRODUCTION ARE PROVIDED FOR AT THEIR NET PRESENT VALUES !LL OTHER BORROWING COSTS ARE RECOGNISED IN THE INCOME STATEMENT IN THE PERIOD IN AND CHARGED AGAINST PROäTS AS EXTRACTION PROGRESSES WHICH THEY ARE INCURRED
Anglo American plc Annual Report 2009 103 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
1. Accounting policies CONTINUED )NVESTMENTS 3HARE BASED PAYMENTS )NVESTMENTS OTHER THAN INVESTMENTS IN SUBSIDIARIES JOINT VENTURES AND ASSOCIATES 4HE 'ROUP HAS APPLIED THE REQUIREMENTS OF )&23 3HARE BASED 0AYMENT )N ARE äNANCIAL ASSET INVESTMENTS AND ARE INITIALLY RECORDED AT FAIR VALUE !T SUBSEQUENT ACCORDANCE WITH THE TRANSITIONAL PROVISIONS )&23 HAS BEEN APPLIED TO ALL GRANTS REPORTING DATES äNANCIAL ASSETS THAT THE 'ROUP HAS THE EXPRESSED INTENTION AND OF EQUITY INSTRUMENTS AFTER .OVEMBER THAT HAD NOT VESTED AS AT ABILITY TO HOLD TO MATURITY ÒHELD TO MATURITYÓ AS WELL AS LOANS AND RECEIVABLES ARE *ANUARY MEASURED AT AMORTISED COST LESS ANY IMPAIRMENT 4HE AMORTISATION OF ANY DISCOUNT OR PREMIUM ON THE ACQUISITION OF A HELD TO MATURITY INVESTMENT IS RECOGNISED IN THE 4HE 'ROUP MAKES EQUITY SETTLED SHARE BASED PAYMENTS TO CERTAIN EMPLOYEES WHICH INCOME STATEMENT IN EACH PERIOD USING THE EFFECTIVE INTEREST METHOD ARE MEASURED AT FAIR VALUE AT THE DATE OF GRANT AND EXPENSED ON A STRAIGHT LINE BASIS OVER THE VESTING PERIOD BASED ON THE 'ROUPÓS ESTIMATE OF SHARES THAT WILL )NVESTMENTS OTHER THAN THOSE CLASSIäED AS HELD TO MATURITY OR LOANS AND RECEIVABLES EVENTUALLY VEST &OR THOSE SHARE SCHEMES WITH MARKET RELATED VESTING CONDITIONS ARE CLASSIäED AS EITHER AT FAIR VALUE THROUGH PROäT OR LOSS WHICH INCLUDES THE FAIR VALUE IS DETERMINED USING THE -ONTE #ARLO METHOD AT THE GRANT DATE 4HE INVESTMENTS HELD FOR TRADING OR AVAILABLE FOR SALE INVESTMENTS "OTH SUB CATEGORIES FAIR VALUE OF SHARE OPTIONS ISSUED WITH NON MARKET VESTING CONDITIONS HAS BEEN ARE MEASURED AT EACH REPORTING DATE AT FAIR VALUE 7HERE INVESTMENTS ARE HELD FOR CALCULATED USING THE "LACK 3CHOLES MODEL &OR ALL OTHER SHARE AWARDS THE FAIR VALUE TRADING PURPOSES UNREALISED GAINS AND LOSSES FOR THE PERIOD ARE INCLUDED IN THE IS DETERMINED BY REFERENCE TO THE MARKET VALUE OF THE SHARE AT THE DATE OF GRANT INCOME STATEMENT WITHIN OTHER GAINS AND LOSSES &OR AVAILABLE FOR SALE INVESTMENTS &OR ALL SHARE SCHEMES WITH NON MARKET RELATED VESTING CONDITIONS THE LIKELIHOOD OF UNREALISED GAINS AND LOSSES ARE RECOGNISED IN EQUITY UNTIL THE INVESTMENT IS VESTING HAS BEEN TAKEN INTO ACCOUNT WHEN DETERMINING THE RELEVANT CHARGE 6ESTING DISPOSED OR IMPAIRED AT WHICH TIME THE CUMULATIVE GAIN OR LOSS PREVIOUSLY ASSUMPTIONS ARE REVIEWED DURING EACH REPORTING PERIOD TO ENSURE THEY REåECT RECOGNISED IN EQUITY IS INCLUDED IN THE INCOME STATEMENT )MPAIRMENT LOSSES ARE CURRENT EXPECTATIONS RECOGNISED IN THE INCOME STATEMENT WHEN THE DIFFERENCE BETWEEN THE ACQUISITION COST AND CURRENT FAIR VALUE IS CONSIDERED SIGNIäCANT OR PROLONGED "LACK ECONOMIC EMPOWERMENT "%% TRANSACTIONS 7HERE THE 'ROUP DISPOSES OF A PORTION OF A 3OUTH !FRICAN BASED SUBSIDIARY OR #URRENT äNANCIAL ASSET INVESTMENTS CONSIST MAINLY OF BANK TERM DEPOSITS AND äXED OPERATION TO A "%% COMPANY AT A DISCOUNT TO FAIR VALUE THE TRANSACTION IS CONSIDERED AND åOATING RATE DEBT SECURITIES $EBT SECURITIES THAT ARE INTENDED TO BE HELD TO TO BE A SHARE BASED PAYMENT IN LINE WITH THE PRINCIPLE CONTAINED IN 3OUTH !FRICA MATURITY ARE RECORDED ON THE AMORTISED COST BASIS $EBT SECURITIES THAT ARE NOT INTERPRETATION !# !CCOUNTING FOR "LACK %CONOMIC %MPOWERMENT "%% INTENDED TO BE HELD TO MATURITY ARE RECORDED AT THE LOWER OF COST AND MARKET VALUE 4RANSACTIONS 4HE DISCOUNT PROVIDED OR VALUE GIVEN IS CALCULATED IN ACCORDANCE WITH )&23 AND INCLUDED IN THE DETERMINATION OF THE PROäT OR LOSS ON DISPOSAL 0ROVISION IS RAISED AGAINST THESE ASSETS WHEN THERE IS DOUBT OVER THE FUTURE REALISATION OF VALUE AS A RESULT OF A KNOWN EVENT OR CIRCUMSTANCE %MPLOYEE BENEäT TRUST 3HARES HELD BY THE EMPLOYEE BENEäT TRUST ARE RECORDED AS TREASURY SHARES AND THE #ONVERTIBLE DEBT CARRYING VALUE IS SHOWN AS A REDUCTION IN RETAINED EARNINGS WITHIN SHAREHOLDERSÓ EQUITY #ONVERTIBLE BONDS ARE REGARDED AS COMPOUND INSTRUMENTS CONSISTING OF A LIABILITY AND AN EQUITY COMPONENT !T THE DATE OF ISSUE THE FAIR VALUE OF THE LIABILITY #ASH AND CASH EQUIVALENTS COMPONENT IS ESTIMATED USING THE PREVAILING MARKET INTEREST RATE FOR SIMILAR #ASH AND CASH EQUIVALENTS COMPRISE CASH IN HAND AND ON DEMAND DEPOSITS NON CONVERTIBLE DEBT AND IS RECORDED WITHIN BORROWINGS AND CARRIED AT AMORTISED TOGETHER WITH SHORT TERM HIGHLY LIQUID INVESTMENTS THAT ARE READILY CONVERTIBLE TO COST 4HE DIFFERENCE BETWEEN THE PROCEEDS OF ISSUE OF THE CONVERTIBLE BOND AND THE A KNOWN AMOUNT OF CASH AND THAT ARE SUBJECT TO AN INSIGNIäCANT RISK OF CHANGES IN FAIR VALUE ASSIGNED TO THE LIABILITY COMPONENT REPRESENTING THE EMBEDDED OPTION TO VALUE "ANK OVERDRAFTS ARE HOWEVER SHOWN WITHIN SHORT TERM BORROWINGS IN CURRENT CONVERT THE LIABILITY INTO EQUITY OF THE 'ROUP IS INCLUDED IN EQUITY LIABILITIES ON THE BALANCE SHEET #ASH AND CASH EQUIVALENTS IN THE #ONSOLIDATED CASH åOW STATEMENT ARE SHOWN NET OF OVERDRAFTS )SSUE COSTS ARE APPORTIONED BETWEEN THE LIABILITY AND EQUITY COMPONENTS OF THE CONVERTIBLE BONDS WHERE APPROPRIATE BASED ON THEIR RELATIVE CARRYING AMOUNTS AT 4RADE RECEIVABLES THE DATE OF ISSUE 4HE PORTION RELATING TO THE EQUITY COMPONENT IS CHARGED DIRECTLY AGAINST EQUITY 4RADE RECEIVABLES DO NOT CARRY ANY INTEREST AND ARE STATED AT THEIR NOMINAL VALUE WITH THE EXCEPTION OF RECEIVABLES RELATING TO PROVISIONALLY PRICED SALES Ð AS SET OUT 4HE INTEREST EXPENSE ON THE LIABILITY COMPONENT IS CALCULATED BY APPLYING THE IN THE REVENUE RECOGNITION ACCOUNTING POLICY NET OF APPROPRIATE ALLOWANCE FOR EFFECTIVE INTEREST RATE FOR SIMILAR NON CONVERTIBLE DEBT TO THE LIABILITY COMPONENT OF ESTIMATED IRRECOVERABLE AMOUNTS 3UCH ALLOWANCES ARE RAISED BASED ON AN THE INSTRUMENT 4HE DIFFERENCE BETWEEN THIS AMOUNT AND THE INTEREST PAID IS ADDED ASSESSMENT OF DEBTOR AGEING PAST EXPERIENCE OR KNOWN CUSTOMER CIRCUMSTANCES TO THE CARRYING AMOUNT OF THE LIABILITY 4RADE PAYABLES &INANCIAL LIABILITIES AND EQUITY INSTRUMENTS 4RADE PAYABLES ARE NOT INTEREST BEARING AND ARE STATED AT THEIR NOMINAL VALUE WITH &INANCIAL LIABILITIES AND EQUITY INSTRUMENTS ARE CLASSIäED AND ACCOUNTED FOR AS DEBT THE EXCEPTION OF AMOUNTS RELATING TO PURCHASES OF PROVISIONALLY PRICED CONCENTRATE OR EQUITY ACCORDING TO THE SUBSTANCE OF THE CONTRACTUAL ARRANGEMENTS ENTERED INTO WHICH ARE MARKED TO MARKET USING THE APPROPRIATE FORWARD PRICE UNTIL SETTLED !N EQUITY INSTRUMENT IS ANY CONTRACT THAT EVIDENCES A RESIDUAL INTEREST IN THE ASSETS OF THE 'ROUP AFTER DEDUCTING ALL OF ITS LIABILITIES %QUITY INSTRUMENTS %QUITY INSTRUMENTS ISSUED BY THE #OMPANY ARE RECORDED AT THE PROCEEDS RECEIVED NET OF DIRECT ISSUE COSTS
104 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 1. Accounting policies CONTINUED $ERECOGNITION OF äNANCIAL ASSETS AND LIABILITIES "ANK BORROWINGS &INANCIAL ASSETS ARE DERECOGNISED WHEN THE RIGHTS TO RECEIVE CASH åOWS FROM THE )NTEREST BEARING BANK LOANS AND OVERDRAFTS ARE RECORDED AT THE PROCEEDS RECEIVED ASSET HAVE EXPIRED THE RIGHT TO RECEIVE CASH åOWS HAS BEEN RETAINED BUT AN NET OF DIRECT TRANSACTION COSTS &INANCE CHARGES INCLUDING PREMIUMS PAYABLE ON OBLIGATION TO ON PAY THEM IN FULL WITHOUT MATERIAL DELAY HAS BEEN ASSUMED OR THE SETTLEMENT OR REDEMPTION AND DIRECT ISSUE COSTS ARE ACCOUNTED FOR ON AN ACCRUALS RIGHT TO RECEIVE CASH åOWS HAS BEEN TRANSFERRED TOGETHER WITH SUBSTANTIALLY ALL THE BASIS AND CHARGED TO THE INCOME STATEMENT USING THE EFFECTIVE INTEREST METHOD RISKS AND REWARDS OF OWNERSHIP 4HEY ARE ADDED TO THE CARRYING AMOUNT OF THE INSTRUMENT TO THE EXTENT THAT THEY ARE NOT SETTLED IN THE PERIOD IN WHICH THEY ARISE &INANCIAL LIABILITIES ARE DERECOGNISED WHEN THE ASSOCIATED OBLIGATION HAS BEEN DISCHARGED CANCELLED OR HAS EXPIRED $ERIVATIVE äNANCIAL INSTRUMENTS AND HEDGE ACCOUNTING )N ORDER TO HEDGE ITS EXPOSURE TO FOREIGN EXCHANGE INTEREST RATE AND COMMODITY .EW )&23 ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED PRICE RISK THE 'ROUP ENTERS INTO FORWARD OPTION AND SWAP CONTRACTS 4HE 'ROUP )&23 2EVISED "USINESS #OMBINATIONS MAKES A NUMBER OF CHANGES TO THE DOES NOT USE DERIVATIVE äNANCIAL INSTRUMENTS FOR SPECULATIVE PURPOSES #OMMODITY ACCOUNTING FOR AND DISCLOSURE OF BUSINESS COMBINATIONS 4HE REVISED STANDARD BASED NORMAL PURCHASE OR NORMAL SALE CONTRACTS THAT MEET THE SCOPE EXEMPTION IN INTRODUCES CHANGES TO THE ACCOUNTING FOR CONTINGENT CONSIDERATION AND TRANSACTION )!3 &INANCIAL )NSTRUMENTS 2ECOGNITION AND -EASUREMENT ARE RECOGNISED IN COSTS AS WELL AS ALLOWING AN OPTION TO CALCULATE GOODWILL BASED ON THE PARENTÓS EARNINGS WHEN THEY ARE SETTLED BY PHYSICAL DELIVERY SHARE OF NET ASSETS ONLY OR INCLUDING GOODWILL RELATING TO MINORITY INTERESTS NON CONTROLLING INTERESTS /NCE ADOPTED THE 'ROUP WILL ACCOUNT FOR SUBSEQUENT !LL DERIVATIVES ARE HELD AT FAIR VALUE IN THE BALANCE SHEET WITHIN /THER äNANCIAL BUSINESS COMBINATIONS IN ACCORDANCE WITH THIS STANDARD 4HE REVISED STANDARD IS ASSETS DERIVATIVES OR /THER äNANCIAL LIABILITIES DERIVATIVES $ERIVATIVES ARE EFFECTIVE PROSPECTIVELY FOR ANNUAL PERIODS BEGINNING ON OR AFTER *ULY CLASSIäED AS CURRENT OR NON CURRENT DEPENDING ON THE EXPECTED MATURITY OF THE DERIVATIVE )!3 2EVISED #ONSOLIDATED AND 3EPARATE &INANCIAL 3TATEMENTS REQUIRES THE EFFECTS OF ALL TRANSACTIONS WITH NON CONTROLLING INTERESTS TO BE RECORDED IN EQUITY IF #HANGES IN THE FAIR VALUE OF DERIVATIVE äNANCIAL INSTRUMENTS THAT ARE DESIGNATED THERE IS NO CHANGE IN CONTROL /NCE ADOPTED ANY TRANSACTION WITHIN THIS SCOPE WILL AND EFFECTIVE AS HEDGES OF FUTURE CASH åOWS ARE RECOGNISED DIRECTLY IN EQUITY BE ACCOUNTED FOR IN ACCORDANCE WITH THE REVISED STANDARD 4HE REVISED STANDARD IS 4HE GAIN OR LOSS RELATING TO THE INEFFECTIVE PORTION IS RECOGNISED IMMEDIATELY IN EFFECTIVE PROSPECTIVELY FOR ANNUAL PERIODS BEGINNING ON OR AFTER *ULY THE INCOME STATEMENT )F THE CASH åOW HEDGE OF A äRM COMMITMENT OR FORECAST TRANSACTION RESULTS IN THE RECOGNITION OF A NON äNANCIAL ASSET OR A LIABILITY THEN )&23 &INANCIAL )NSTRUMENTS IS THE äRST PHASE OF THE )!3"ÓS THREE STAGE PROJECT TO AT THE TIME THE ASSET OR LIABILITY IS RECOGNISED THE ASSOCIATED GAINS OR LOSSES ON REPLACE )!3 4HE äRST PHASE DEALS WITH THE CLASSIäCATION AND MEASUREMENT OF THE DERIVATIVE THAT HAD PREVIOUSLY BEEN RECOGNISED IN EQUITY ARE INCLUDED IN THE äNANCIAL ASSETS 4HE STANDARD APPLIES FOR ANNUAL PERIODS BEGINNING ON OR AFTER INITIAL MEASUREMENT OF THE ASSET OR LIABILITY &OR HEDGES THAT DO NOT RESULT IN THE *ANUARY %ARLY APPLICATION IS PERMITTED ALTHOUGH )&23 HAS NOT YET BEEN RECOGNITION OF A NON äNANCIAL ASSET OR A LIABILITY AMOUNTS DEFERRED IN EQUITY ARE ENDORSED FOR USE IN THE %UROPEAN 5NION /NCE ADOPTED ALL äNANCIAL ASSETS WITHIN RECOGNISED IN THE INCOME STATEMENT IN THE SAME PERIOD IN WHICH THE HEDGED ITEM THE SCOPE OF )&23 WILL BE ACCOUNTED FOR IN ACCORDANCE WITH THE STANDARD AFFECTS PROäT OR LOSS 4HE FOLLOWING NEW )&23 ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED &OR AN EFFECTIVE HEDGE OF AN EXPOSURE TO CHANGES IN FAIR VALUE THE HEDGED ITEM IS ARE NOT EXPECTED TO HAVE A SIGNIäCANT IMPACT ON THE 'ROUP ADJUSTED FOR CHANGES IN FAIR VALUE ATTRIBUTABLE TO THE RISK BEING HEDGED WITH THE CORRESPONDING ENTRY IN PROäT OR LOSS 'AINS OR LOSSES FROM REMEASURING THE !MENDMENT TO )!3 &INANCIAL )NSTRUMENTS 2ECOGNITION AND -EASUREMENT %LIGIBLE ASSOCIATED DERIVATIVE ARE RECOGNISED IN THE INCOME STATEMENT (EDGED )TEMS PROHIBITS DESIGNATING INåATION AS A HEDGEABLE COMPONENT OF A äXED Financial statements RATE DEBT AND INCLUSION OF TIME VALUE IN THE ONE SIDED HEDGED RISK WHEN DESIGNATING 4HE GAIN OR LOSS ON HEDGING INSTRUMENTS RELATING TO THE EFFECTIVE PORTION OF A NET OPTIONS AS HEDGES 4HE AMENDMENT IS EFFECTIVE FOR ACCOUNTING PERIODS BEGINNING ON INVESTMENT HEDGE IS RECOGNISED IN EQUITY 4HE INEFFECTIVE PORTION IS RECOGNISED OR AFTER *ULY IMMEDIATELY IN THE INCOME STATEMENT 'AINS OR LOSSES ACCUMULATED IN EQUITY ARE INCLUDED IN THE INCOME STATEMENT ON DISPOSAL OF THE FOREIGN OPERATIONS TO WHICH !MENDMENT TO )&23 3HARE BASED PAYMENTS ON 'ROUP #ASH SETTLED 3HARE BASED THEY RELATE 0AYMENT 4RANSACTIONS CLARIäES THE SCOPE AND THE ACCOUNTING FOR GROUP CASH SETTLED SHARE BASED PAYMENT TRANSACTIONS IN THE SEPARATE OR INDIVIDUAL äNANCIAL #HANGES IN THE FAIR VALUE OF ANY DERIVATIVE INSTRUMENTS THAT ARE NOT HEDGE STATEMENTS OF THE ENTITY RECEIVING THE GOODS OR SERVICES WHEN THAT ENTITY HAS NO ACCOUNTED ARE RECOGNISED IMMEDIATELY IN THE INCOME STATEMENT AND ARE CLASSIäED OBLIGATION TO SETTLE THE SHARE BASED PAYMENT TRANSACTION 4HE AMENDMENT IS WITHIN OTHER GAINS AND LOSSES OR NET äNANCE COSTS DEPENDING ON THE TYPE OF RISK THE EFFECTIVE FOR ANNUAL PERIODS COMMENCING ON OR AFTER *ANUARY SUBJECT TO DERIVATIVE RELATES TO ADOPTION BY THE %UROPEAN 5NION
(EDGE ACCOUNTING IS DISCONTINUED WHEN THE HEDGING INSTRUMENT EXPIRES OR IS SOLD !MENDMENT TO )!3 &INANCIAL )NSTRUMENTS 0RESENTATION Ð #LASSIäCATION OF 2IGHTS TERMINATED EXERCISED REVOKED OR NO LONGER QUALIäES FOR HEDGE ACCOUNTING !T THAT )SSUES ADDRESSES THE ACCOUNTING FOR RIGHTS ISSUES RIGHTS OPTIONS OR WARRANTS THAT TIME ANY CUMULATIVE GAIN OR LOSS ON THE HEDGING INSTRUMENT RECOGNISED IN EQUITY IS ARE DENOMINATED IN A CURRENCY OTHER THAN THE FUNCTIONAL CURRENCY OF THE ISSUER 0RIOR RETAINED IN EQUITY UNTIL THE FORECAST TRANSACTION OCCURS )F A HEDGE TRANSACTION IS NO TO THE AMENDMENT SUCH RIGHTS ISSUES WERE ACCOUNTED FOR AS DERIVATIVE LIABILITIES LONGER EXPECTED TO OCCUR THE NET CUMULATIVE GAIN OR LOSS PREVIOUSLY RECOGNISED IN 4HE AMENDMENT STATES THAT IF SUCH RIGHTS ARE ISSUED PRO RATA TO AN ENTITYÓS EXISTING EQUITY IS INCLUDED IN THE INCOME STATEMENT FOR THE PERIOD SHAREHOLDERS FOR A äXED AMOUNT OF ANY CURRENCY THEY SHOULD BE CLASSIäED AS EQUITY REGARDLESS OF THE CURRENCY IN WHICH THE EXERCISE PRICE IS DENOMINATED 4HE $ERIVATIVES EMBEDDED IN OTHER äNANCIAL INSTRUMENTS OR NON äNANCIAL HOST CONTRACTS AMENDMENT IS EFFECTIVE FOR ANNUAL PERIODS COMMENCING ON OR AFTER &EBRUARY ARE TREATED AS SEPARATE DERIVATIVES WHEN THEIR RISKS AND CHARACTERISTICS ARE NOT CLOSELY RELATED TO THOSE OF THEIR HOST CONTRACTS AND THE HOST CONTRACTS THEMSELVES ARE NOT CARRIED AT FAIR VALUE WITH UNREALISED GAINS OR LOSSES REPORTED IN THE INCOME STATEMENT
Anglo American plc Annual Report 2009 105 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
1. Accounting policies CONTINUED 2EVENUE /PERATING PROäTLOSS !NNUAL IMPROVEMENTS TO )&23S AMENDS A NUMBER OF STANDARDS INCLUDING 53 MILLION CHANGES IN PRESENTATION RECOGNITION AND MEASUREMENT PLUS TERMINOLOGY AND EDITORIAL 0LATINUM CHANGES 4HE AMENDMENTS ARE EFFECTIVE FOR ANNUAL PERIODS COMMENCING ON OR $IAMONDS AFTER *ANUARY SUBJECT TO ADOPTION BY THE %UROPEAN 5NION #OPPER )&2)# %XTINGUISHING &INANCIAL ,IABILITIES WITH %QUITY )NSTRUMENTS CLARIäES THE .ICKEL ACCOUNTING WHEN AN ENTITY RENEGOTIATES THE TERMS OF ITS DEBT WITH THE RESULT THAT )RON /RE AND -ANGANESE THE LIABILITY IS EXTINGUISHED BY THE DEBTOR ISSUING ITS OWN EQUITY INSTRUMENTS FOR -ETALLURGICAL #OAL THE CREDITOR 4HE INTERPRETATION IS TO BE APPLIED RETROSPECTIVELY FROM THE EARLIEST 4HERMAL #OAL COMPARATIVE PERIOD PRESENTED AND IS EFFECTIVE FOR ANNUAL PERIODS BEGINNING ON OR /THER -INING AND )NDUSTRIAL AFTER *ULY SUBJECT TO ADOPTION BY THE %UROPEAN 5NION ALTHOUGH EARLIER %XPLORATION Ð Ð APPLICATION IS PERMITTED #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS !MENDMENTS TO )&23 &IRST TIME !DOPTION OF )NTERNATIONAL &INANCIAL 2EPORTING 3EGMENT MEASURE 3TANDARDS AND )!3 #ONSOLIDATED AND 3EPARATE &INANCIAL 3TATEMENTS ON THE #OST OF AN )NVESTMENT IN A 3UBSIDIARY *OINTLY #ONTROLLED %NTITY OR !SSOCIATE 2ECONCILIATION ,ESS !SSOCIATES !MENDMENTS TO )&23 ON !DDITIONAL %XEMPTIONS FOR &IRST TIME !DOPTERS /PERATING SPECIAL ITEMS AND REMEASUREMENTS Ð Ð )&2)# 3ERVICE #ONCESSION !RRANGEMENTS 3TATUTORY MEASURE
)&2)# $ISTRIBUTIONS OF .ON CASH !SSETS TO /WNERS 3EGMENT REVENUE INCLUDES THE 'ROUPÓS ATTRIBUTABLE SHARE OF ASSOCIATESÓ REVENUE 4HIS IS RECONCILED TO 'ROUP REVENUE FROM SUBSIDIARIES AND JOINT VENTURES AS PRESENTED IN THE #ONSOLIDATED INCOME STATEMENT 3EGMENT OPERATING PROäT IS REVENUE LESS OPERATING COSTS BEFORE SPECIAL ITEMS AND REMEASUREMENTS AND )&2)# 4RANSFERS OF !SSETS FROM #USTOMERS INCLUDES THE 'ROUPÓS ATTRIBUTABLE SHARE OF ASSOCIATESÓ OPERATING PROäT 4HIS IS RECONCILED TO /PERATING PROäT FROM SUBSIDIARIES AND JOINT VENTURES AFTER SPECIAL ITEMS AND REMEASUREMENTS AS PRESENTED IN THE 2. Segmental information #ONSOLIDATED INCOME STATEMENT 4HE 'ROUPÓS SEGMENTS ARE ALIGNED TO THE STRUCTURE OF "USINESS 5NITS BASED AROUND CORE COMMODITIES )N ADDITION ASSETS IDENTIäED FOR DIVESTMENT ARE MANAGED AS A !SSOCIATESÓ REVENUE AND OPERATING PROäT ARE AS FOLLOWS SEPARATE "USINESS 5NIT /THER -INING AND )NDUSTRIAL 4HE +UMBA )RON /RE )RON /RE "RAZIL AND 3AMANCOR "USINESS 5NITS HAVE BEEN AGGREGATED AS THE )RON /RE AND !SSOCIATESÓ !SSOCIATESÓ OPERATING REVENUE PROäTLOSS -ANGANESE SEGMENT ON THE BASIS OF THE ULTIMATE PRODUCT PRODUCED FERROUS METALS %ACH "USINESS 5NIT HAS A MANAGEMENT TEAM THAT IS ACCOUNTABLE TO THE 53 MILLION #HIEF EXECUTIVE 0LATINUM $IAMONDS 4HE 'ROUPÓS %XECUTIVE #OMMITTEE EVALUATES THE äNANCIAL PERFORMANCE OF THE 'ROUP )RON /RE AND -ANGANESE AND ITS SEGMENTS PRINCIPALLY WITH REFERENCE TO OPERATING PROäT BEFORE SPECIAL ITEMS -ETALLURGICAL #OAL AND REMEASUREMENTS WHICH INCLUDES THE 'ROUPÓS ATTRIBUTABLE SHARE OF ASSOCIATESÓ 4HERMAL #OAL OPERATING PROäT BEFORE SPECIAL ITEMS AND REMEASUREMENTS /THER -INING AND )NDUSTRIAL 3EGMENTS PREDOMINATELY DERIVE REVENUE AS FOLLOWS Ð 0LATINUM PLATINUM GROUP METALS $IAMONDS ROUGH AND POLISHED DIAMONDS AND DIAMOND JEWELLERY #OPPER 2ECONCILIATION AND .ICKEL BASE METALS )RON /RE AND -ANGANESE IRON ORE MANGANESE ORE AND !SSOCIATESÓ NET äNANCE COSTS BEFORE ALLOYS -ETALLURGICAL #OAL METALLURGICAL COAL 4HERMAL #OAL THERMAL COAL AND /THER SPECIAL ITEMS AND REMEASUREMENTS -INING AND )NDUSTRIAL HEAVY BUILDING MATERIALS ZINC AND STEEL PRODUCTS !SSOCIATESÓ INCOME TAX EXPENSE BEFORE SPECIAL ITEMS AND REMEASUREMENTS 4HE SEGMENT RESULTS ARE STATED AFTER ELIMINATION OF INTER SEGMENT TRANSACTIONS AND !SSOCIATESÓ MINORITY INTERESTS BEFORE INCLUDE AN ALLOCATION OF CORPORATE COSTS SPECIAL ITEMS AND REMEASUREMENTS 3HARE OF NET INCOME FROM ASSOCIATES 4HE #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS SEGMENT INCLUDES INSURANCE COSTS BEFORE SPECIAL ITEMS AND REMEASUREMENTS $UE TO THE PORTFOLIO AND MANAGEMENT STRUCTURE CHANGES ANNOUNCED IN /CTOBER !SSOCIATESÓ SPECIAL ITEMS AND REMEASUREMENTS THE SEGMENTS HAVE CHANGED FROM THOSE REPORTED AT $ECEMBER #OMPARATIVES HAVE BEEN RECLASSIäED TO ALIGN WITH CURRENT YEAR PRESENTATION !SSOCIATEÓS TAX SPECIAL ITEM Ð !SSOCIATESÓ TAX ON SPECIAL ITEMS AND REMEASUREMENTS !SSOCIATESÓ MINORITY INTERESTS ON SPECIAL ITEMS AND REMEASUREMENTS 3HARE OF NET INCOME FROM ASSOCIATES
!SSOCIATESÓ OPERATING PROäT IS THE 'ROUPÓS ATTRIBUTABLE SHARE OF ASSOCIATESÓ REVENUE LESS OPERATING COSTS BEFORE SPECIAL ITEMS AND REMEASUREMENTS
106 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 2. Segmental information CONTINUED "ALANCE SHEET MEASURES ARE AS FOLLOWS 3IGNIäCANT NON CASH ITEMS INCLUDED WITHIN OPERATING PROäT ARE AS FOLLOWS #APITAL EXPENDITURE .ET DEBT $EPRECIATION AND /THER NON CASH 53 MILLION AMORTISATION EXPENSES 0LATINUM 53 MILLION #OPPER 0LATINUM .ICKEL #OPPER )RON /RE AND -ANGANESE .ICKEL -ETALLURGICAL #OAL )RON /RE AND -ANGANESE 4HERMAL #OAL -ETALLURGICAL #OAL /THER -INING AND )NDUSTRIAL 4HERMAL #OAL %XPLORATION Ð Ð Ð /THER -INING AND )NDUSTRIAL #ORPORATE !CTIVITIES AND 5NALLOCATED %XPLORATION Ð Ð Ð #OSTS #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS 2ECONCILIATION )NTEREST CAPITALISED 4HE 'ROUPÓS ATTRIBUTABLE SHARE OF DEPRECIATION AND AMORTISATION IN ASSOCIATES IS MILLION .ON CASH MOVEMENTS MILLION AND IS SPLIT BY SEGMENT AS FOLLOWS 0LATINUM MILLION MILLION $IAMONDS 4ANGIBLE ASSET ADDITIONS MILLION MILLION )RON /RE AND -ANGANESE MILLION MILLION -ETALLURGICAL #OAL MILLION MILLION 4HERMAL #OAL MILLION MILLION AND /THER -INING AND 4ANGIBLE ASSETS ACQUIRED THROUGH BUSINESS )NDUSTRIAL MILLION MILLION COMBINATIONS /THER NON CASH EXPENSES INCLUDE EQUITY SETTLED SHARE BASED PAYMENT CHARGES AND AMOUNTS INCLUDED IN OPERATING COSTS IN RESPECT OF PROVISIONS )NTANGIBLE ASSET ADDITIONS .ET DEBT IN DISPOSAL GROUPS
#APITAL EXPENDITURE IS SEGMENTED ON A CASH BASIS AND IS RECONCILED TO BALANCE SHEET ADDITIONS #ASH CAPITAL EXPENDITURE EXCLUDES CASH åOWS ON RELATED DERIVATIVES 3EGMENT NET DEBT EXCLUDES NET DEBT IN DISPOSAL GROUPS AND HEDGES ! RECONCILIATION OF NET DEBT TO THE BALANCE SHEET IS PROVIDED IN NOTE !T $ECEMBER NET DEBT OF MILLION WAS SPLIT BY SEGMENT AS FOLLOWS 0LATINUM MILLION #OPPER MILLION .ICKEL MILLION )RON /RE AND -ANGANESE MILLION -ETALLURGICAL #OAL MILLION 4HERMAL #OAL MILLION /THER -INING AND )NDUSTRIAL MILLION %XPLORATION MILLION AND #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS MILLION 'ROUP NET DEBT OF MILLION INCLUDED A FURTHER MILLION OF NET DEBT IN DISPOSAL GROUPS )NCLUDES MOVEMENTS ON TANGIBLE ASSET ACCRUALS AND THE IMPACT OF CASH åOW HEDGE DERIVATIVES #APITAL EXPENDITURE ON AN ACCRUALS BASIS AND INCLUDING ADDITIONS RESULTING FROM ACQUISITIONS OF INTERESTS IN SUBSIDIARIES AND JOINT VENTURES IS SPLIT BY SEGMENT AS FOLLOWS 0LATINUM MILLION MILLION #OPPER MILLION MILLION .ICKEL MILLION MILLION )RON /RE AND -ANGANESE MILLION MILLION -ETALLURGICAL #OAL MILLION Financial statements MILLION 4HERMAL #OAL MILLION MILLION /THER -INING AND )NDUSTRIAL MILLION MILLION %XPLORATION NIL MILLION AND #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS MILLION MILLION
4HE FOLLOWING BALANCE SHEET SEGMENT MEASURES ARE PROVIDED FOR INFORMATION
3EGMENT ASSETS 3EGMENT LIABILITIES .ET SEGMENT ASSETS 53 MILLION 0LATINUM #OPPER .ICKEL )RON /RE AND -ANGANESE -ETALLURGICAL #OAL 4HERMAL #OAL /THER -INING AND )NDUSTRIAL %XPLORATION #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS /THER ASSETS AND LIABILITIES )NVESTMENTS IN ASSOCIATES Ð Ð &INANCIAL ASSET INVESTMENTS Ð Ð $EFERRED TAX ASSETSLIABILITIES #ASH AND CASH EQUIVALENTS Ð Ð /THER äNANCIAL ASSETSLIABILITIES Ð DERIVATIVES /THER NON OPERATING ASSETSLIABILITIES /THER PROVISIONS Ð Ð "ORROWINGS Ð Ð .ET ASSETS
3EGMENT ASSETS AT $ECEMBER ARE OPERATING ASSETS AND CONSIST OF INTANGIBLE ASSETS OF MILLION MILLION TANGIBLE ASSETS OF MILLION MILLION BIOLOGICAL ASSETS OF MILLION MILLION ENVIRONMENTAL REHABILITATION TRUSTS OF MILLION MILLION RETIREMENT BENEäT ASSETS OF MILLION MILLION INVENTORIES OF MILLION MILLION AND OPERATING RECEIVABLES OF MILLION MILLION 3EGMENT LIABILITIES AT $ECEMBER ARE OPERATING LIABILITIES AND CONSIST OF NON INTEREST BEARING CURRENT LIABILITIES OF MILLION MILLION RETIREMENT BENEäT OBLIGATIONS OF MILLION MILLION AND ENVIRONMENTAL RESTORATION AND DECOMMISSIONING PROVISIONS OF MILLION MILLION 2EFER TO NOTE FOR A SPLIT OF INVESTMENTS IN ASSOCIATES BY SEGMENT
Anglo American plc Annual Report 2009 107 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
2. Segmental information CONTINUED 3EGMENT REVENUE AND OPERATING PROäTLOSS BEFORE SPECIAL ITEMS AND %NTITY WIDE INFORMATION REMEASUREMENTS BY ORIGIN INCLUDING ATTRIBUTABLE SHARE OF REVENUE AND OPERATING 4HE 'ROUPÓS ANALYSIS OF SEGMENT REVENUE BY PRODUCT INCLUDING ATTRIBUTABLE SHARE OF PROäTLOSS FROM ASSOCIATES HAS BEEN PROVIDED FOR INFORMATION REVENUE FROM ASSOCIATES IS AS FOLLOWS /PERATING PROäTLOSS BEFORE SPECIAL ITEMS AND 53 MILLION 2EVENUE REMEASUREMENTS 0LATINUM 53 MILLION 0ALLADIUM 3OUTH !FRICA 2HODIUM /THER !FRICA $IAMONDS %UROPE #OPPER .ORTH !MERICA .ICKEL 3OUTH !MERICA )RON ORE !USTRALIA AND !SIA -ANGANESE -ETALLURGICAL COAL 4HERMAL COAL 4HE 'ROUPÓS GEOGRAPHICAL ANALYSIS OF SEGMENT ASSETS AND LIABILITIES ALLOCATED BASED :INC ON WHERE ASSETS AND LIABILITIES ARE LOCATED HAS BEEN PROVIDED FOR INFORMATION 3TEEL PRODUCTS (EAVY BUILDING MATERIALS 3EGMENT ASSETS 3EGMENT LIABILITIES .ET SEGMENT ASSETS /THER 53 MILLION 3OUTH !FRICA /THER !FRICA 4HE 'ROUPÓS GEOGRAPHICAL ANALYSIS OF SEGMENT REVENUE INCLUDING ATTRIBUTABLE SHARE %UROPE OF REVENUE FROM ASSOCIATES ALLOCATED BASED ON THE COUNTRY IN WHICH THE CUSTOMER .ORTH !MERICA IS LOCATED AND NON CURRENT SEGMENT ASSETS ALLOCATED BASED ON THE COUNTRY IN WHICH 3OUTH !MERICA THE ASSETS ARE LOCATED IS AS FOLLOWS !USTRALIA AND !SIA .ON CURRENT 2EVENUE SEGMENT ASSETS )NVESTMENTS IN ASSOCIATES ARE NOT INCLUDED IN SEGMENT ASSETS 4HE GEOGRAPHICAL DISTRIBUTION OF THESE 53 MILLION INVESTMENTS BASED ON THE LOCATION OF THE UNDERLYING ASSETS IS DISCLOSED IN NOTE 3OUTH !FRICA /THER !FRICA 5NITED +INGDOM !NGLO !MERICAN PLCÓS COUNTRY OF DOMICILE /THER %UROPE 53 /THER .ORTH !MERICA "RAZIL #HILE 6ENEZUELA /THER 3OUTH !MERICA !USTRALIA #HINA )NDIA Ð Ð *APAN Ð Ð /THER !SIA
.ON CURRENT SEGMENT ASSETS ARE NON CURRENT OPERATING ASSETS AND CONSIST OF TANGIBLE ASSETS INTANGIBLE ASSETS AND BIOLOGICAL ASSETS .ON CURRENT SEGMENT ASSETS AT $ECEMBER WERE MILLION
108 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 3. Reconciliation of Underlying earnings to Profit for the financial year attributable to equity shareholders of the Company 4HE TABLE BELOW ANALYSES THE CONTRIBUTION OF EACH SEGMENT TO THE 'ROUPÓS OPERATING PROäT INCLUDING ATTRIBUTABLE SHARE OF OPERATING PROäT FROM ASSOCIATES FOR THE äNANCIAL YEAR AND 5NDERLYING EARNINGS WHICH THE DIRECTORS CONSIDER TO BE A USEFUL ADDITIONAL MEASURE OF THE 'ROUPÓS PERFORMANCE ! RECONCILIATION FROM Ò0ROäT FOR THE äNANCIAL YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANYÓ TO Ò5NDERLYING EARNINGS FOR THE äNANCIAL YEARÓ IS GIVEN IN NOTE
$UE TO THE PORTFOLIO AND MANAGEMENT STRUCTURE CHANGES ANNOUNCED IN /CTOBER THE SEGMENTS HAVE CHANGED FROM THOSE REPORTED AT $ECEMBER #OMPARATIVES HAVE BEEN RECLASSIäED TO ALIGN WITH CURRENT YEAR PRESENTATION
/PERATING PROäT INCLUDING ATTRIBUTABLE SHARE OF OPERATING PROäT FROM ASSOCIATES IS RECONCILED TO Ò5NDERLYING EARNINGSÓ AND Ò0ROäT FOR THE äNANCIAL YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANYÓ IN THE TABLE BELOW
/PERATING /PERATING .ET PROäTLOSS PROäTLOSS /PERATING &INANCING INTEREST BEFORE SPECIAL AFTER SPECIAL SPECIAL .ET SPECIAL TAX AND ITEMS AND ITEMS AND ITEMS AND PROäT ON ITEMS AND MINORITY 53 MILLION REMEASUREMENTS REMEASUREMENTS REMEASUREMENTS DISPOSALS REMEASUREMENTS INTERESTS 4OTAL "Y SEGMENT 0LATINUM Ð $IAMONDS Ð #OPPER Ð Ð .ICKEL Ð Ð )RON /RE AND -ANGANESE Ð -ETALLURGICAL #OAL Ð 4HERMAL #OAL Ð %XPLORATION Ð Ð #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS Ð Ð #ORE OPERATIONS Ð /THER -INING AND )NDUSTRIAL Ð 4OTAL5NDERLYING EARNINGS Ð 5NDERLYING EARNINGS ADJUSTMENTS 0ROäT FOR THE äNANCIAL YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY
/PERATING /PERATING .ET
PROäTLOSS PROäTLOSS /PERATING &INANCING INTEREST Financial statements BEFORE SPECIAL AFTER SPECIAL SPECIAL .ET SPECIAL TAX AND ITEMS AND ITEMS AND ITEMS AND PROäT ON ITEMS AND MINORITY 53 MILLION REMEASUREMENTS REMEASUREMENTS REMEASUREMENTS DISPOSALS REMEASUREMENTS INTERESTS 4OTAL "Y SEGMENT 0LATINUM Ð $IAMONDS Ð #OPPER Ð .ICKEL Ð )RON /RE AND -ANGANESE Ð -ETALLURGICAL #OAL Ð Ð 4HERMAL #OAL Ð Ð %XPLORATION Ð Ð #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS Ð #ORE OPERATIONS Ð /THER -INING AND )NDUSTRIAL Ð 4OTAL5NDERLYING EARNINGS Ð 5NDERLYING EARNINGS ADJUSTMENTS 0ROäT FOR THE äNANCIAL YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY
/PERATING PROäT INCLUDES ATTRIBUTABLE SHARE OF ASSOCIATESÓ OPERATING PROäT WHICH IS RECONCILED TO Ò3HARE OF NET INCOME FROM ASSOCIATESÓ IN NOTE 3PECIAL ITEMS AND REMEASUREMENTS ARE SET OUT IN NOTE 4HIS REPRESENTS 5NDERLYING EARNINGS FOR THE äNANCIAL YEAR AND IS EQUAL TO PROäT FOR THE äNANCIAL YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY BEFORE SPECIAL ITEMS AND REMEASUREMENTS
Anglo American plc Annual Report 2009 109 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
4. Operating profit from subsidiaries and joint ventures ! MORE DETAILED ANALYSIS OF AUDITORSÓ REMUNERATION IS PROVIDED BELOW
53 MILLION 'ROUP REVENUE 0AID PAYABLE #OST OF SALES TO AUDITOR IF NOT 'ROSS PROäT 0AIDPAYABLE TO $ELOITTE $ELOITTE 3ELLING AND DISTRIBUTION COSTS 5NITED !DMINISTRATIVE EXPENSES 53 MILLION +INGDOM /VERSEAS 4OTAL /VERSEAS /THER GAINS AND LOSSES SEE BELOW 3TATUTORY AUDIT SERVICES %XPLORATION EXPENDITURE SEE NOTE !NGLO !MERICAN PLC !NNUAL 2EPORT PAID TO THE #OMPANYÓS AUDITOR Ð Ð /PERATING PROäT FROM SUBSIDIARIES AND JOINT VENTURES
)NCLUDES OPERATING SPECIAL ITEMS OF MILLION MILLION SEE NOTE 3UBSIDIARY ENTITIES Ð FOR PURPOSES OF !NGLO !MERICAN PLC !NNUAL 2EPORT Ð 3UBSIDIARY ENTITIES Ð ADDITIONAL LOCAL 53 MILLION STATUTORY REQUIREMENTS /PERATING PROäT IS STATED AFTER CHARGING 3UBSIDIARY ENTITIES Ð TOTAL $EPRECIATION OF TANGIBLE ASSETS SEE NOTE 4OTAL !MORTISATION OF INTANGIBLE ASSETS SEE NOTE /THER SERVICES 2ENTALS UNDER OPERATING LEASES /THER SERVICES PURSUANT TO LEGISLATION Ð 2ESEARCH AND DEVELOPMENT EXPENDITURE 4AX SERVICES /PERATING SPECIAL ITEMS )NTERNAL AUDIT SERVICES ÐÐÐ %MPLOYEE COSTS SEE NOTE /THER !DJUSTMENT DUE TO PROVISIONAL PRICING 4OTAL
/THER GAINS AND LOSSES COMPRISE MILLION WAS PAIDPAYABLE IN RESPECT OF THE AUDIT OF 'ROUP PENSION SCHEMES /PERATING REMEASUREMENTS )NCLUDES MILLION FOR SERVICES RELATING TO BID DEFENCE AND MILLION FOR SERVICES REQUIRED TO BE UNDERTAKEN BY $ELOITTE IN THEIR CAPACITY AS AUDITORS .ET GAINLOSS ON NON HEDGE DERIVATIVES
2EALISED LOSS ON DERIVATIVES RELATING TO CAPITAL EXPENDITURE /THER REMEASUREMENTS 0AID /THER FAIR VALUE GAINSLOSSES ON DERIVATIVES Ð REALISED PAYABLE TO AUDITOR &OREIGN CURRENCY LOSSES GAINS ON OTHER MONETARY ITEMS IF NOT 0AIDPAYABLE TO $ELOITTE $ELOITTE 'AINS ON VALUATION OF BIOLOGICAL ASSETS 5NITED 4OTAL OTHER GAINS AND LOSSES 53 MILLION +INGDOM /VERSEAS 4OTAL /VERSEAS 3TATUTORY AUDIT SERVICES 3PECIAL ITEMS AND REMEASUREMENTS ARE SET OUT IN NOTE !NGLO !MERICAN PLC !NNUAL 2EPORT PAID 0ROVISIONALLY PRICED CONTRACTS RESULTED IN A TOTAL REALISED AND UNREALISED GAIN IN REVENUE OF MILLION TO THE #OMPANYÓS AUDITOR Ð Ð MILLION LOSS AND TOTAL REALISED AND UNREALISED LOSS IN OPERATING COSTS OF MILLION MILLION GAIN 3UBSIDIARY ENTITIES Ð FOR PURPOSES OF !NGLO 53 MILLION !MERICAN PLC !NNUAL 2EPORT Ð !UDITORSÓ REMUNERATION 3UBSIDIARY ENTITIES Ð ADDITIONAL LOCAL STATUTORY REQUIREMENTS !UDIT 3UBSIDIARY ENTITIES Ð TOTAL 5NITED +INGDOM 4OTAL /VERSEAS /THER SERVICES /THER SERVICES PROVIDED BY $ELOITTE /THER SERVICES PURSUANT TO LEGISLATION Ð 5NITED +INGDOM 4AX SERVICES Ð /VERSEAS )NTERNAL AUDIT SERVICES Ð Ð Ð
Ò/THER SERVICES PROVIDED BY $ELOITTEÓ INCLUDES CHARGES INCURRED IN RESPECT OF THE INTERIM REVIEW #ORPORATE äNANCE Ð Ð MILLION FOR SERVICES RELATING TO BID DEFENCE AND MILLION FOR SERVICES REQUIRED TO BE UNDERTAKEN /THER BY $ELOITTE IN THEIR CAPACITY AS AUDITORS 4OTAL
MILLION WAS PAIDPAYABLE IN RESPECT OF THE AUDIT OF 'ROUP PENSION SCHEMES )NCLUDES MILLION FOR SERVICES REQUIRED TO BE UNDERTAKEN BY $ELOITTE IN THEIR CAPACITY AS AUDITORS
110 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 5. Exploration expenditure )N ACCORDANCE WITH )!3 2ELATED 0ARTY $ISCLOSURES KEY MANAGEMENT PERSONNEL ARE %XPLORATION EXPENDITURE IS STATED BEFORE SPECIAL ITEMS THOSE PERSONS HAVING AUTHORITY AND RESPONSIBILITY FOR PLANNING DIRECTING AND CONTROLLING THE ACTIVITIES OF THE 'ROUP DIRECTLY OR INDIRECTLY INCLUDING ANY DIRECTOR 53 MILLION EXECUTIVE AND NON EXECUTIVE OF THE 'ROUP "Y COMMODITY 0LATINUM GROUP METALS #OMPENSATION FOR KEY MANAGEMENT WAS AS FOLLOWS #OPPER 53 MILLION .ICKEL 3ALARIES AND SHORT TERM EMPLOYEE BENEäTS )RON ORE 0OST EMPLOYMENT BENEäTS -ETALLURGICAL COAL 4ERMINATION BENEäTS 4HERMAL COAL .ATIONAL INSURANCE AND SOCIAL SECURITY :INC 3HARE BASED PAYMENTS #ENTRAL EXPLORATION ACTIVITIES
&OLLOWING THE PORTFOLIO AND MANAGEMENT STRUCTURE CHANGES ANNOUNCED IN /CTOBER EXPLORATION +EY MANAGEMENT INCLUDES MEMBERS OF THE "OARD AND THE %XECUTIVE #OMMITTEE 4HE EXPENDITURE IS PRESENTED BY COMMODITY #OMPARATIVES HAVE BEEN RECLASSIäED TO ALIGN WITH CURRENT YEAR COMPOSITION OF KEY MANAGEMENT PERSONNEL HAS CHANGED FOLLOWING THE PORTFOLIO AND PRESENTATION MANAGEMENT STRUCTURE CHANGES ANNOUNCED IN /CTOBER
6. Employee numbers and costs $ISCLOSURE OF DIRECTORSÓ EMOLUMENTS PENSION ENTITLEMENTS SHARE OPTIONS AND LONG 4HE AVERAGE NUMBER OF EMPLOYEES EXCLUDING CONTRACTORS AND ASSOCIATESÓ EMPLOYEES TERM INCENTIVE PLAN AWARDS REQUIRED BY THE #OMPANIES !CT AND THOSE AND INCLUDING A PROPORTIONATE SHARE OF EMPLOYEES WITHIN JOINT VENTURE ENTITIES WAS SPECIäED FOR AUDIT BY 2EGULATION AND 3CHEDULE OF THE ,ARGE AND -EDIUM 3IZED #OMPANIES AND 'ROUPS !CCOUNTS AND 2EPORTS 2EGULATIONS ARE INCLUDED IN 4HOUSAND THE 2EMUNERATION REPORT "Y SEGMENT 0LATINUM 7. Special items and remeasurements Ò3PECIAL ITEMSÓ ARE THOSE ITEMS OF äNANCIAL PERFORMANCE THAT THE 'ROUP BELIEVES #OPPER SHOULD BE SEPARATELY DISCLOSED ON THE FACE OF THE INCOME STATEMENT TO ASSIST IN THE .ICKEL UNDERSTANDING OF THE UNDERLYING äNANCIAL PERFORMANCE ACHIEVED BY THE 'ROUP 3UCH )RON /RE AND -ANGANESE ITEMS ARE MATERIAL BY NATURE OR AMOUNT TO THE YEARÓS RESULTS AND REQUIRE SEPARATE -ETALLURGICAL #OAL DISCLOSURE IN ACCORDANCE WITH )!3 REVISED PARAGRAPH 3PECIAL ITEMS THAT 4HERMAL #OAL RELATE TO THE OPERATING PERFORMANCE OF THE 'ROUP ARE CLASSIäED AS OPERATING SPECIAL /THER -INING AND )NDUSTRIAL ITEMS AND INCLUDE IMPAIRMENT CHARGES AND REVERSALS AND OTHER EXCEPTIONAL ITEMS #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS INCLUDING SIGNIäCANT LEGAL PROVISIONS .ON OPERATING SPECIAL ITEMS INCLUDE PROäTS AND LOSSES ON DISPOSALS OF INVESTMENTS AND BUSINESSES
Ò2EMEASUREMENTSÓ COMPRISE OTHER ITEMS WHICH THE 'ROUP BELIEVES SHOULD BE Financial statements $UE TO THE PORTFOLIO AND MANAGEMENT STRUCTURE CHANGES ANNOUNCED IN /CTOBER THE SEGMENTS HAVE CHANGED FROM THOSE REPORTED AT $ECEMBER #OMPARATIVES HAVE BEEN RECLASSIäED TO ALIGN WITH REPORTED SEPARATELY TO AID AN UNDERSTANDING OF THE UNDERLYING äNANCIAL PERFORMANCE CURRENT YEAR PRESENTATION OF THE 'ROUP 4HIS CATEGORY INCLUDES 4HE AVERAGE NUMBER OF EMPLOYEES BY PRINCIPAL LOCATION OF EMPLOYMENT WAS I UNREALISED GAINS AND LOSSES ON ÒNON HEDGEÓ DERIVATIVE INSTRUMEN TS OPEN AT YEAR END IN RESPECT OF FUTURE TRANSACTIONS AND THE REVERSAL OF THE HISTORICAL 4HOUSAND MARKED TO MARKET VALUE OF SUCH INSTRUMENTS SETTLED IN THE YEAR 4HE FULL 3OUTH !FRICA REALISED GAINS OR LOSSES ARE RECORDED IN UNDERLYING EARNINGS IN THE SAME YEAR AS THE UNDERLYING TRANSACTION FOR WHICH SUCH INSTRUMENTS PROVIDE AN ECONOMIC /THER !FRICA BUT NOT FORMALLY DESIGNATED HEDGE IF THE UNDERLYING TRANSACTION IS RECORDED IN %UROPE THE BALANCE SHEET EG CAPITAL EXPENDITURE THE REALISED AMOUNT REMAINS IN .ORTH !MERICA REMEASUREMENTS ON SETTLEMENT OF THE DERIVATIVE 3UCH AMOUNTS ARE CLASSIäED 3OUTH !MERICA IN THE INCOME STATEMENT AS äNANCING WHEN THE UNDERLYING EXPOSURE IS IN !USTRALIA AND !SIA RESPECT OF NET DEBT AND OTHERWISE AS OPERATING II FOREIGN EXCHANGE GAINS AND LOSSES ARISING ON THE RETRANSLATION OF DOLLAR DENOMINATED $E "EERS PREFERENCE SHARES HELD BY A RAND FUNCTIONAL CURRENCY SUBSIDIARY OF THE 'ROUP 4HIS IS CLASSIäED AS äNANCING 0AYROLL COSTS IN RESPECT OF THE EMPLOYEES INCLUDED IN THE TABLES ABOVE WERE III FOREIGN EXCHANGE IMPACT ARISING IN 53 DOLLAR FUNCTIONAL CURRENCY ENTITIES WHERE TAX CALCULATIONS ARE GENERATED BASED ON LOCAL CURRENCY äNANCIAL INFORMATION 53 MILLION AND HENCE DEFERRED TAX IS SUSCEPTIBLE TO CURRENCY åUCTUATIONS 3UCH AMOUNTS 7AGES AND SALARIES ARE INCLUDED WITHIN INCOME TAX EXPENSE 3OCIAL SECURITY COSTS $EäNED CONTRIBUTION PLANS $EäNED BENEäT PLANS /THER POST EMPLOYMENT BENEäTS 3HARE BASED PAYMENTS 4OTAL PAYROLL COSTS 2ECONCILIATION ,ESS %MPLOYEE COSTS CAPITALISED ,ESS %MPLOYEE COSTS INCLUDED WITHIN OPERATING SPECIAL ITEMS %MPLOYEE COSTS INCLUDED IN OPERATING COSTS
#OMPARATIVES HAVE BEEN ALIGNED WITH CURRENT YEAR PRESENTATION WHICH IS INCLUSIVE OF AMOUNTS CAPITALISED AND AMOUNTS INCLUDED WITHIN OPERATING SPECIAL ITEMS
Anglo American plc Annual Report 2009 111 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
7. Special items and remeasurements CONTINUED #OSTS ASSOCIATED WITH Ò/NE !NGLOÓ INITIATIVES PRINCIPALLY COMPRISE ADVISORY COSTS AND 3UBSIDIARIES AND JOINT VENTURESÓ SPECIAL ITEMS AND REMEASUREMENTS INCLUDE COSTS ASSOCIATED WITH THE CORPORATE REVIEW PROCUREMENT SHARED SERVICES /PERATING SPECIAL ITEMS AND INFORMATION SYSTEMS
53 MILLION /PERATING REMEASUREMENTS )MPAIRMENT OF !MAP SYSTEM Ð 53 MILLION #OSTS ASSOCIATED WITH Ò/NE !NGLOÓ INITIATIVES .ET GAINLOSS ON NON HEDGE DERIVATIVES )MPAIRMENT OF ,OMA DE .¨QUEL Ð 2EALISED LOSS ON DERIVATIVES RELATING TO CAPITAL EXPENDITURE 2ESTRUCTURING COSTS /THER REMEASUREMENTS /THER -INING AND )NDUSTRIAL 4OTAL OPERATING REMEASUREMENTS #ORPORATE Ð 4AX 0LATINUM Ð -INORITY INTERESTS -ETALLURGICAL #OAL AND 4HERMAL #OAL Ð .ET TOTAL ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY 0LATINUM ASSETS WRITTEN OFF Ð )MPAIRMENT OF 4ARMAC ASSETS 4HE NET GAIN ON NON HEDGE DERIVATIVES PRINCIPALLY INCLUDES NET UNREALISED GAINS ON "ID DEFENCE COSTS Ð DERIVATIVES RELATING TO CAPITAL EXPENDITURE HELD BY )RON /RE "RAZIL AND ,OS "RONCES )MPAIRMENT OF )RON /RE "RAZIL TRANSSHIPPING VESSEL Ð AND AN UNREALISED GAIN ON AN EMBEDDED DERIVATIVE AT -INERA ,OMA DE .¨QUEL ! NET 0ROVISIONS FOR ONEROUS CONTRACTS LOSS OF MILLION WAS REALISED IN THE YEAR IN RESPECT OF THE )RON /RE "RAZIL AND #OSTS ASSOCIATED WITH PROPOSED SALE OF 4ARMAC Ð ,OS "RONCES CAPITAL EXPENDITURE DERIVATIVE PORTFOLIOS )MPAIRMENT OF ,ISHEEN Ð )MPAIRMENT OF "LACK -OUNTAIN Ð 0ROäTS AND LOSSES ON DISPOSALS )MPAIRMENT OF -ETALLURGICAL #OAL ASSETS Ð 53 MILLION 2EVERSAL OF IMPAIRMENT OF 3ILANGAN EXPLORATION ASSET Ð $ISPOSAL OF INTEREST IN !NGLO'OLD !SHANTI Ð /THER $ISPOSAL OF INTEREST IN "OOYSENDAL JOINT VENTURE Ð 4OTAL OPERATING SPECIAL ITEMS $ISPOSAL OF INTEREST IN ,EBOWA 0LATINUM -INES ,IMITED Ð 4AX $ISPOSAL OF äNANCIAL ASSET INVESTMENTS Ð -INORITY INTERESTS $ISPOSAL OF INTERESTS IN 4ONGAAT (ULETT AND (ULAMIN Ð .ET TOTAL ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY $ISPOSAL OF 4ARMAC äXED ASSETS Ð $ISPOSAL OF 3ILANGAN EXPLORATION ASSET Ð 4HE !MAP IRON ORE SYSTEM !MAP WAS ACQUIRED IN AS AN OPERATING ASSET $ISPOSAL OF INTEREST IN #HINA 3HENHUA %NERGY Ð AS PART OF THE ACQUISITION OF THE -INAS 2IO PROJECT $URING !MAP HAS EXPERIENCED SIGNIäCANT OPERATIONAL CHALLENGES ACROSS ITS MINE PLANT AND LOGISTICS $ISPOSAL OF INTEREST IN -INERA 3ANTA 2OSA 3#- Ð CHAIN PRODUCING MILLION TONNES COMPARED TO THE DESIGN CAPACITY OF MILLION $ISPOSAL OF .ORTHAM 0LATINUM ,IMITED Ð TONNES PER ANNUM -TPA -ANAGEMENTÓS FOCUS HAS BEEN AND REMAINS ON SEEKING #OPEBRS PROPERTY COMPENSATION Ð TO MARKEDLY IMPROVE PERFORMANCE FROM THE EXISTING OPERATIONS RATHER THAN $ISPOSAL OF 4ARMAC )BERIA Ð INVESTING TO EXPAND THE OPERATION !MAP IS CURRENTLY BELIEVED TO HAVE CAPACITY $ISPOSAL OF .AMAKWA 3ANDS Ð TO INCREASE PRODUCTION TO -TPA WITHOUT SIGNIäCANT FURTHER CAPITAL EXPENDITURE /THER $UE TO THE FOCUS ON IMPROVING OPERATIONAL PERFORMANCE AND PRESERVING CASH LIMITED EXPLORATION DRILLING HAS BEEN UNDERTAKEN IN AND THE ANTICIPATED GROWTH .ET PROäT ON DISPOSALS POTENTIAL OF SURROUNDING LICENCE AREAS REMAINS UNTESTED 'IVEN THESE OPERATIONAL 4AX DIFäCULTIES AND DELAYS IN INCREASING PRODUCTION THE 'ROUP HAS RECORDED AN -INORITY INTERESTS IMPAIRMENT CHARGE OF MILLION AFTER TAX AND MINORITY INTEREST AGAINST THE .ET TOTAL ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY CARRYING VALUE OF THE ASSET /F THIS CHARGE MILLION HAS BEEN RECORDED AGAINST INTANGIBLE ASSETS PRIMARILY GOODWILL MILLION HAS BEEN RECORDED AGAINST 3EE $ISPOSALS OF SUBSIDIARIES AND BUSINESSES NOTE TANGIBLE ASSETS PRIMARILY MINING PROPERTIES WITH ASSOCIATED DEFERRED TAX CREDIT OF MILLION AND MINORITY INTEREST CREDIT OF MILLION 4HE IMPAIRMENT BRINGS THE $URING THE 'ROUP SOLD ITS REMAINING INVESTMENT IN !NGLO'OLD !SHANTI FOR CARRYING VALUE OF !MAP IN LINE WITH FAIR VALUE LESS COSTS TO SELL DETERMINED ON TOTAL PROCEEDS OF MILLION GENERATING A PROäT ON DISPOSAL OF MILLION A DISCOUNTED CASH åOW BASIS -INISTERIAL APPROVAL FOR THE SALE OF !NGLO 0LATINUMÓS INTEREST IN THE "OOYSENDAL )N *ANUARY THE 6ENEZUELAN -INISTRY OF "ASIC )NDUSTRIES AND -INING -)"!- JOINT VENTURE TO -VELAPHANDA 2ESOURCES ,IMITED -VELA WAS RECEIVED IN *UNE PUBLISHED A RESOLUTION CANCELLING OF -INERA ,OMA DE .¨QUELÓS -,D. 4OTAL CONSIDERATION WAS MILLION EXCLUDING TRANSACTION AND DEAL FACILITATION EXPLORATION AND EXPLOITATION CONCESSIONS DUE TO -,D.ÓS ALLEGED FAILURE TO FULäL CERTAIN COSTS OF WHICH MILLION WAS RECEIVED IN ADVANCE IN THE PRIOR YEAR !T CONDITIONS OF THE CONCESSIONS 4HE CURRENT MINING AND METALLURGICAL FACILITIES ARE $ECEMBER MILLION OF THIS REMAINS IN AN ESCROW ACCOUNT PENDING LOCATED ON THE THREE CONCESSIONS THAT HAVE NOT BEEN CANCELLED -,D. BELIEVES THAT IT COMPLETION OF DOCUMENTATION HAS COMPLIED WITH THE CONDITIONS OF THESE CONCESSIONS AND HAS LODGED ADMINISTRATIVE APPEALS AGAINST THE NOTICES OF TERMINATION AND IS WAITING FOR A RESPONSE FROM -)"!- 4HE SALE OF OF !NGLO 0LATINUMÓS HOLDING IN ,EBOWA 0LATINUM -INES ,IMITED -,D. MAY IN THE FUTURE UNDERTAKE FURTHER APPEALS INCLUDING WITH 6ENEZUELAÓS ,EBOWA AND INTEREST IN THE 'A 0HASHA "OIKGANTSHO AND +WANDA JOINT VENTURES 3UPREME #OURT IF THE -)"!-ÓS RULING DOES NOT ADEQUATELY PROTECT ITS INTERESTS TO !NOORAQ 2ESOURCES #ORPORATION !NOORAQ COMPLETED ON *UNE FOR CONSIDERATION OF MILLION EXCLUDING TRANSACTION AND DEAL FACILITATION COSTS !N IMPAIRMENT AND ASSOCIATED ADJUSTMENTS OF MILLION HAS BEEN RECORDED DUE TO 4HE FAIR VALUE OF THE CONSIDERATION WAS MILLION EXCLUDING TRANSACTION AND DEAL INCREASED UNCERTAINTY OVER THE RENEWAL OF THE THREE CONCESSIONS THAT HAVE NOT BEEN FACILITATION COSTS 4HE PROäT ON DISPOSAL OF ,EBOWA HAS BEEN REVISED SINCE *UNE CANCELLED BUT THAT EXPIRE IN AND OVER THE RESTORATION OF THE CONCESSIONS THAT AFTER äNALISATION OF THE VALUATIONS OF äNANCIAL INSTRUMENTS AND LOAN COMMITMENTS WERE CANCELLED 4HE CHARGE IS BASED ON A VALUE IN USE ASSESSMENT OF RECOVERABLE AMOUNT INCLUDES THE IMPACT OF RECYCLING A RELATED CASH åOW HEDGE RESERVE AND AN $URING THE 'ROUP SOLD ITS REMAINING INVESTMENTS IN 4ONGAAT (ULETT AND ASSOCIATED REDUCTION IN THE RELATED EMBEDDED DERIVATIVE LIABILITY 2ECOVERABLE AMOUNT (ULAMIN FOR TOTAL PROCEEDS OF MILLION EXCLUDING TRANSACTION COSTS GENERATING HAS BEEN DETERMINED USING DISCOUNTED CASH åOWS WHICH USE PRE TAX DISCOUNT RATES A NET PROäT ON DISPOSAL OF MILLION EQUIVALENT TO A REAL POST TAX DISCOUNT RATE OF
2ESTRUCTURING COSTS RELATE TO RETRENCHMENT COSTS
112 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 7. Special items and remeasurements CONTINUED !SSOCIATESÓ PROäTS AND LOSSES ON DISPOSALS &INANCING REMEASUREMENTS 53 MILLION 53 MILLION $ISPOSAL OF !+ DIAMOND DEPOSIT Ð 5NREALISED NET LOSS GAIN ON NON HEDGE DERIVATIVES RELATED TO $ISPOSAL OF INTERESTS IN 7ILLIAMSON #ULLINAN AND +OFäEFONTEIN Ð NET DEBT /THER &OREIGN EXCHANGE LOSS GAIN ON $E "EERS PREFERENCE SHARES !SSOCIATESÓ NET PROäT ON DISPOSALS /THER REMEASUREMENTS Ð 4OTAL äNANCING REMEASUREMENTS !SSOCIATESÓ äNANCING SPECIAL ITEMS 4AX Ð -INORITY INTERESTS Ð 53 MILLION .ET TOTAL ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY #OSTS ASSOCIATED WITH REäNANCING Ð
4HE UNREALISED NET LOSS ON NON HEDGE DERIVATIVES RELATED TO NET DEBT PRINCIPALLY !SSOCIATESÓ äNANCING REMEASUREMENTS COMPRISES AN UNREALISED LOSS ON AN EMBEDDED INTEREST RATE DERIVATIVE 53 MILLION 4AX SPECIAL ITEM 5NREALISED NET GAINLOSS ON NON HEDGE DERIVATIVES RELATED TO NET DEBT 53 MILLION 7RITE OFF OF DEFERRED TAX ASSET RELATED TO !MAP Ð !SSOCIATEÓS TAX SPECIAL ITEM -INORITY INTEREST Ð .ET TOTAL ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY Ð 53 MILLION 7RITE OFF OF DEFERRED TAX ASSET RELATED TO $E "EERSÓ #ANADIAN ASSETS Ð 4AX REMEASUREMENTS
53 MILLION 4OTAL ASSOCIATESÓ SPECIAL ITEMS AND REMEASUREMENTS &OREIGN CURRENCY TRANSLATION OF DEFERRED TAX BALANCES 53 MILLION -INORITY INTERESTS 4OTAL ASSOCIATESÓ SPECIAL ITEMS AND REMEASUREMENTS BEFORE .ET TOTAL ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY TAX AND MINORITY INTERESTS 4AX SPECIAL ITEM Ð 4OTAL SPECIAL ITEMS AND REMEASUREMENTS 4AX ON SPECIAL ITEMS AND REMEASUREMENTS -INORITY INTERESTS 53 MILLION .ET TOTAL ASSOCIATESÓ SPECIAL ITEMS AND REMEASUREMENTS 4OTAL SPECIAL ITEMS AND REMEASUREMENTS BEFORE TAX AND
MINORITY INTERESTS Financial statements 4AX SPECIAL ITEM Ð /PERATING SPECIAL ITEMS AND REMEASUREMENTS 4AX REMEASUREMENTS 53 MILLION 4AX ON SPECIAL ITEMS AND REMEASUREMENTS /PERATING SPECIAL ITEMS -INORITY INTERESTS /PERATING REMEASUREMENTS .ET TOTAL SPECIAL ITEMS AND REMEASUREMENTS ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY 4OTAL OPERATING SPECIAL ITEMS AND REMEASUREMENTS EXCLUDING ASSOCIATES !SSOCIATESÓ SPECIAL ITEMS AND REMEASUREMENTS !SSOCIATESÓ OPERATING SPECIAL ITEMS !SSOCIATESÓ OPERATING SPECIAL ITEMS AND REMEASUREMENTS !SSOCIATESÓ OPERATING REMEASUREMENTS 53 MILLION 4OTAL ASSOCIATESÓ OPERATING SPECIAL ITEMS AND REMEASUREMENTS )MPAIRMENT OF $E "EERSÓ #ANADIAN ASSETS Ð 4OTAL OPERATING SPECIAL ITEMS AND REMEASUREMENTS INCLUDING ASSOCIATES )MPAIRMENT OF $E "EERSÓ BUSINESSES Ð 3HARE OF $E "EERSÓ RESTRUCTURING COSTS /PERATING SPECIAL ITEMS INCLUDING ASSOCIATES 5NREALISED NET GAINLOSS ON NON HEDGE DERIVATIVES /PERATING REMEASUREMENTS INCLUDING ASSOCIATES 3HARE OF $E "EERSÓ CLASS ACTION PAYMENT AND RELATED COSTS Ð 4OTAL OPERATING SPECIAL ITEMS AND REMEASUREMENTS INCLUDING /THER IMPAIRMENTS ASSOCIATES 4OTAL ASSOCIATESÓ OPERATING SPECIAL ITEMS AND REMEASUREMENTS 4AX -INORITY INTERESTS .ET TOTAL ASSOCIATESÓ OPERATING SPECIAL ITEMS AND REMEASUREMENTS
$UE TO THE NATURE OF THE ASSETS THE EFFECTS OF THE STRENGTHENING #ANADIAN DOLLAR AND THE IMPACT OF THE GLOBAL RECESSION ON PRICING AND PRODUCTION LEVELS $E "EERS HAS RECORDED AN IMPAIRMENT OF MILLION ATTRIBUTABLE SHARE MILLION IN RESPECT OF ITS #ANADIAN ASSET PORTFOLIO 4HE IMPAIRMENT BRINGS THE CARRYING VALUE OF THE #ANADIAN ASSET PORTFOLIO IN LINE WITH FAIR VALUE LESS COSTS TO SELL DETERMINED USING DISCOUNTED CASH åOW TECHNIQUES
Anglo American plc Annual Report 2009 113 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
8. Net finance costs 10. Tax on profit on ordinary activities &INANCE COSTS AND EXCHANGE GAINSLOSSES ARE PRESENTED NET OF EFFECTIVE CASH åOW A !NALYSIS OF CHARGE FOR THE YEAR HEDGES FOR RESPECTIVE INTEREST BEARING AND FOREIGN CURRENCY BORROWINGS 53 MILLION 4HE WEIGHTED AVERAGE CAPITALISATION RATE APPLIED TO QUALIFYING CAPITAL EXPENDITURE 5NITED +INGDOM CORPORATION TAX AT Ð WAS &INANCING REMEASUREMENTS ARE SET OUT IN NOTE 5NITED +INGDOM CORPORATION TAX AT Ð 3OUTH !FRICA TAX /THER OVERSEAS TAX "EFORE !FTER "EFORE !FTER REMEASURE REMEASURE REMEASURE REMEASURE 0RIOR YEAR ADJUSTMENTS 53 MILLION MENTS MENTS MENTS MENTS #URRENT TAX EXCLUDING SPECIAL ITEMS AND REMEASUREMENTS TAX )NVESTMENT INCOME $EFERRED TAX EXCLUDING SPECIAL ITEMS AND REMEASUREMENTS )NTEREST AND OTHER äNANCIAL INCOME TAX %XPECTED RETURN ON DEäNED BENEäT 4AX EXCLUDING SPECIAL ITEMS AND REMEASUREMENTS TAX ARRANGEMENTS 3PECIAL ITEMS AND REMEASUREMENTS TAX $IVIDEND INCOME FROM äNANCIAL ASSET INVESTMENTS )NCOME TAX EXPENSE 4OTAL INVESTMENT INCOME )NTEREST EXPENSE B &ACTORS AFFECTING TAX CHARGE FOR THE YEAR )NTEREST AND OTHER äNANCE EXPENSE 4HE EFFECTIVE TAX RATE FOR THE YEAR OF IS LOWER HIGHER THAN THE APPLICABLE STANDARD RATE OF CORPORATION TAX FOR IN THE 5NITED +INGDOM )NTEREST PAID ON CONVERTIBLE BOND ÐÐ 4HE RECONCILING ITEMS ARE 5NWINDING OF DISCOUNT ON CONVERTIBLE BOND ÐÐ 53 MILLION )NTEREST ON DEäNED BENEäT ARRANGEMENTS 0ROäT ON ORDINARY ACTIVITIES BEFORE TAX !MORTISATION OF DISCOUNT RELATING TO PROVISIONS 4AX ON PROäT ON ORDINARY ACTIVITIES CALCULATED AT 5NITED +INGDOM CORPORATION TAX RATE OF Ð $IVIDEND ON REDEEMABLE PREFERENCE SHARES ÐÐ 4AX ON PROäT ON ORDINARY ACTIVITIES CALCULATED AT 5NITED +INGDOM CORPORATION TAX RATE OF Ð ,ESS INTEREST CAPITALISED 4OTAL INTEREST EXPENSE 4AX EFFECT OF SHARE OF NET INCOME FROM ASSOCIATES /THER äNANCING LOSSES GAINS .ET FOREIGN EXCHANGE LOSSES 4AX EFFECTS OF &AIR VALUE GAINSLOSSES ON DERIVATIVES 3PECIAL ITEMS AND REMEASUREMENTS .ET FAIR VALUE GAINS ON FAIR VALUE HEDGES /PERATING SPECIAL ITEMS AND REMEASUREMENTS /THER NET FAIR VALUE LOSSES 0ROäTS AND LOSSES ON DISPOSALS AND äNANCING REMEASUREMENTS 4OTAL OTHER äNANCING LOSSES 4AX SPECIAL ITEM Ð .ET äNANCE COSTS 4AX REMEASUREMENTS )TEMS NOT TAXABLEDEDUCTIBLE FOR TAX PURPOSES 9. Financial instrument gains and losses %XPLORATION EXPENDITURE 4HE NET GAINS AND LOSSES RECORDED IN THE #ONSOLIDATED INCOME STATEMENT IN RESPECT .ON DEDUCTIBLE NET FOREIGN EXCHANGE LOSS OF äNANCIAL INSTRUMENTS WERE AS FOLLOWS .ON TAXABLEDEDUCTIBLE NET INTEREST INCOME EXPENSE
53 MILLION /THER NON DEDUCTIBLE EXPENSES !T FAIR VALUE THROUGH PROäT AND LOSS /THER NON TAXABLE INCOME #ASH åOW HEDGE DERIVATIVES 4EMPORARY DIFFERENCE ADJUSTMENTS &AIR VALUE HEDGE DERIVATIVES #HANGES IN TAX RATES Ð &AIR VALUE HEDGE UNDERLYING INSTRUMENTS -OVEMENTS IN TAX LOSSES /THER FAIR VALUE MOVEMENTS %NHANCED TAX DEPRECIATION Ð ,OANS AND RECEIVABLES /THER TEMPORARY DIFFERENCES &OREIGN EXCHANGE /THER ADJUSTMENTS )NTEREST INCOME AT AMORTISED COST 3ECONDARY TAX ON COMPANIES AND DIVIDEND WITHHOLDING TAXES !VAILABLE FOR SALE %FFECT OF DIFFERENCES BETWEEN LOCAL AND 5NITED +INGDOM RATES .ET GAIN TRANSFERRED ON SALE 0RIOR YEAR ADJUSTMENTS TO CURRENT TAX /THER INCOME /THER ADJUSTMENTS /THER äNANCIAL LIABILITIES )NCOME TAX EXPENSE &OREIGN EXCHANGE )NTEREST EXPENSE AT AMORTISED COST )!3 REQUIRES INCOME FROM ASSOCIATES TO BE PRESENTED NET OF TAX ON THE FACE OF THE INCOME STATEMENT !SSOCIATESÓ TAX IS THEREFORE NOT INCLUDED WITHIN THE 'ROUPÓS INCOME
'AINS AND LOSSES ON DERIVATIVE INSTRUMENTS DESIGNATED IN CASH åOW HEDGE RELATIONSHIPS WHICH HAVE BEEN TAX EXPENSE !SSOCIATESÓ TAX INCLUDED WITHIN Ò3HARE OF NET INCOME FROM ASSOCIATESÓ FOR REALISED IN THE YEAR HAVE BEEN RECORDED IN 'ROUP REVENUE 'ROUP REVENUE THE YEAR ENDED $ECEMBER IS MILLION MILLION %XCLUDING )NCLUDES THE IMPACT OF PROVISIONAL PRICING WHICH IS DISCLOSED IN NOTE SPECIAL ITEMS AND REMEASUREMENTS THIS BECOMES MILLION MILLION
4HE EFFECTIVE RATE OF TAX BEFORE SPECIAL ITEMS AND REMEASUREMENTS INCLUDING ATTRIBUTABLE SHARE OF ASSOCIATESÓ TAX FOR THE YEAR ENDED $ECEMBER WAS 4HIS WAS BROADLY IN LINE WITH THE EQUIVALENT EFFECTIVE RATE OF FOR THE YEAR ENDED $ECEMBER )N FUTURE PERIODS IT IS EXPECTED THAT THE EFFECTIVE TAX RATE INCLUDING ASSOCIATESÓ TAX WILL REMAIN ABOVE THE 5NITED +INGDOM STATUTORY TAX RATE
114 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 11. Dividends )N !PRIL THE 'ROUP ISSUED BILLION OF SENIOR CONVERTIBLE NOTES 4HE SENIOR CONVERTIBLE NOTES WERE ISSUED WITH A COUPON OF A CONVERSION PRICE OF a 53 MILLION AND UNLESS REDEEMED CONVERTED OR CANCELLED WILL MATURE IN 4HE 'ROUP WILL &INAL ORDINARY PAID Ð NIL PER ORDINARY SHARE 53 CENTS Ð HAVE THE OPTION TO CALL THE SENIOR CONVERTIBLE NOTES AFTER THREE YEARS FROM THE )NTERIM ORDINARY PAID Ð NIL PER ORDINARY SHARE 53 ISSUANCE DATE SUBJECT TO CERTAIN CONDITIONS CENTS Ð Ð 5NDERLYING EARNINGS IS AN ALTERNATIVE EARNINGS MEASURE WHICH THE DIRECTORS BELIEVE PROVIDES A CLEARER PICTURE OF THE UNDERLYING äNANCIAL PERFORMANCE OF THE 'ROUPÓS OPERATIONS 5NDERLYING EARNINGS IS PRESENTED AFTER MINORITY INTERESTS AND EXCLUDES 4HE "OARD HAS DECIDED TO SUSPEND DIVIDEND PAYMENTS SPECIAL ITEMS AND REMEASUREMENTS SEE NOTE 5NDERLYING EARNINGS IS DISTINCT FROM Ò(EADLINE EARNINGSÓ WHICH IS A *3% ,IMITED DEäNED PERFORMANCE MEASURE !S STATED IN NOTE THE EMPLOYEE BENEäT TRUST HAS WAIVED THE RIGHT TO RECEIVE DIVIDENDS ON THE SHARES IT HOLDS 4HE CALCULATION OF BASIC AND DILUTED EARNINGS PER SHARE BASED ON (EADLINE AND 5NDERLYING EARNINGS USES THE FOLLOWING EARNINGS DATA 12. Earnings per share
%ARNINGS "ASIC EARNINGS PER SHARE 53 53 MILLION 53 0ROäT FOR THE äNANCIAL YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY 0ROäT FOR THE äNANCIAL YEAR ATTRIBUTABLE TO "ASIC EARNINGS PER SHARE EQUITY SHAREHOLDERS OF THE #OMPANY $ILUTED EARNINGS PER SHARE /PERATING SPECIAL ITEMS (EADLINE EARNINGS FOR THE äNANCIAL YEAR /PERATING SPECIAL ITEMS Ð TAX "ASIC EARNINGS PER SHARE /PERATING SPECIAL ITEMS Ð MINORITY INTERESTS Ð $ILUTED EARNINGS PER SHARE .ET PROäT ON DISPOSALS 5NDERLYING EARNINGS FOR THE äNANCIAL YEAR .ET PROäT ON DISPOSALS Ð TAX "ASIC EARNINGS PER SHARE .ET PROäT ON DISPOSALS Ð MINORITY INTERESTS $ILUTED EARNINGS PER SHARE !SSOCIATESÓ SPECIAL ITEMS !SSOCIATESÓ SPECIAL ITEMS Ð TAX Ð Ð "ASIC AND DILUTED EARNINGS PER SHARE ARE SHOWN BASED ON (EADLINE EARNINGS A *OHANNESBURG STOCK EXCHANGE *3% ,IMITED DEäNED PERFORMANCE MEASURE AND 5NDERLYING EARNINGS WHICH THE DIRECTORS !SSOCIATESÓ SPECIAL ITEMS Ð MINORITY CONSIDER TO BE A USEFUL ADDITIONAL MEASURE OF THE 'ROUPÓS PERFORMANCE "OTH EARNINGS MEASURES ARE FURTHER INTERESTS Ð Ð EXPLAINED BELOW (EADLINE EARNINGS FOR THE äNANCIAL YEAR /PERATING SPECIAL ITEMS 4HE CALCULATION OF THE BASIC AND DILUTED EARNINGS PER SHARE IS BASED ON THE FOLLOWING /PERATING SPECIAL ITEMS Ð TAX DATA /PERATING SPECIAL ITEMS Ð MINORITY INTERESTS Ð Ð
53 MILLION UNLESS OTHERWISE STATED /PERATING REMEASUREMENTS
%ARNINGS /PERATING REMEASUREMENTS Ð TAX Financial statements "ASIC EARNINGS BEING PROäT FOR THE äNANCIAL YEAR ATTRIBUTABLE TO /PERATING REMEASUREMENTS Ð MINORITY EQUITY SHAREHOLDERS OF THE #OMPANY INTERESTS Ð %FFECT OF DILUTIVE POTENTIAL ORDINARY SHARES &INANCING REMEASUREMENTS )NTEREST PAID ON CONVERTIBLE BOND NET OF TAX Ð &INANCING REMEASUREMENTS Ð TAX Ð Ð Ð 5NWINDING OF DISCOUNT ON CONVERTIBLE BOND NET OF TAX Ð &INANCING REMEASUREMENTS Ð MINORITY $ILUTED EARNINGS INTERESTS Ð Ð Ð .UMBER OF SHARES MILLION 4AX SPECIAL ITEM Ð Ð "ASIC NUMBER OF ORDINARY SHARES OUTSTANDING 4AX SPECIAL ITEM Ð MINORITY INTEREST Ð Ð %FFECT OF DILUTIVE POTENTIAL ORDINARY SHARES 4AX REMEASUREMENTS 3HARE OPTIONS AND AWARDS 4AX REMEASUREMENTS Ð MINORITY INTERESTS #ONVERTIBLE BOND Ð !SSOCIATESÓ SPECIAL ITEMS $ILUTED NUMBER OF ORDINARY SHARES OUTSTANDING !SSOCIATESÓ SPECIAL ITEMS Ð TAX Ð !SSOCIATESÓ SPECIAL ITEMS Ð MINORITY "ASIC AND DILUTED NUMBER OF ORDINARY SHARES OUTSTANDING REPRESENT THE WEIGHTED AVERAGE FOR THE YEAR INTERESTS Ð 4HE AVERAGE NUMBER OF ORDINARY SHARES IN ISSUE EXCLUDES SHARES HELD BY EMPLOYEE BENEäT TRUSTS AND !SSOCIATESÓ REMEASUREMENTS !NGLO !MERICAN PLC SHARES HELD BY 'ROUP COMPANIES $ILUTED EARNINGS PER SHARE IS CALCULATED BY ADJUSTING THE WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES !SSOCIATESÓ REMEASUREMENTS Ð TAX IN ISSUE ON THE ASSUMPTION OF CONVERSION OF ALL POTENTIALLY DILUTIVE ORDINARY SHARES !SSOCIATESÓ REMEASUREMENTS Ð MINORITY INTERESTS )N THE YEAR ENDED $ECEMBER THERE WERE SHARE OPTIONS WHICH WERE 5NDERLYING EARNINGS FOR THE äNANCIAL YEAR POTENTIALLY DILUTIVE BUT HAVE NOT BEEN INCLUDED IN THE CALCULATION OF DILUTED EARNINGS PER SHARE BECAUSE THEY WERE ANTI DILUTIVE )N THE YEAR ENDED $ECEMBER NO 9EAR ENDED $ECEMBER INCLUDES COSTS ASSOCIATED WITH Ò/NE !NGLOÓ INITIATIVES RESTRUCTURING COSTS BID DEFENCE COSTS AND PROVISIONS FOR ONEROUS CONTRACTS INCLUDES COSTS ASSOCIATED WITH Ò/NE !NGLOÓ SHARE OPTIONS WERE ANTI DILUTIVE INITIATIVES RESTRUCTURING COSTS AND COSTS ASSOCIATED WITH PROPOSED SALE OF 4ARMAC AND PROVISIONS FOR ONEROUS CONTRACTS )N THE YEAR ENDED $ECEMBER SHARE BUYBACKS TOOK PLACE WHICH HAD AN 9EAR ENDED $ECEMBER INCLUDES RESTRUCTURING COSTS AND THE TAX SPECIAL ITEM INCLUDES RESTRUCTURING COSTS AND LEGAL SETTLEMENTS IMPACT ON THE WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES AT $ECEMBER
Anglo American plc Annual Report 2009 115 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
13. Intangible assets 4HE RECOVERABLE AMOUNT OF A #'5 IS DETERMINED BASED ON A FAIR VALUE OR VALUE IN USE CALCULATION AS APPROPRIATE 6ALUE IN USE CALCULATIONS USE CASH åOW PROJECTIONS BASED ON äNANCIAL BUDGETS AND LIFE OF MINE OR NON MINE PRODUCTION PLANS COVERING ,ICENCES ,ICENCES A äVE YEAR PERIOD THAT ARE BASED ON LATEST FORECASTS FOR COMMODITY PRICES AND AND OTHER AND OTHER EXCHANGE RATES #ASH åOW PROJECTIONS BEYOND äVE YEARS ARE BASED ON LIFE OF MINE 53 MILLION INTANGIBLES 'OODWILL 4OTAL INTANGIBLES 'OODWILL 4OTAL PLANS WHERE APPLICABLE AND INTERNAL MANAGEMENT FORECASTS ASSUME CONSTANT LONG #OST TERM REAL PRICES FOR SALES REVENUE AND ARE BENCHMARKED ON EXTERNAL SOURCES OF !T *ANUARY INFORMATION FOR COMMODITY PRICES AND EXCHANGE RATES !CQUIRED THROUGH BUSINESS #ASH åOW PROJECTIONS ARE DISCOUNTED USING PRE TAX DISCOUNT RATES EQUIVALENT COMBINATIONS Ð TO A REAL POST TAX DISCOUNT RATE OF THAT HAVE BEEN ADJUSTED !DDITIONS Ð Ð FOR ANY RISKS THAT ARE NOT REåECTED IN THE UNDERLYING CASH åOWS 7HERE THE 4RANSFER TO ASSETS RECOVERABILITY OF GOODWILL ALLOCATED TO A #'5 IS SUPPORTED BY FAIR VALUE LESS COSTS HELD FOR SALE Ð TO SELL MARKET OBSERVABLE DATA IN THE CASE OF LISTED SUBSIDIARIES MARKET SHARE $ISPOSAL OF ASSETS Ð ÐÐÐPRICE AT $ECEMBER OF THE RESPECTIVE LISTED ENTITY OR DETAILED CASH åOW MODELS )MPAIRMENTS Ð ÐÐÐARE USED 2ECLASSIäCATIONS ÐÐÐ Ð %XPECTED FUTURE CASH åOWS ARE INHERENTLY UNCERTAIN AND COULD MATERIALLY CHANGE #URRENCY MOVEMENTS OVER TIME 4HEY ARE SIGNIäCANTLY AFFECTED BY A NUMBER OF FACTORS INCLUDING RESERVES !T $ECEMBER AND PRODUCTION ESTIMATES TOGETHER WITH ECONOMIC FACTORS SUCH AS COMMODITY !CCUMULATED AMORTISATION PRICES DISCOUNT RATES EXCHANGE RATES ESTIMATES OF COSTS TO PRODUCE RESERVES AND !T *ANUARY Ð ÐFUTURE CAPITAL EXPENDITURE -ANAGEMENT BELIEVES THAT ANY REASONABLY POSSIBLE #HARGE FOR THE YEAR Ð ÐCHANGE IN A KEY ASSUMPTION ON WHICH THE RECOVERABLE AMOUNT IS BASED WOULD NOT )MPAIRMENTS Ð ÐCAUSE THE CARRYING AMOUNTS TO EXCEED THEIR RECOVERABLE AMOUNTS 4RANSFER TO ASSETS HELD FOR SALE Ð ÐÐÐ4HE 'ROUP ACQUIRED A CONTROLLING INTEREST IN !NGLO &ERROUS "RAZIL 3! ON !UGUST $ISPOSAL OF ASSETS Ð ÐÐÐ RESULTING IN THE RECOGNITION OF BILLION GOODWILL &OLLOWING THE COMPLETION OF A DETAILED STUDY IN GOODWILL ATTRIBUTABLE TO THE !MAP SYSTEM WITH A #URRENCY MOVEMENTS Ð ÐÐÐ CARRYING VALUE OF MILLION HAS BEEN IMPAIRED 4HE RECOVERABLE AMOUNT OF THIS !T $ECEMBER Ð Ð GOODWILL HAS BEEN REVIEWED WITH REFERENCE TO FAIR VALUE LESS COSTS TO SELL .ET BOOK VALUE DETERMINED USING DISCOUNTED CASH åOWS
4HE GOODWILL BALANCES PROVIDED ARE NET OF CUMULATIVE IMPAIRMENT CHARGES OF MILLION AT $ECEMBER 14. Tangible assets MILLION
-INING 4HE INCREASE IN GOODWILL RELATING TO ACQUISITION OF SUBSIDIARIES REPRESENTS THE EXCESS PROPERTIES ,AND AND 0LANT AND OF PURCHASE PRICE OVER THE FAIR VALUE OF THE NET ASSETS INCLUDING MINING RESERVES OF 53 MILLION AND LEASES BUILDINGS EQUIPMENT /THER 4OTAL BUSINESSES ACQUIRED &URTHER DETAIL IS GIVEN IN NOTE #OST !T *ANUARY )MPAIRMENT TESTS FOR GOODWILL !DDITIONS 'OODWILL IS ALLOCATED FOR IMPAIRMENT TESTING PURPOSES TO CASH GENERATING UNITS !CQUIRED THROUGH BUSINESS #'5S WHICH REåECT HOW IT IS MONITORED FOR INTERNAL MANAGEMENT PURPOSES 4HIS COMBINATIONS ALLOCATION LARGELY REPRESENTS THE 'ROUPÓS SEGMENTS SET OUT BELOW !NY GOODWILL 4RANSFER TO ASSETS HELD FOR SALE ASSOCIATED WITH #'5S SUBSUMED WITHIN THESE SEGMENTS IS NOT SIGNIäCANT WHEN $ISPOSAL OF ASSETS COMPARED TO THE GOODWILL OF THE 'ROUP OTHER THAN IN )RON /RE AND -ANGANESE AND $ISPOSAL OF BUSINESSES /THER -INING AND )NDUSTRIAL WHERE THE MATERIAL COMPONENTS OF GOODWILL ARE SPLIT OUT BELOW 2ECLASSIäCATIONS Ð #URRENCY MOVEMENTS 53 MILLION !T $ECEMBER 0LATINUM !CCUMULATED DEPRECIATION #OPPER !T *ANUARY )RON /RE AND -ANGANESE #HARGE FOR THE YEAR )RON /RE "RAZIL )MPAIRMENTS 4HERMAL #OAL 4RANSFER TO ASSETS HELD FOR SALE /THER -INING AND )NDUSTRIAL $ISPOSAL OF ASSETS 4ARMAC $ISPOSAL OF BUSINESSES /THER #URRENCY MOVEMENTS !T $ECEMBER .ET BOOK VALUE $UE TO THE PORTFOLIO AND MANAGEMENT STRUCTURE CHANGES ANNOUNCED IN /CTOBER THE SEGMENTS HAVE CHANGED FROM THOSE REPORTED AT $ECEMBER #OMPARATIVES HAVE BEEN RECLASSIäED TO ALIGN WITH !T $ECEMBER CURRENT YEAR PRESENTATION !T $ECEMBER
)NCLUDES AMOUNTS IN RELATION TO DEFERRED STRIPPING /THER TANGIBLE ASSETS INCLUDE MILLION OF ASSETS IN THE COURSE OF CONSTRUCTION WHICH ARE NOT DEPRECIATED 2ELATES MAINLY TO AMOUNTS TRANSFERRED FROM ASSETS IN THE COURSE OF CONSTRUCTION
116 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 14. Tangible assets CONTINUED 4HE FUNDS COMPRISE THE FOLLOWING INVESTMENTS
-INING 53 MILLION PROPERTIES ,AND AND 0LANT AND 53 MILLION AND LEASES BUILDINGS EQUIPMENT /THER 4OTAL %QUITY #OST "ONDS !T *ANUARY #ASH !DDITIONS !CQUIRED THROUGH BUSINESS COMBINATIONS 4HESE ASSETS ARE PRIMARILY RAND DENOMINATED #ASH IS HELD IN SHORT TERM äXED 4RANSFER TO ASSETS HELD FOR SALE Ð DEPOSITS OR EARNS INTEREST AT åOATING INTER BANK RATES AND BONDS EARN INTEREST AT &AIR VALUE ADJUSTMENT Ð Ð A WEIGHTED AVERAGE äXED RATE OF AND ARE äXED FOR AN AVERAGE $ISPOSAL OF ASSETS PERIOD OF YEARS YEARS 4HESE ASSETS ARE RECORDED ÒAT FAIR VALUE THROUGH PROäT AND LOSSÓ $ISPOSAL OF BUSINESSES Ð 2ECLASSIäCATIONS Ð 4HESE FUNDS ARE NOT AVAILABLE FOR THE GENERAL PURPOSES OF THE 'ROUP !LL INCOME #URRENCY MOVEMENTS FROM THESE ASSETS IS REINVESTED TO MEET SPECIäC ENVIRONMENTAL OBLIGATIONS 4HESE !T $ECEMBER OBLIGATIONS ARE INCLUDED IN ENVIRONMENTAL REHABILITATION COSTS UNDER NON CURRENT !CCUMULATED DEPRECIATION PROVISIONS SEE NOTE !T *ANUARY #HARGE FOR THE YEAR 16. Investments in associates )MPAIRMENTS Ð 4RANSFER TO ASSETS HELD FOR SALE Ð Ð 53 MILLION $ISPOSAL OF ASSETS !T *ANUARY $ISPOSAL OF BUSINESSES Ð Ð .ET INCOME FROM ASSOCIATES #URRENCY MOVEMENTS $IVIDENDS RECEIVED !T $ECEMBER 4RANSFER FROM SUBSIDIARYJOINT VENTURE Ð .ET BOOK VALUE !CTUARIAL LOSS ON POST RETIREMENT BENEäTS !T $ECEMBER -OVEMENT ON CASH åOW HEDGE RESERVE !T $ECEMBER /THER EQUITY MOVEMENTS !CQUIRED )NCLUDES AMOUNTS IN RELATION TO DEFERRED STRIPPING $ISPOSED Ð /THER TANGIBLE ASSETS INCLUDE MILLION OF ASSETS IN THE COURSE OF CONSTRUCTION WHICH ARE NOT )SSUE OF CAPITALISED LOANS Ð DEPRECIATED /THER Ð 2ELATES MAINLY TO AMOUNTS TRANSFERRED FROM ASSETS IN THE COURSE OF CONSTRUCTION #URRENCY MOVEMENTS !T $ECEMBER )NCLUDED IN THE ADDITIONS ABOVE IS MILLION MILLION OF INTEREST Financial statements EXPENSE INCURRED ON BORROWINGS FUNDING THE CONSTRUCTION OF QUALIFYING ASSETS WHICH .IL MILLION WAS RECEIVED FROM ASSOCIATES CLASSIäED AS HELD FOR SALE HAS BEEN CAPITALISED DURING THE YEAR %XCLUDES NIL MILLION REDEMPTION BY $E "EERS OF PREFERENCE SHARES INCLUDED WITHIN äNANCIAL ASSET INVESTMENTS 4HE NET BOOK VALUE AND DEPRECIATION CHARGES RELATING TO ASSETS HELD UNDER äNANCE 4HE FAIR VALUE OF THE 'ROUPÓS INVESTMENT IN !NOORAQ AT $ECEMBER WAS MILLION NIL LEASES COMPRISE 4HE FAIR VALUE OF INVESTMENTS IN 4ONGAAT (ULETT AND (ULAMIN AT $ECEMBER WERE MILLION AND MILLION RESPECTIVELY BASED ON THE CLOSING SHARE PRICES )N *ULY AND !UGUST THE 'ROUP SOLD ITS SHAREHOLDINGS IN (ULAMIN AND 4ONGAAT (ULETT RESPECTIVELY .ET BOOK $EPRECIA .ET BOOK $EPRECIA 53 MILLION VALUE TION VALUE TION 4HE 'ROUPÓS TOTAL INVESTMENTS IN ASSOCIATES COMPRISE -INING PROPERTIES AND LEASES 53 MILLION ,AND AND BUILDINGS ÐÐ %QUITY 0LANT AND EQUIPMENT ,OANS /THER ÐÐ Ð 4OTAL INVESTMENTS IN ASSOCIATES
4HE 'ROUPÓS TOTAL INVESTMENTS IN ASSOCIATES INCLUDE LONG TERM DEBT WHICH IN SUBSTANCE FORMS PART OF THE 4HE NET BOOK VALUE OF LAND AND BUILDINGS COMPRISES 'ROUPÓS INVESTMENT 4HESE LOANS ARE NOT REPAYABLE IN THE FORESEEABLE FUTURE
53 MILLION 4HE 'ROUPÓS ATTRIBUTABLE SHARE OF THE SUMMARISED äNANCIAL INFORMATION OF ASSOCIATES &REEHOLD IS AS FOLLOWS ,EASEHOLD Ð LONG 53 MILLION ,EASEHOLD Ð SHORT LESS THAN YEARS 4OTAL NON CURRENT ASSETS 4OTAL CURRENT ASSETS 4OTAL CURRENT LIABILITIES 15. Environmental rehabilitation trusts 4OTAL NON CURRENT LIABILITIES 4HE 'ROUP MAKES CONTRIBUTIONS TO CONTROLLED FUNDS THAT WERE ESTABLISHED TO MEET 'ROUPÓS SHARE OF ASSOCIATESÓ NET ASSETS THE COST OF SOME OF ITS RESTORATION AND ENVIRONMENTAL REHABILITATION LIABILITIES PRIMARILY IN 3OUTH !FRICA 2EVENUE /PERATING COSTS 53 MILLION /PERATING SPECIAL ITEMS AND REMEASUREMENTS !T *ANUARY .ET PROäT ON DISPOSALS #ONTRIBUTIONS MADE .ET äNANCE COSTS $ISPOSAL OF BUSINESSES Ð &INANCING SPECIAL ITEMS AND REMEASUREMENTS .ET INTEREST EARNED AND FAIR VALUE ADJUSTMENTS )NCOME TAX EXPENSE #URRENCY MOVEMENTS -INORITY INTERESTS !T $ECEMBER 'ROUPÓS SHARE OF ASSOCIATESÓ NET INCOME
Anglo American plc Annual Report 2009 117 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
16. Investments in associates CONTINUED 18. Financial asset investments 3EGMENTAL INFORMATION IS PROVIDED AS FOLLOWS !VAILABLE FOR SALE .ET INCOME !GGREGATE INVESTMENT ,OANS AND INVEST 53 MILLION 53 MILLION RECEIVABLES MENTS 4OTAL "Y SEGMENT !T *ANUARY 0LATINUM )NTEREST RECEIVABLE Ð $IAMONDS .ET ADVANCES Ð )RON /RE AND -ANGANESE $ISPOSALS Ð -ETALLURGICAL #OAL -OVEMENTS IN FAIR VALUE 4HERMAL #OAL #URRENCY MOVEMENTS /THER -INING AND )NDUSTRIAL !T $ECEMBER .ON CURRENT #URRENT Ð $UE TO THE PORTFOLIO AND MANAGEMENT STRUCTURE CHANGES ANNOUNCED IN /CTOBER THE SEGMENTS HAVE CHANGED FROM THOSE REPORTED AT $ECEMBER #OMPARATIVES HAVE BEEN RECLASSIäED TO ALIGN WITH CURRENT YEAR PRESENTATION !VAILABLE FOR SALE !GGREGATE INVESTMENT ,OANS AND INVEST 53 MILLION RECEIVABLES MENTS 4OTAL 53 MILLION !T *ANUARY "Y GEOGRAPHY !DDITIONS Ð 3OUTH !FRICA )NTEREST RECEIVABLE Ð /THER !FRICA .ET ADVANCES Ð %UROPE $ISPOSALS Ð .ORTH !MERICA $ISPOSAL OF BUSINESSES Ð 3OUTH !MERICA 2EVERSAL OF IMPAIRMENTS !USTRALIA AND !SIA -OVEMENTS IN FAIR VALUE #URRENCY MOVEMENTS
)N THE BASIS OF THE GEOGRAPHIC SPLIT HAS BEEN AMENDED AND THE COMPARATIVES HAVE BEEN UPDATED !T $ECEMBER ACCORDINGLY .ON CURRENT #URRENT Ð 4HE 'ROUPÓS SHARE OF ASSOCIATESÓ CONTINGENT LIABILITIES INCURRED JOINTLY BY INVESTORS IS MILLION MILLION "ALANCE AT $ECEMBER PRINCIPALLY INCLUDES INVESTMENT IN !NGLO'OLD !SHANTI ,IMITED 4HIS INVESTMENT WAS SOLD IN 2EFER TO NOTE $ETAILS OF PRINCIPAL ASSOCIATES ARE SET OUT IN NOTE .O PROVISION FOR IMPAIRMENT IS RECORDED AGAINST äNANCIAL ASSETS CLASSIäED AS Ò,OANS 17. Joint ventures AND RECEIVABLESÓ NIL 4HE 'ROUPÓS SHARE OF THE SUMMARISED äNANCIAL INFORMATION OF JOINT VENTURE ENTITIES THAT ARE PROPORTIONATELY CONSOLIDATED IN THE 'ROUP äNANCIAL STATEMENTS IS AS FOLLOWS 19. Inventories
53 MILLION 53 MILLION 4OTAL NON CURRENT ASSETS 2AW MATERIALS AND CONSUMABLES 4OTAL CURRENT ASSETS 7ORK IN PROGRESS 4OTAL ASSETS CLASSIäED AS HELD FOR SALE Ð &INISHED PRODUCTS 4OTAL CURRENT LIABILITIES 4OTAL NON CURRENT LIABILITIES 4OTAL LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS CLASSIäED AS HELD 4HE COST OF INVENTORIES RECOGNISED AS AN EXPENSE AND INCLUDED IN COST OF SALES FOR SALE Ð AMOUNTED TO MILLION MILLION 'ROUPÓS SHARE OF JOINT VENTURE ENTITIESÓ NET ASSETS 2EVENUE )NVENTORIES HELD AT NET REALISABLE VALUE AMOUNTED TO MILLION MILLION /PERATING COSTS INCLUDING SPECIAL ITEMS AND REMEASUREMENTS .ET äNANCE COSTS 7RITE DOWN OF INVENTORIES NET OF REVALUATION OF PROVISIONALLY PRICED PURCHASES AMOUNTED TO MILLION MILLION /F THIS MILLION WAS )NCOME TAX EXPENSE RECOGNISED AS AN EXPENSE AND INCLUDED IN COST OF SALES MILLION AND 'ROUPÓS SHARE OF JOINT VENTURE ENTITIESÓ PROäT FOR THE äNANCIAL MILLION WAS CAPITALISED NIL YEAR
4HERE WERE ALSO MILLION MILLION OF INVENTORY WRITE DOWNS 4HE 'ROUPÓS SHARE OF JOINT VENTURE ENTITIESÓ CONTINGENT LIABILITIES INCURRED JOINTLY WITH REVERSED AND RECOGNISED AS A REDUCTION IN THE INVENTORY EXPENSE FOR THE YEAR OTHER VENTURERS IS MILLION MILLION AND ITS SHARE OF CAPITAL COMMITMENTS IS MILLION MILLION
4HE 'ROUP ALSO HOLDS INVESTMENTS IN A NUMBER OF PROPORTIONATELY CONSOLIDATED JOINTLY CONTROLLED OPERATIONS 4HE 'ROUPÓS SHARE OF JOINT VENTURE OPERATIONSÓ NET ASSETS IS MILLION MILLION 4HE 'ROUPÓS SHARE OF JOINT VENTURE OPERATIONSÓ PROäT FOR THE äNANCIAL YEAR IS MILLION MILLION 4HE 'ROUPÓS SHARE OF JOINT VENTURE OPERATIONSÓ CONTINGENT LIABILITIES INCURRED JOINTLY WITH OTHER VENTURERS IS MILLION MILLION AND ITS SHARE OF CAPITAL COMMITMENTS IS MILLION MILLION
$ETAILS OF PRINCIPAL JOINT VENTURES ARE SET OUT IN NOTE
118 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 20. Trade and other receivables
$UE WITHIN $UE AFTER $UE WITHIN $UE AFTER $UE WITHIN $UE AFTER 53 MILLION ONE YEAR ONE YEAR 4OTAL ONE YEAR ONE YEAR 4OTAL ONE YEAR ONE YEAR 4OTAL 4RADE RECEIVABLES !MOUNTS OWED BY RELATED PARTIES Ð ÐÐ /THER RECEIVABLES 0REPAYMENTS AND ACCRUED INCOME
4HE HISTORICAL LEVEL OF CUSTOMER DEFAULT IS MINIMAL AND AS A RESULT THE ÒCREDIT QUALITYÓ 22. Financial assets OF YEAR END TRADE RECEIVABLES WHICH ARE NOT PAST DUE IS CONSIDERED TO BE HIGH /F 4HE CARRYING AMOUNTS AND FAIR VALUES OF äNANCIAL ASSETS ARE AS FOLLOWS THE YEAR END TRADE RECEIVABLES BALANCE THE FOLLOWING WERE PAST DUE AT $ECEMBER STATED AFTER ASSOCIATED IMPAIRMENT PROVISION %STIMATED #ARRYING %STIMATED #ARRYING 53 MILLION 53 MILLION FAIR VALUE VALUE FAIR VALUE VALUE ,ESS THAN ONE MONTH !T FAIR VALUE THROUGH PROäT AND LOSS "ETWEEN ONE TO TWO MONTHS 4RADE AND OTHER RECEIVABLES "ETWEEN TWO TO THREE MONTHS /THER äNANCIAL ASSETS DERIVATIVES 'REATER THAN THREE MONTHS ,OANS AND RECEIVABLES #ASH AND CASH EQUIVALENTS 4RADE AND OTHER RECEIVABLES 4HE OVERDUE DEBTOR AGEING PROäLE ABOVE IS TYPICAL OF THE INDUSTRY IN WHICH CERTAIN &INANCIAL ASSET INVESTMENTS OF THE 'ROUPÓS BUSINESSES OPERATE 'IVEN THIS EXISTING INSURANCE COVER INCLUDING !VAILABLE FOR SALE INVESTMENTS LETTERS OF CREDIT FROM äNANCIAL INSTITUTIONS AND THE NATURE OF THE RELATED &INANCIAL ASSET INVESTMENTS COUNTERPARTIES THESE AMOUNTS ARE CONSIDERED RECOVERABLE 4OTAL äNANCIAL ASSETS
4OTAL TRADE RECEIVABLES ARE STATED NET OF THE FOLLOWING IMPAIRMENT PROVISION 4RADE AND OTHER RECEIVABLES EXCLUDE PREPAYMENTS $ERIVATIVE INSTRUMENTS ARE ANALYSED BETWEEN THOSE WHICH ARE Ò(ELD FOR TRADINGÓ AND THOSE DESIGNATED INTO 53 MILLION HEDGE RELATIONSHIPS IN NOTE !T *ANUARY #HARGE FOR THE YEAR 4HE FAIR VALUES OF äNANCIAL ASSETS REPRESENT THE MARKET VALUE OF QUOTED INVESTMENTS 2ECLASSIäCATION AND OTHER TRADED INSTRUMENTS &OR NON LISTED INVESTMENTS AND OTHER NON TRADED äNANCIAL ASSETS FAIR VALUE IS CALCULATED USING DISCOUNTED CASH åOWS WITH MARKET
4RANSFER TO ASSETS HELD FOR SALE Financial statements ASSUMPTIONS UNLESS CARRYING VALUE IS CONSIDERED TO APPROXIMATE FAIR VALUE #URRENCY MOVEMENTS !T *ANUARY !N ANALYSIS OF äNANCIAL ASSETS CARRIED AT FAIR VALUE IS SET OUT BELOW #HARGE FOR THE YEAR 4RANSFER TO ASSETS HELD FOR SALE #URRENCY MOVEMENTS 53 MILLION ,EVEL ,EVEL ,EVEL 4OTAL !T $ECEMBER !T FAIR VALUE THROUGH PROäT AND LOSS 4RADE AND OTHER RECEIVABLES Ð Ð 21. Trade and other payables /THER äNANCIAL ASSETS DERIVATIVES !VAILABLE FOR SALE INVESTMENTS 53 MILLION &INANCIAL ASSET INVESTMENTS 4RADE PAYABLES 4AX AND SOCIAL SECURITY /THER PAYABLES 6ALUED USING UNADJUSTED QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL äNANCIAL INSTRUMENTS 4HIS CATEGORY INCLUDES LISTED EQUITY SHARES AND CERTAIN EXCHANGE TRADED DERIVATIVES !CCRUALS AND DEFERRED INCOME 6ALUED USING TECHNIQUES BASED SIGNIäCANTLY ON OBSERVABLE MARKET DATA )NSTRUMENTS IN THIS CATEGORY ARE VALUED USING VALUATION TECHNIQUES WHERE ALL OF THE INPUTS THAT HAVE A SIGNIäCANT EFFECT ON THE VALUATION ARE DIRECTLY OR INDIRECTLY BASED ON OBSERVABLE MARKET DATA )NSTRUMENTS IN THIS CATEGORY HAVE BEEN VALUED USING A VALUATION TECHNIQUE WHERE AT LEAST ONE INPUT WHICH /N !UGUST !NGLO 0LATINUM RECEIVED MILLION FROM A SUBSIDIARY OF -VELAPHANDA 2ESOURCES COULD HAVE A SIGNIäCANT EFFECT ON THE INSTRUMENTÓS VALUATION IS NOT BASED ON OBSERVABLE MARKET DATA ,IMITED -VELA IN RESPECT OF THE ANTICIPATED DISPOSAL OF A INTEREST IN THE "OOYSENDAL JOINT VENTURE 7HERE INPUTS CAN BE OBSERVED FROM MARKET DATA WITHOUT UNDUE COST AND EFFORT THE OBSERVED INPUT IS 4HESE FUNDS WERE INVESTED IN ACCORDANCE WITH THE TERMS OF SALE AND WERE ONLY TO BE RELEASED TO !NGLO USED /THERWISE MANAGEMENT DETERMINES A REASONABLE ESTIMATE FOR THE INPUT &INANCIAL ASSETS INCLUDED 0LATINUM UPON MINISTERIAL APPROVAL !T $ECEMBER AN AMOUNT OF MILLION WAS INCLUDED WITHIN LEVEL PRIMARILY CONSIST OF EMBEDDED DERIVATIVES AND äNANCIAL ASSET INVESTMENTS WHERE VALUATION WITHIN OTHER PAYABLES REPRESENTING THE OBLIGATION TO REPAY THE FUNDS FAILING THE RECEIPT OF SUCH APPROVAL DEPENDS UPON UNOBSERVABLE INPUTS &OLLOWING MINISTERIAL APPROVAL AND SUBSEQUENT COMPLETION OF THE DISPOSAL ON *UNE THE MILLION INCLUDED WITHIN OTHER PAYABLES WAS RELEASED
Anglo American plc Annual Report 2009 119 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
22. Financial assets CONTINUED !N ANALYSIS OF äNANCIAL LIABILITIES CARRIED AT FAIR VALUE IS SET OUT BELOW 4HE MOVEMENTS IN THE FAIR VALUE OF THE LEVEL äNANCIAL ASSETS ARE SHOWN IN THE FOLLOWING TABLE 53 MILLION ,EVEL ,EVEL ,EVEL 4OTAL 53 MILLION !T FAIR VALUE THROUGH PROäT AND LOSS !T *ANUARY 4RADE AND OTHER PAYABLES Ð Ð .ET LOSS RECORDED IN äNANCING REMEASUREMENTS /THER äNANCIAL LIABILITIES DERIVATIVES .ET GAIN RECORDED IN STATEMENT OF COMPREHENSIVE INCOME 2ECLASSIäCATION TO /THER äNANCIAL LIABILITIES DERIVATIVES #URRENCY MOVEMENTS 6ALUED USING UNADJUSTED QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL äNANCIAL INSTRUMENTS 4HIS CATEGORY INCLUDES EXCHANGE TRADED DERIVATIVES !T $ECEMBER 6ALUED USING TECHNIQUES BASED SIGNIäCANTLY ON OBSERVABLE MARKET DATA )NSTRUMENTS IN THIS CATEGORY ARE VALUED USING VALUATION TECHNIQUES WHERE ALL OF THE INPUTS THAT HAVE A SIGNIäCANT EFFECT ON THE VALUATION ARE DIRECTLY OR INDIRECTLY BASED ON OBSERVABLE MARKET DATA &OR THE LEVEL äNANCIAL ASSETS CHANGING CERTAIN INPUTS TO REASONABLY POSSIBLE )NSTRUMENTS IN THIS CATEGORY HAVE BEEN VALUED USING A VALUATION TECHNIQUE WHERE AT LEAST ONE INPUT ALTERNATIVE ASSUMPTIONS MAY CHANGE THE FAIR VALUE SIGNIäCANTLY 7HERE SIGNIäCANT WHICH COULD HAVE A SIGNIäCANT EFFECT ON THE INSTRUMENTÓS VALUATION IS NOT BASED ON OBSERVABLE MARKET THE EFFECT OF A CHANGE IN THESE ASSUMPTIONS TO A REASONABLY POSSIBLE ALTERNATIVE DATA 7HERE INPUTS CAN BE OBSERVED FROM MARKET DATA WITHOUT UNDUE COST AND EFFORT THE OBSERVED INPUT IS USED /THERWISE MANAGEMENT DETERMINES A REASONABLE ESTIMATE FOR THE INPUT &INANCIAL INSTRUMENTS ASSUMPTION IS OUTLINED IN THE TABLE BELOW 4HESE SENSITIVITIES HAVE BEEN CALCULATED INCLUDED WITHIN LEVEL PRIMARILY CONSIST OF EMBEDDED DERIVATIVES WHERE VALUATION DEPENDS UPON BY AMENDING THE FAIR VALUE OF THE LEVEL äNANCIAL ASSETS AS AT $ECEMBER UNOBSERVABLE INPUTS FOR A CHANGE IN EACH INDIVIDUAL ASSUMPTION AS OUTLINED BELOW WHILST KEEPING ALL OTHER ASSUMPTIONS CONSISTENT WITH THOSE USED TO CALCULATE THE FAIR VALUE RECOGNISED 4HE MOVEMENTS IN THE FAIR VALUE OF THE LEVEL äNANCIAL LIABILITIES ARE SHOWN IN THE IN THE äNANCIAL STATEMENTS FOLLOWING TABLE
53 MILLION )NCREASE !T *ANUARY DECREASE IN FAIR VALUE .ET GAIN RECORDED IN äNANCING REMEASUREMENTS 53 MILLION #HANGE IN ASSUMPTION OF ASSETS .ET LOSS RECORDED IN UNDERLYING EARNINGS &INANCIAL ASSET INVESTMENTS $ECREASE OF IN LIQUIDITY DISCOUNT 2EDUCTION IN ASSUMED LIFE OF äNANCIAL LIABILITY PERCENTAGE 2ECLASSIäCATION FROM /THER äNANCIAL ASSETS DERIVATIVES )NCREASE OF IN LIQUIDITY DISCOUNT PERCENTAGE #URRENCY MOVEMENTS !T $ECEMBER &INANCIAL ASSET RISK EXPOSURES ARE SET OUT IN NOTE 2ELATES TO REDUCTION OF EMBEDDED DERIVATIVE LIABILITY IN -INERA ,OMA DE .¨QUEL AND IS RECORDED IN OPERATING SPECIAL ITEMS 23. Financial liabilities 4HE CARRYING AMOUNTS AND FAIR VALUES OF äNANCIAL LIABILITIES ARE AS FOLLOWS &OR THE LEVEL äNANCIAL LIABILITIES CHANGING CERTAIN INPUTS TO REASONABLY POSSIBLE ALTERNATIVE ASSUMPTIONS MAY CHANGE THE FAIR VALUE SIGNIäCANTLY 7HERE SIGNIäCANT THE EFFECT OF A CHANGE IN THESE ASSUMPTIONS TO A REASONABLY POSSIBLE ALTERNATIVE %STIMATED #ARRYING %STIMATED #ARRYING 53 MILLION FAIR VALUE VALUE FAIR VALUE VALUE ASSUMPTION IS OUTLINED IN THE TABLE BELOW 4HESE SENSITIVITIES HAVE BEEN CALCULATED BY AMENDING THE FAIR VALUE OF THE LEVEL äNANCIAL LIABILITIES AS AT $ECEMBER !T FAIR VALUE THROUGH PROäT AND LOSS FOR A CHANGE IN EACH INDIVIDUAL ASSUMPTION AS OUTLINED BELOW WHILST KEEPING ALL 4RADE AND OTHER PAYABLES OTHER ASSUMPTIONS CONSISTENT WITH THOSE USED TO CALCULATE THE FAIR VALUE RECOGNISED /THER äNANCIAL LIABILITIES DERIVATIVES IN THE äNANCIAL STATEMENTS $ESIGNATED INTO FAIR VALUE HEDGE "ORROWINGS &INANCIAL LIABILITIES AT AMORTISED COST )NCREASE DECREASE 4RADE AND OTHER PAYABLES IN FAIR VALUE 53 MILLION #HANGE IN ASSUMPTION OF LIABILITIES "ORROWINGS /THER äNANCIAL LIABILITIES )NCREASE OF IN DIVIDEND FORECAST 4OTAL äNANCIAL LIABILITIES DERIVATIVES $ECREASE OF IN DIVIDEND FORECAST 4RADE AND OTHER PAYABLES EXCLUDE TAX AND SOCIAL SECURITY AND CURRENT AND NON CURRENT DEFERRED INCOME AND 3HIFT OF 4*,0 CURVE INCLUDE OTHER NON CURRENT PAYABLES $ERIVATIVE INSTRUMENTS ARE ANALYSED BETWEEN THOSE WHICH ARE Ò(ELD FOR TRADINGÓ AND THOSE DESIGNATED INTO "RAZILIAN DOMESTIC LONG TERM INTEREST RATE CURVE 2ANGE PROVIDED DUE TO THE DIFFERENT BASE ASSUMPTIONS HEDGE RELATIONSHIPS IN NOTE USED BY THE RELEVANT BANKS &AIR VALUE OF THE CONVERTIBLE BOND REPRESENTS THE QUOTED PRICE OF THE DEBT AT $ECEMBER AND THEREFORE INCLUDES THE PORTION ACCOUNTED FOR IN EQUITY &INANCIAL LIABILITY RISK EXPOSURES ARE SET OUT IN NOTE
4HE FAIR VALUE OF äNANCIAL LIABILITIES IS DETERMINED BY REFERENCE TO ITS QUOTED MARKET PRICE OTHERWISE THE CARRYING VALUE APPROXIMATES FAIR VALUE
120 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 23. Financial liabilities CONTINUED 24. Financial risk management and derivative financial assets/ !N ANALYSIS OF BORROWINGS IS SET OUT BELOW liabilities 4HE 'ROUP IS EXPOSED IN VARYING DEGREES TO A VARIETY OF äNANCIAL INSTRUMENT RELATED RISKS 4HE "OARD HAS APPROVED AND MONITORS THE RISK MANAGEMENT PROCESSES $UE WITHIN $UE AFTER $UE WITHIN $UE AFTER INCLUSIVE OF DOCUMENTED TREASURY POLICIES COUNTERPARTY LIMITS CONTROLLING AND 53 MILLION ONE YEAR ONE YEAR 4OTAL ONE YEAR ONE YEAR 4OTAL REPORTING STRUCTURES 4HE RISK MANAGEMENT PROCESSES OF THE 'ROUPÓS INDEPENDENTLY 3ECURED LISTED SUBSIDIARIES ARE IN LINE WITH THE 'ROUPÓS OWN POLICY "ANK LOANS AND OVERDRAFTS 4HE TYPES OF RISK EXPOSURE THE WAY IN WHICH SUCH EXPOSURE IS MANAGED AND /BLIGATIONS UNDER QUANTIäCATION OF THE LEVEL OF EXPOSURE IN THE BALANCE SHEET AT YEAR END IS PROVIDED äNANCE LEASES AS FOLLOWS SUBCATEGORISED INTO CREDIT RISK LIQUIDITY RISK AND MARKET RISK 5NSECURED #REDIT RISK "ANK LOANS AND 4HE 'ROUPÓS PRINCIPAL äNANCIAL ASSETS ARE BANK BALANCES AND CASH TRADE AND OTHER OVERDRAFTS RECEIVABLES AND INVESTMENTS 4HE 'ROUPÓS MAXIMUM EXPOSURE TO CREDIT RISK ARISING "ONDS ISSUED UNDER FROM UNDERLYING äNANCIAL ASSETS IS AS FOLLOWS %-4. PROGRAMME 53 BOND Ð ÐÐÐ53 MILLION #ONVERTIBLE BOND Ð ÐÐÐ#ASH AND CASH EQUIVALENTS #OMMERCIAL PAPER Ð Ð 4RADE AND OTHER RECEIVABLES /BLIGATIONS UNDER &INANCIAL ASSET INVESTMENTS äNANCE LEASES ÐÐÐ /THER äNANCIAL ASSETS DERIVATIVES /THER LOANS /THER GUARANTEES AND LOAN FACILITIES 4OTAL
)NCLUDES MILLION MILLION OF PREFERENCE SHARES IN "%% ENTITIES "ANK LOANS AND OVERDRAFTS DUE WITHIN ONE YEAR INCLUDE SHORT TERM BORROWINGS UNDER LONG TERM COMMITTED FACILITIES OF MILLION BILLION !SSETS WITH A BOOK VALUE OF MILLION MILLION HAVE BEEN PLEDGED AS SECURITY OF WHICH 4HE 'ROUP LIMITS EXPOSURE TO CREDIT RISK ON LIQUID FUNDS AND DERIVATIVE äNANCIAL MILLION MILLION ARE TANGIBLE ASSETS MILLION MILLION ARE äNANCIAL ASSETS AND MILLION MILLION ARE INVENTORIES 2ELATED TO THESE ASSETS ARE BORROWINGS OF INSTRUMENTS THROUGH ADHERENCE TO A POLICY OF MILLION MILLION IN RESPECT OF PROJECT äNANCING ARRANGEMENTS 4HE MINIMUM LEASE PAYMENTS UNDER äNANCE LEASES FALL DUE AS FOLLOWS Ú 7HERE POSSIBLE ACCEPTABLE MINIMUM COUNTERPARTY CREDIT RATINGS ASSIGNED BY 53 MILLION INTERNATIONAL CREDIT RATING AGENCIES INCLUDING LONG TERM RATINGS OF ! 3TANDARD 7ITHIN ONE YEAR 0OORÓS ! -OODYÓS OR ! &ITCH OR BETTER 'REATER THAN ONE YEAR LESS THAN äVE YEARS Ú $AILY COUNTERPARTY SETTLEMENT LIMITS WHICH ARE NOT TO EXCEED THREE TIMES THE 'REATER THAN äVE YEARS CREDIT LIMIT FOR AN INDIVIDUAL BANK AND Ú %XPOSURE DIVERSIäCATION THE AGGREGATE GROUP EXPOSURE TO KEY RELATIONSHIP &UTURE äNANCE CHARGES ON äNANCE LEASES COUNTERPARTIES CANNOT EXCEED OF THE COUNTERPARTYÓS SHAREHOLDERSÓ EQUITY Financial statements 0RESENT VALUE OF äNANCE LEASE LIABILITIES
)N THE YEAR ENDED $ECEMBER THE 'ROUP ISSUED MILLION OF BONDS UNDER THE %-4. 'IVEN THE DIVERSE NATURE OF THE 'ROUPÓS OPERATIONS BOTH IN RELATION TO COMMODITY PROGRAMME MILLION !LL NOTES ARE GUARANTEED BY !NGLO !MERICAN PLC MARKETS AND GEOGRAPHICALLY TOGETHER WITH INSURANCE COVER INCLUDING LETTERS 2EPRESENTS THE FAIR VALUE OF THE DEBT COMPONENT OF THE CONVERTIBLE BOND AT THE DATE OF ISSUE OF OF CREDIT FROM äNANCIAL INSTITUTIONS IT DOES NOT HAVE SIGNIäCANT CONCENTRATION OF MILLION NET OF FEES ADJUSTED FOR UNWINDING OF DISCOUNT OF MILLION 4HE FAIR VALUE OF THE EQUITY CONVERSION FEATURE WAS MILLION AND IS PRESENTED IN EQUITY REFER TO THE #ONSOLIDATED STATEMENT OF CREDIT RISK IN RESPECT OF TRADE RECEIVABLES WITH EXPOSURE SPREAD OVER A LARGE NUMBER CHANGES IN EQUITY OF CUSTOMERS
$URING THE 'ROUP HAS RAISED BILLION THROUGH THE ISSUANCE OF SENIOR NOTES !N ALLOWANCE FOR IMPAIRMENT OF TRADE RECEIVABLES IS MADE WHERE THERE IS AN BILLION THROUGH THE ISSUANCE OF SENIOR CONVERTIBLE NOTES AND BILLION IDENTIäED LOSS EVENT WHICH BASED ON PREVIOUS EXPERIENCE IS EVIDENCE OF A REDUCTION THROUGH THE ISSUANCE OF BONDS UNDER THE %-4. PROGRAMME 4HE SENIOR NOTE IN THE RECOVERABILITY OF THE CASH åOWS $ETAILS OF THE CREDIT QUALITY OF TRADE OFFERING COMPRISED MILLION SENIOR NOTES DUE IN AND RECEIVABLES AND THE ASSOCIATED PROVISION FOR IMPAIRMENT IS DISCLOSED IN NOTE MILLION SENIOR NOTES DUE IN 4HE SENIOR CONVERTIBLE NOTES WERE ISSUED WITH A COUPON OF A CONVERSION PRICE OF a AND UNLESS REDEEMED ,IQUIDITY RISK CONVERTED OR CANCELLED WILL MATURE IN 4HE 'ROUP WILL HAVE THE OPTION TO CALL 4HE 'ROUP ENSURES THAT THERE ARE SUFäCIENT COMMITTED LOAN FACILITIES INCLUDING THE SENIOR CONVERTIBLE NOTE AFTER THREE YEARS FROM THE ISSUANCE DATE SUBJECT TO REäNANCING WHERE NECESSARY IN ORDER TO MEET SHORT TERM BUSINESS REQUIREMENTS CERTAIN CONDITIONS 4HE ISSUES UNDER THE %-4. PROGRAMME IN COMPRISED AFTER TAKING INTO ACCOUNT CASH åOWS FROM OPERATIONS AND ITS HOLDING OF CASH AND A Ñ MILLION BILLION BOND DUE IN AND A Ñ MILLION CASH EQUIVALENTS AS WELL AS ANY GROUP DISTRIBUTION RESTRICTIONS THAT EXIST BILLION BOND DUE IN 4HE PROCEEDS FROM THE SALE OF !NGLO'OLD !SHANTI REFER TO NOTE SENIOR NOTES SENIOR CONVERTIBLE NOTES AND BONDS ISSUED .ON WHOLLY OWNED SUBSIDIARIES WHERE POSSIBLE WILL MAINTAIN THEIR OWN äNANCING UNDER THE %-4. PROGRAMME HAVE BEEN USED TO PREPAY THE BILLION REVOLVING BANK AND FUNDING REQUIREMENTS )N MOST CASES THE äNANCING WILL BE NON RECOURSE TO THE FACILITY WHICH WAS DUE TO MATURE IN $ECEMBER FUND CAPITAL EXPENDITURE AND 'ROUP )N ADDITION CERTAIN PROJECTS ARE äNANCED BY MEANS OF LIMITED RECOURSE REPAY OTHER SHORT TERM DEBT OWING ON 'ROUP FACILITIES PROJECT äNANCE IF APPROPRIATE
/N .OVEMBER THE WAIVERS IN RESPECT OF VARIOUS BREACHES UNDER THE !MAP LONG TERM PROJECT äNANCING AGREEMENTS FACILITIES OF MILLION EXPIRED 3UBSEQUENT TO $ECEMBER NEW RETROSPECTIVE WAIVERS WERE OBTAINED FROM LENDERS MILLION HAS BEEN REPAID AND A PROCESS HAS COMMENCED TO RESTRUCTURE THE REMAINING DEBT
Anglo American plc Annual Report 2009 121 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
24. Financial risk management and derivative financial assets/ )N ADDITION THE 'ROUP HAS A DEDICATED COMMITTED äNANCING FACILITY FOR -INAS 2IO liabilities CONTINUED OF BILLION SUBJECT TO CERTAIN DISBURSEMENT CONDITIONS AND THE GRANTING OF THE 4HE EXPECTED UNDISCOUNTED CASH åOWS OF THE 'ROUPÓS äNANCIAL LIABILITIES INCLUDING REMAINING )NSTALLATION %NVIRONMENTAL LICENCE REGARDED AS LIKELY TO OCCUR IN ASSOCIATED DERIVATIVES BY REMAINING CONTRACTUAL MATURITY BASED ON CONDITIONS FOR -INAS 2IO AND "ARRO !LTO TOTALLING BILLION EXISTING AT THE BALANCE SHEET DATE ARE AS FOLLOWS 4HE 'ROUP ALSO HAD A BILLION %UROPEAN #OMMERCIAL 0APER 0ROGRAMME ESTABLISHED 7ITHIN ONE YEAR /NE TO TWO YEARS IN /CTOBER $RAWINGS OF NIL WERE MADE AT $ECEMBER &IXED &LOATING #APITAL &IXED &LOATING #APITAL MILLION 4HE 'ROUP ALSO HAD A 2AND BILLION 3OUTH !FRICAN -EDIUM 4ERM 53 MILLION INTEREST INTEREST REPAYMENT INTEREST INTEREST REPAYMENT .OTE 0ROGRAMME ESTABLISHED IN .OVEMBER ON WHICH TOTAL DRAWINGS OF $ECEMBER 2AND MILLION MILLION WERE MADE AT $ECEMBER 2AND .ON DERIVATIVE MILLION MILLION /F THIS DRAWING 2AND MILLION MILLION WAS äNANCIAL LIABILITIES ISSUED AS COMMERCIAL PAPER 2AND MILLION MILLION .ET SETTLED DERIVATIVES Ð -ARKET RISK 4HIS IS THE RISK THAT äNANCIAL INSTRUMENT FAIR VALUES WILL åUCTUATE OWING TO CHANGES IN MARKET PRICES 4HE SIGNIäCANT MARKET RISKS TO WHICH THE 'ROUP IS EXPOSED ARE $ECEMBER FOREIGN EXCHANGE RISK INTEREST RATE RISK AND COMMODITY PRICE RISK .ON DERIVATIVE äNANCIAL LIABILITIES &OREIGN EXCHANGE RISK .ET SETTLED !S A GLOBAL BUSINESS THE 'ROUP IS EXPOSED TO MANY CURRENCIES PRINCIPALLY AS A RESULT DERIVATIVES OF NON 53 DOLLAR OPERATING COSTS INCURRED BY 53 DOLLAR FUNCTIONAL CURRENCY COMPANIES AND TO A LESSER EXTENT FROM NON 53 DOLLAR REVENUES 4HE 'ROUPÓS POLICY IS GENERALLY NOT TO HEDGE SUCH EXPOSURES AS HEDGING IS NOT DEEMED APPROPRIATE GIVEN THE DIVERSIäED NATURE OF THE 'ROUP THOUGH EXCEPTIONS CAN BE APPROVED BY THE 'ROUP 4WO TO äVE YEARS 'REATER THAN äVE YEARS -ANAGEMENT #OMMITTEE &IXED &LOATING #APITAL &IXED &LOATING #APITAL 53 MILLION INTEREST INTEREST REPAYMENT INTEREST INTEREST REPAYMENT )N ADDITION CURRENCY EXPOSURES EXIST IN RESPECT OF NON 53 DOLLAR APPROVED CAPITAL $ECEMBER EXPENDITURE PROJECTS 4HE 'ROUPÓS POLICY IS THAT SUCH EXPOSURE CAN BE HEDGED AT .ON DERIVATIVE MANAGEMENTÓS DISCRETION WITHIN CERTAIN PRE DEäNED LIMITS äNANCIAL LIABILITIES .ET SETTLED DERIVATIVES 4HE EXPOSURE OF THE 'ROUPÓS äNANCIAL ASSETS AND LIABILITIES EXCLUDING INTRA GROUP LOAN BALANCES TO CURRENCY RISK IS AS FOLLOWS Ð
&INANCIAL 4OTAL äNANCIAL $ECEMBER ASSETS )MPACT OF ASSETS Ð EXCLUDING CURRENCY $ERIVATIVE EXPOSURE TO .ON DERIVATIVE 53 MILLION DERIVATIVES DERIVATIVES ASSETS CURRENCY RISK äNANCIAL LIABILITIES !T $ECEMBER .ET SETTLED 53 DOLLAR DERIVATIVES 2AND Ð 3TERLING Ð Ð
)NCLUDES GUARANTEES AND LOAN FACILITIES %URO Ð !T $ECEMBER THE EXPECTED MATURITIES WERE NOT MATERIALLY DIFFERENT FROM THE CONTRACTED MATURITIES !USTRALIAN DOLLAR Ð Ð )NCLUDES THE FULL VALUE OF THE CONVERTIBLE BOND AND ASSUMES NO CONVERSION "RAZILIAN REAL Ð Ð /THER CURRENCIES 4HE 'ROUP HAD THE FOLLOWING UNDRAWN COMMITTED BORROWING FACILITIES AT $ECEMBER 4OTAL äNANCIAL ASSETS Ð
53 MILLION !T $ECEMBER %XPIRY DATE 53 DOLLAR 7ITHIN ONE YEAR 2AND 'REATER THAN ONE YEAR LESS THAN TWO YEARS 3TERLING Ð 'REATER THAN TWO YEARS LESS THAN äVE YEARS %URO Ð Ð 'REATER THAN äVE YEARS !USTRALIAN DOLLAR Ð "RAZILIAN REAL Ð Ð )NCLUDES UNDRAWN RAND FACILITIES EQUIVALENT TO BILLION BILLION IN RESPECT OF A SERIES OF /THER CURRENCIES FACILITIES WITH DAY MATURITIES WHICH ROLL AUTOMATICALLY ON A DAILY BASIS UNLESS NOTICE IS SERVED 4OTAL äNANCIAL ASSETS Ð
3EE FOLLOWING PAGE FOR FOOTNOTES
122 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 24. Financial risk management and derivative financial assets/ 4HE EXPOSURE OF THE 'ROUPÓS äNANCIAL ASSETS EXCLUDING INTRA GROUP LOAN BALANCES TO liabilities CONTINUED INTEREST RATE RISK IS AS FOLLOWS
&INANCIAL 4OTAL äNANCIAL )NTEREST BEARING .ON INTEREST BEARING LIABILITIES )MPACT OF LIABILITIES Ð äNANCIAL ASSETS äNANCIAL ASSETS EXCLUDING CURRENCY $ERIVATIVE EXPOSURE TO 53 MILLION DERIVATIVES DERIVATIVES LIABILITIES CURRENCY RISK %QUITY /THER NON &LOATING &IXED INVEST INTEREST !T $ECEMBER 53 MILLION RATE RATE MENTS BEARING 4OTAL 53 DOLLAR !T $ECEMBER 2AND &INANCIAL ASSETS EXCLUDING DERIVATIVES 3TERLING Ð $ERIVATIVE ASSETS Ð Ð %URO Ð &INANCIAL ASSET EXPOSURE TO !USTRALIAN DOLLAR Ð Ð INTEREST RATE RISK "RAZILIAN REAL Ð /THER CURRENCIES Ð !T $ECEMBER 4OTAL äNANCIAL LIABILITIES Ð &INANCIAL ASSETS EXCLUDING DERIVATIVES !T $ECEMBER $ERIVATIVE ASSETS Ð Ð 53 DOLLAR &INANCIAL ASSET EXPOSURE TO INTEREST RATE RISK 2AND 3TERLING Ð )NCLUDES MILLION MILLION OF PREFERENCE SHARES IN "%% ENTITIES %URO Ð !T $ECEMBER AND NO INTEREST RATE SWAPS WERE HELD IN RESPECT OF äNANCIAL ASSET EXPOSURES !USTRALIAN DOLLAR Ð Ð "RAZILIAN REAL &LOATING RATE äNANCIAL ASSETS CONSIST MAINLY OF CASH AND BANK TERM DEPOSITS /THER CURRENCIES Ð )NTEREST ON åOATING RATE ASSETS IS BASED ON THE RELEVANT NATIONAL INTER BANK RATES 4OTAL äNANCIAL LIABILITIES Ð &IXED RATE äNANCIAL ASSETS CONSIST MAINLY OF äNANCIAL ASSET INVESTMENTS AND CASH AND HAVE A WEIGHTED AVERAGE INTEREST RATE OF AND ARE äXED 7HERE CURRENCY DERIVATIVES ARE HELD TO MANAGE äNANCIAL INSTRUMENT EXPOSURES THE NOTIONAL PRINCIPAL FOR AN AVERAGE PERIOD OF THREE YEARS FOUR YEARS %QUITY INVESTMENTS HAVE AMOUNT IS ÒREALLOCATEDÓ TO REåECT THE REMAINING EXPOSURE TO THE 'ROUP NO MATURITY PERIOD AND THE MAJORITY ARE FULLY LIQUID /F THESE 53 äNANCIAL ASSETS MILLION MILLION ARE SUBJECT TO 3OUTH !FRICAN EXCHANGE CONTROLS AND WILL BE CONVERTED TO RAND WITHIN THE NEXT SIX MONTHS 4HE EXPOSURE OF THE 'ROUPÓS äNANCIAL LIABILITIES EXCLUDING INTRA GROUP LOAN BALANCES #OMPARATIVES HAVE BEEN RECLASSIäED TO ALIGN WITH CURRENT YEAR PRESENTATION TO INTEREST RATE RISK IS AS FOLLOWS
)NTEREST RATE RISK )NTEREST BEARING .ON äNANCIAL LIABILITIES INTEREST &LUCTUATIONS IN INTEREST RATES IMPACT ON THE VALUE OF SHORT TERM INVESTMENTS AND BEARING
äNANCING ACTIVITIES GIVING RISE TO INTEREST RATE RISK %XPOSURE TO INTEREST RATE RISK &LOATING &IXED äNANCIAL Financial statements IS PARTICULARLY WITH REFERENCE TO CHANGES IN 53 AND 3OUTH !FRICAN INTEREST RATES 53 MILLION RATE RATELIABILITIES 4OTAL %XPOSURE TO "RAZILIAN INTEREST RATES IS EXPECTED TO CONTINUE TO INCREASE IN THE !T $ECEMBER NEAR TERM &INANCIAL LIABILITIES EXCLUDING DERIVATIVES )MPACT OF INTEREST RATE SWAPS Ð Ð 4HE 'ROUP POLICY IS TO BORROW FUNDS AT åOATING RATES OF INTEREST AS THIS IS $ERIVATIVE LIABILITIES Ð CONSIDERED TO GIVE SOMEWHAT OF A NATURAL HEDGE AGAINST COMMODITY PRICE &INANCIAL LIABILITY EXPOSURE TO MOVEMENTS GIVEN THE CORRELATION WITH ECONOMIC GROWTH AND INDUSTRIAL ACTIVITY INTEREST RATE RISK WHICH IN TURN SHOWS A HIGH CORRELATION WITH COMMODITY PRICE åUCTUATION )N CERTAIN CIRCUMSTANCES THE 'ROUP USES INTEREST RATE SWAP CONTRACTS TO MANAGE ITS EXPOSURE !T $ECEMBER TO INTEREST RATE MOVEMENTS ON A PORTION OF ITS EXISTING DEBT !LSO STRATEGIC HEDGING USING äXED RATE DEBT MAY BE UNDERTAKEN FROM TIME TO TIME IF APPROVED BY THE 'ROUP &INANCIAL LIABILITIES EXCLUDING DERIVATIVES -ANAGEMENT #OMMITTEE )MPACT OF INTEREST RATE SWAPS Ð Ð $ERIVATIVE LIABILITIES Ð Ð )N RESPECT OF äNANCIAL ASSETS THE 'ROUPÓS POLICY IS TO INVEST CASH AT åOATING RATES OF &INANCIAL LIABILITY EXPOSURE TO INTEREST AND CASH RESERVES ARE TO BE MAINTAINED IN SHORT TERM INVESTMENTS LESS INTEREST RATE RISK THAN ONE YEAR IN ORDER TO MAINTAIN LIQUIDITY WHILE ACHIEVING A SATISFACTORY RETURN FOR SHAREHOLDERS 7HERE INTEREST RATE SWAPS ARE HELD TO MANAGE äNANCIAL LIABILITY EXPOSURES THE NOTIONAL PRINCIPAL AMOUNT IS ÒREALLOCATEDÓ TO REåECT THE REMAINING EXPOSURE TO THE 'ROUP
)NTEREST ON åOATING RATE INSTRUMENTS IS BASED ON THE RELEVANT NATIONAL INTER BANK RATES 2EMAINING äXED RATE BORROWINGS ACCRUE INTEREST AT A WEIGHTED AVERAGE INTEREST RATE OF AND ARE AT äXED RATES FOR AN AVERAGE PERIOD OF FOUR YEARS TWO YEARS !VERAGE MATURITY ON NON INTEREST BEARING INSTRUMENTS IS MONTHS MONTHS
#OMMODITY PRICE RISK 4HE 'ROUPÓS EARNINGS ARE EXPOSED TO MOVEMENTS IN THE PRICES OF THE COMMODITIES IT PRODUCES
4HE 'ROUP POLICY IS GENERALLY NOT TO HEDGE PRICE RISK ALTHOUGH SOME HEDGING MAY BE UNDERTAKEN FOR STRATEGIC REASONS )N SUCH CASES THE 'ROUP USES FORWARD AND DEFERRED CONTRACTS TO HEDGE THE PRICE RISK
Anglo American plc Annual Report 2009 123 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
24. Financial risk management and derivative financial assets/ .ON HEDGES liabilities CONTINUED 4HE 'ROUP MAY CHOOSE NOT TO DESIGNATE CERTAIN DERIVATIVES AS HEDGES FOR EXAMPLE #ERTAIN OF THE 'ROUPÓS SALES AND PURCHASES ARE PROVISIONALLY PRICED AND AS A RESULT CERTAIN FORWARD FOREIGN CURRENCY CONTRACTS THAT PROVIDE A NATURAL HEDGE OF NON 53 ARE SUSCEPTIBLE TO FUTURE PRICE MOVEMENTS 4HE EXPOSURE OF THE 'ROUPÓS äNANCIAL DOLLAR DEBT IN THE INCOME STATEMENT OR WHERE THE 'ROUP IS ECONOMICALLY HEDGED BUT ASSETS AND LIABILITIES TO COMMODITY PRICE RISK IS AS FOLLOWS )!3 HEDGE ACCOUNTING CANNOT BE ACHIEVED 7HERE DERIVATIVES HAVE NOT BEEN DESIGNATED AS HEDGES FAIR VALUE CHANGES ARE RECOGNISED IN THE INCOME STATEMENT IN
#OMMODITY PRICE LINKED .OT LINKED ACCORDANCE WITH THE 'ROUPÓS ACCOUNTING POLICY SET OUT IN NOTE AND ARE CLASSIäED AS 3UBJECT TO äNANCING OR OPERATING DEPENDING ON THE NATURE OF THE ASSOCIATED HEDGED RISK TO PRICE &IXED COMMODITY 53 MILLION MOVEMENTS PRICE PRICE 4OTAL 4HE FAIR VALUE OF THE 'ROUPÓS OPEN DERIVATIVE POSITION AT $ECEMBER EXCLUDING !T $ECEMBER NORMAL PURCHASE AND SALE CONTRACTS HELD OFF BALANCE SHEET RECORDED WITHIN Ò/THER 4OTAL NET äNANCIAL INSTRUMENTS äNANCIAL ASSETS DERIVATIVES Ó AND Ò/THER äNANCIAL LIABILITIES DERIVATIVES Ó IS AS FOLLOWS EXCLUDING DERIVATIVES #OMMODITY DERIVATIVES NET Ð Ð .ON COMMODITY DERIVATIVES NET Ð Ð 53 MILLION !SSET ,IABILITY !SSET ,IABILITY 4OTAL äNANCIAL INSTRUMENT EXPOSURE #URRENT TO COMMODITY RISK #ASH åOW HEDGE &ORWARD FOREIGN CURRENCY CONTRACTS Ð !T $ECEMBER &ORWARD COMMODITY CONTRACTS Ð Ð 4OTAL NET äNANCIAL INSTRUMENTS EXCLUDING DERIVATIVES /THER Ð ÐÐ #OMMODITY DERIVATIVES NET Ð Ð &AIR VALUE HEDGE .ON COMMODITY DERIVATIVES NET Ð Ð )NTEREST RATE SWAPS Ð Ð 4OTAL äNANCIAL INSTRUMENT EXPOSURE /THER ÐÐ Ð TO COMMODITY RISK .ON HEDGE Ò(ELD FOR TRADINGÓ &ORWARD FOREIGN CURRENCY CONTRACTS )NCLUDES äNANCIAL INSTRUMENTS WHOSE COMMODITY PRICES ARE SET ANNUALLY OR VIA CONTRACT NEGOTIATION #ROSS CURRENCY SWAPS Ð )NCLUDES A MILLION MILLION DERIVATIVE EMBEDDED IN A LONG TERM POWER CONTRACT /THER 4OTAL CURRENT DERIVATIVES $ERIVATIVES )N ACCORDANCE WITH )!3 &INANCIAL )NSTRUMENTS 0RESENTATION AND )!3 THE FAIR VALUE OF ALL DERIVATIVES ARE SEPARATELY RECORDED ON THE BALANCE SHEET WITHIN .ON CURRENT Ò/THER äNANCIAL ASSETS DERIVATIVES Ó AND Ò/THER äNANCIAL LIABILITIES DERIVATIVES Ó #ASH åOW HEDGE $ERIVATIVES ARE CLASSIäED AS CURRENT OR NON CURRENT DEPENDING ON THE EXPECTED &ORWARD FOREIGN CURRENCY CONTRACTS Ð Ð MATURITY OF THE DERIVATIVE &ORWARD COMMODITY CONTRACTS ÐÐ Ð &AIR VALUE HEDGE 4HE 'ROUP UTILISES DERIVATIVE INSTRUMENTS TO MANAGE ITS MARKET RISK EXPOSURES AS EXPLAINED ABOVE 4HE 'ROUP DOES NOT USE DERIVATIVE äNANCIAL INSTRUMENTS FOR )NTEREST RATE SWAPS Ð SPECULATIVE PURPOSES HOWEVER IT MAY CHOOSE NOT TO DESIGNATE CERTAIN DERIVATIVES .ON HEDGE Ò(ELD FOR TRADINGÓ AS HEDGES 3UCH DERIVATIVES THAT ARE NOT HEDGE ACCOUNTED ARE CLASSIäED AS &ORWARD FOREIGN CURRENCY CONTRACTS ÒNON HEDGESÓ AND FAIR VALUE MOVEMENTS ARE RECORDED IN THE INCOME STATEMENT #ROSS CURRENCY SWAPS /THER 4HE USE OF DERIVATIVE INSTRUMENTS IS SUBJECT TO LIMITS AND THE POSITIONS ARE REGULARLY 4OTAL NON CURRENT DERIVATIVES MONITORED AND REPORTED TO SENIOR MANAGEMENT
4HE TIMING OF THE EXPECTED CASH åOWS ASSOCIATED WITH THESE HEDGES IS AS FOLLOWS %MBEDDED DERIVATIVES 53 MILLION $ERIVATIVES EMBEDDED IN OTHER äNANCIAL INSTRUMENTS OR OTHER HOST CONTRACTS ARE 7ITHIN ONE YEAR TREATED AS SEPARATE DERIVATIVES WHEN THEIR RISKS AND CHARACTERISTICS ARE NOT CLOSELY 'REATER THAN ONE YEAR LESS THAN TWO YEARS RELATED TO THOSE OF THEIR HOST CONTRACT AND THE HOST CONTRACT IS NOT CARRIED AT FAIR 'REATER THAN TWO YEARS LESS THAN äVE YEARS Ð VALUE %MBEDDED DERIVATIVES MAY BE DESIGNATED INTO HEDGE RELATIONSHIPS AND ARE 'REATER THAN äVE YEARS Ð Ð ACCOUNTED FOR IN ACCORDANCE WITH THE 'ROUPÓS ACCOUNTING POLICY SET OUT IN NOTE
4HE PERIODS WHEN THESE HEDGES ARE EXPECTED TO IMPACT THE INCOME STATEMENT GENERALLY FOLLOW THE CASH #ASH åOW HEDGES åOW PROäLE WITH THE EXCEPTION OF HEDGING ASSOCIATED WITH CAPITAL PROJECTS WHICH IS INCLUDED IN THE )N CERTAIN CASES THE 'ROUP CLASSIäES ITS FORWARD EXCHANGE AND COMMODITY PRICE CAPITALISED ASSET VALUE AND DEPRECIATED OVER THE LIFE OF THE ASSET CONTRACTS HEDGING HIGHLY PROBABLE FORECAST TRANSACTIONS AS CASH åOW HEDGES #OMPARATIVES HAVE BEEN ADJUSTED IN ACCORDANCE WITH )!3 0RESENTATION OF &INANCIAL 3TATEMENTS Ð )MPROVEMENTS AS DESCRIBED IN NOTE 7HERE THIS DESIGNATION IS DOCUMENTED CHANGES IN FAIR VALUE ARE RECOGNISED IN EQUITY UNTIL THE HEDGED TRANSACTIONS OCCUR AT WHICH TIME THE RESPECTIVE GAINS OR LOSSES ARE TRANSFERRED TO THE INCOME STATEMENT OR HEDGED BALANCE SHEET ITEM IN 4HESE MARKED TO MARKET VALUATIONS ARE IN NO WAY PREDICTIVE OF THE FUTURE VALUE OF ACCORDANCE WITH THE 'ROUPÓS ACCOUNTING POLICY SET OUT IN NOTE THE HEDGED POSITION NOR OF THE FUTURE IMPACT ON THE PROäT OF THE 'ROUP 4HE VALUATIONS REPRESENT THE COST OF CLOSING ALL HEDGE CONTRACTS AT YEAR END AT MARKET &AIR VALUE HEDGES PRICES AND RATES AVAILABLE AT THE TIME 4HE MAJORITY OF INTEREST RATE SWAPS TAKEN OUT TO SWAP THE 'ROUPÓS äXED RATE BORROWINGS TO åOATING RATE IN ACCORDANCE WITH THE TREASURY POLICY HAVE BEEN .ORMAL PURCHASE AND NORMAL SALE CONTRACTS DESIGNATED AS FAIR VALUE HEDGES 4HE RESPECTIVE CARRYING VALUES OF THE HEDGED DEBT ARE #OMMODITY BASED CONTRACTS THAT MEET THE SCOPE EXEMPTION IN )!3 IN THAT THEY ADJUSTED TO REåECT THE FAIR VALUE OF THE INTEREST RATE RISK BEING HEDGED 3UBSEQUENT ARE SETTLED THROUGH PHYSICAL DELIVERY OF THE 'ROUPÓS PRODUCTION OR ARE USED WITHIN CHANGES IN THE FAIR VALUE OF THE HEDGED RISK ARE OFFSET AGAINST FAIR VALUE CHANGES IN THE THE PRODUCTION PROCESS ARE CLASSIäED AS NORMAL PURCHASE OR SALE CONTRACTS )N INTEREST RATE SWAP AND CLASSIäED WITHIN äNANCING COSTS IN THE INCOME STATEMENT ACCORDANCE WITH )!3 THESE CONTRACTS ARE NOT MARKED TO MARKET
124 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 24. Financial risk management and derivative financial assets/ )NCOME 53 MILLION STATEMENT %QUITY liabilities CONTINUED #OMMODITY PRICE SENSITIVITIES #APITAL RISK MANAGEMENT 4HE 'ROUPÓS OBJECTIVES WHEN MANAGING CAPITAL ARE TO SAFEGUARD THE 'ROUPÓS ABILITY TO CONTINUE AS A GOING CONCERN IN ORDER TO PROVIDE RETURNS FOR SHAREHOLDERS AND INCREASE IN THE PLATINUM PRICE BENEäTS FOR OTHER STAKEHOLDERS AND WITH COGNISANCE OF FORECAST FUTURE MARKET DECREASE IN THE PLATINUM PRICE CONDITIONS AND STRUCTURING TO MAINTAIN AN OPTIMAL CAPITAL STRUCTURE TO REDUCE THE INCREASE IN THE COPPER PRICE COST OF CAPITAL DECREASE IN THE COPPER PRICE INCREASE IN THE COAL PRICE ÐÐ )N ORDER TO MANAGE THE SHORT AND LONG TERM CAPITAL STRUCTURE THE 'ROUP ADJUSTS THE DECREASE IN THE COAL PRICE ÐÐ AMOUNT OF ORDINARY DIVIDENDS PAID TO SHAREHOLDERS RETURNS CAPITAL TO SHAREHOLDERS VIA FOR EXAMPLE SHARE BUYBACKS AND SPECIAL DIVIDENDS ARRANGES DEBT TO FUND NEW ACQUISITIONS AND ALSO MAY SELL NON CORE ASSETS TO REDUCE DEBT INCREASE IN THE PLATINUM PRICE DECREASE IN THE PLATINUM PRICE 4HE 'ROUP MONITORS CAPITAL ON THE BASIS OF THE RATIO OF NET DEBT TO TOTAL CAPITAL LESS INCREASE IN THE COPPER PRICE INVESTMENTS IN ASSOCIATES GEARING .ET DEBT IS CALCULATED AS TOTAL BORROWINGS DECREASE IN THE COPPER PRICE LESS CASH AND CASH EQUIVALENTS AND CURRENT äNANCIAL ASSET INVESTMENTS EXCLUDING INCREASE IN THE COAL PRICE Ð DERIVATIVES WHICH PROVIDE AN ECONOMIC HEDGE OF DEBT AND INCLUDING THE NET DEBT OF DISPOSAL GROUPS 4OTAL CAPITAL IS CALCULATED AS Ò.ET ASSETSÓ AS SHOWN IN THE DECREASE IN THE COAL PRICE Ð #ONSOLIDATED BALANCE SHEET EXCLUDING NET DEBT 'EARING AS AT $ECEMBER )NTEREST RATE SENSITIVITIES WAS 4HE DECREASE IN GEARING SINCE $ECEMBER IS PRIMARILY DUE TO THE INCREASE IN NET ASSETS BP INCREASE IN 53 INTEREST RATES BP DECREASE IN 53 INTEREST RATES &INANCIAL INSTRUMENT SENSITIVITIES BP INCREASE IN 3OUTH !FRICAN INTEREST RATES ÐÐ &INANCIAL INSTRUMENTS AFFECTED BY MARKET RISK INCLUDE BORROWINGS DEPOSITS DERIVATIVE äNANCIAL INSTRUMENTS TRADE RECEIVABLES AND TRADE PAYABLES 4HE BP DECREASE IN 3OUTH !FRICAN INTEREST RATES ÐÐ FOLLOWING ANALYSIS REQUIRED BY )&23 IS INTENDED TO ILLUSTRATE THE SENSITIVITY OF THE 'ROUPÓS äNANCIAL INSTRUMENTS AS AT YEAR END TO CHANGES IN COMMODITY PRICES BP INCREASE IN 53 INTEREST RATES EXCHANGE RATES AND INTEREST RATES BP DECREASE IN 53 INTEREST RATES BP INCREASE IN 3OUTH !FRICAN INTEREST RATES 4HE SENSITIVITY ANALYSIS HAS BEEN PREPARED ON THE BASIS THAT THE COMPONENTS OF BP DECREASE IN 3OUTH !FRICAN INTEREST RATES NET DEBT THE RATIO OF äXED TO åOATING INTEREST RATES OF THE DEBT AND DERIVATIVES PORTFOLIO AND THE PROPORTION OF äNANCIAL INSTRUMENTS IN FOREIGN CURRENCIES ARE ALL &OREIGN CURRENCY SENSITIVITIES CONSTANT AND ON THE BASIS OF THE HEDGE DESIGNATIONS IN PLACE AT $ECEMBER )N ADDITION THE COMMODITY PRICE IMPACT FOR PROVISIONALLY PRICED CONTRACTS IS BASED 53 DOLLAR TO RAND ON THE RELATED TRADE RECEIVABLES AND TRADE PAYABLES AT $ECEMBER !S A 53 DOLLAR TO RAND CONSEQUENCE THIS SENSITIVITY ANALYSIS RELATES TO THE POSITION AS AT $ECEMBER 53 DOLLAR TO !USTRALIAN DOLLAR Financial statements 53 DOLLAR TO !USTRALIAN DOLLAR 4HE FOLLOWING ASSUMPTIONS WERE MADE IN CALCULATING THE SENSITIVITY ANALYSIS 53 DOLLAR TO "RAZILIAN REAL Ú !LL INCOME STATEMENT SENSITIVITIES ALSO IMPACT EQUITY 53 DOLLAR TO "RAZILIAN REAL Ú &OR DEBT AND OTHER DEPOSITS CARRIED AT AMORTISED COST CARRYING VALUE DOES NOT 53 DOLLAR TO #HILEAN PESO CHANGE AS INTEREST RATES MOVE 53 DOLLAR TO #HILEAN PESO Ú .O SENSITIVITY IS PROVIDED FOR INTEREST ACCRUALS AS THESE ARE BASED ON PRE AGREED INTEREST RATES AND THEREFORE ARE NOT SUSCEPTIBLE TO FURTHER RATE CHANGES 53 DOLLAR TO RAND Ú #HANGES IN THE CARRYING VALUE OF DERIVATIVES FROM MOVEMENTS IN COMMODITY PRICES AND INTEREST RATES DESIGNATED AS CASH åOW HEDGES ARE ASSUMED TO BE 53 DOLLAR TO RAND RECORDED FULLY WITHIN EQUITY ON THE GROUNDS OF MATERIALITY 53 DOLLAR TO !USTRALIAN DOLLAR Ú .O SENSITIVITY HAS BEEN CALCULATED ON DERIVATIVES AND RELATED UNDERLYING 53 DOLLAR TO !USTRALIAN DOLLAR INSTRUMENTS DESIGNATED INTO FAIR VALUE HEDGE RELATIONSHIPS AS THESE ARE ASSUMED 53 DOLLAR TO "RAZILIAN REAL MATERIALLY TO OFFSET ONE ANOTHER 53 DOLLAR TO "RAZILIAN REAL Ú !LL HEDGE RELATIONSHIPS ARE ASSUMED TO BE FULLY EFFECTIVE ON THE GROUNDS OF 53 DOLLAR TO #HILEAN PESO MATERIALITY Ú $EBT WITH A MATURITY OF LESS THAN ONE YEAR IS åOATING RATE UNLESS IT IS A LONG TERM 53 DOLLAR TO #HILEAN PESO äXED RATE DEBT IN ITS äNAL YEAR Ú 4RANSLATION OF FOREIGN SUBSIDIARIES AND OPERATIONS INTO THE 'ROUPÓS PRESENTATION REPRESENTS STRENGTHENING OF 53 DOLLAR AGAINST THE RESPECTIVE CURRENCY CURRENCY HAS BEEN EXCLUDED FROM THE SENSITIVITY 4HE ABOVE SENSITIVITIES ARE CALCULATED WITH REFERENCE TO A SINGLE MOMENT IN TIME AND 5SING THE ABOVE ASSUMPTIONS THE FOLLOWING TABLES SHOW THE ILLUSTRATIVE EFFECT ON ARE SUBJECT TO CHANGE DUE TO A NUMBER OF FACTORS INCLUDING THE INCOME STATEMENT AND EQUITY THAT WOULD RESULT FROM REASONABLY POSSIBLE CHANGES IN THE RELEVANT COMMODITY PRICE FOREIGN CURRENCY OR INTEREST RATES Ú åUCTUATING TRADE RECEIVABLE AND TRADE PAYABLE BALANCES Ú DERIVATIVE INSTRUMENTS AND BORROWINGS SETTLED THROUGHOUT THE YEAR Ú åUCTUATING CASH BALANCES Ú CHANGES IN CURRENCY MIX AND Ú COMMERCIAL PAPER WITH SHORT TERM MATURITIES WHICH IS REGULARLY REPLACED OR SETTLED
!S THE SENSITIVITIES ARE LIMITED TO YEAR END äNANCIAL INSTRUMENT BALANCES THEY DO NOT TAKE ACCOUNT OF THE 'ROUPÓS SALES AND OPERATING COSTS WHICH ARE HIGHLY SENSITIVE TO CHANGES IN COMMODITY PRICES AND EXCHANGE RATES )N ADDITION EACH OF THE SENSITIVITIES IS CALCULATED IN ISOLATION WHILE IN REALITY COMMODITY PRICES FOREIGN EXCHANGE RATES AND INTEREST RATES DO NOT MOVE INDEPENDENTLY
Anglo American plc Annual Report 2009 125 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
25. Provisions for liabilities and charges 26. Deferred tax $EFERRED TAX ASSETS %NVIRON MENTAL RESTOR $ECOMM 53 MILLION 53 MILLION ATION ISSIONING /THER 4OTAL !T *ANUARY !T *ANUARY #REDITEDCHARGED TO THE INCOME STATEMENT !CQUIRED THROUGH BUSINESS COMBINATIONS Ð #HARGED TO THE STATEMENT OF COMPREHENSIVE INCOME $ISPOSAL OF BUSINESSES Ð Ð #REDITEDCHARGED DIRECTLY TO EQUITY #HARGED TO THE INCOME STATEMENT 4RANSFER TO ASSETS HELD FOR SALE 4RANSFER TO LIABILITIES DIRECTLY ASSOCIATED 2ECLASSIäCATIONS Ð WITH ASSETS HELD FOR SALE #URRENCY MOVEMENTS #APITALISED Ð !T $ECEMBER 5NWINDING OF DISCOUNT 5NUSED AMOUNTS REVERSED !MOUNTS APPLIED $EFERRED TAX LIABILITIES
#URRENCY MOVEMENTS 53 MILLION !T $ECEMBER !T *ANUARY #REDITEDCHARGED TO THE INCOME STATEMENT -ATURITY ANALYSIS OF TOTAL PROVISIONS #REDITED TO THE STATEMENT OF COMPREHENSIVE INCOME #REDITEDCHARGED DIRECTLY TO EQUITY 53 MILLION #URRENT !CQUIRED THROUGH BUSINESS COMBINATIONS .ON CURRENT 4RANSFER TO LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE $ISPOSAL OF BUSINESSES Ð 2ECLASSIäCATIONS Ð 4HE 'ROUP MAKES CONTRIBUTIONS TO CONTROLLED FUNDS TO MEET THE COST OF SOME OF ITS DECOMMISSIONING #URRENCY MOVEMENTS RESTORATION AND ENVIRONMENTAL REHABILITATION LIABILITIES SEE NOTE !T $ECEMBER 0ROVISIONS FOR LIABILITIES AND CHARGES AT $ECEMBER WERE MILLION 4HIS RELATED TO MILLION OF ENVIRONMENTAL RESTORATION PROVISIONS MILLION OF DECOMMISSIONING PROVISIONS AND MILLION OF OTHER PROVISIONS 4HE AMOUNT OF DEFERRED TAX RECOGNISED IN THE BALANCE SHEET IS AS FOLLOWS 2ELATES TO FAIR VALUE ADJUSTMENTS ON ACQUISITIONS !MOUNTS CAPITALISED IN THE ENVIRONMENTAL RESTORATION PROVISION RELATE TO AMOUNTS THAT WILL BE RECOVERED 53 MILLION FROM THIRD PARTIES WHEN THE ACTUAL EXPENDITURE IS INCURRED $EFERRED TAX ASSETS %NVIRONMENTAL RESTORATION 4AX LOSSES 4HE 'ROUP HAS AN OBLIGATION TO UNDERTAKE RESTORATION REHABILITATION AND 0OST RETIREMENT BENEäTS ENVIRONMENTAL WORK WHEN ENVIRONMENTAL DISTURBANCE IS CAUSED BY THE 3HARE BASED PAYMENTS DEVELOPMENT OR ONGOING PRODUCTION OF A MINING PROPERTY ! PROVISION IS RECOGNISED /THER TEMPORARY DIFFERENCES FOR THE PRESENT VALUE OF SUCH COSTS )T IS ANTICIPATED THAT THESE COSTS WILL BE INCURRED OVER A PERIOD IN EXCESS OF YEARS $EFERRED TAX LIABILITIES #APITAL ALLOWANCES IN EXCESS OF DEPRECIATION $ECOMMISSIONING 0ROVISION IS MADE FOR THE PRESENT VALUE OF COSTS RELATING TO THE DECOMMISSIONING &AIR VALUE ADJUSTMENTS OF PLANT OR OTHER SITE RESTORATION WORK )T IS ANTICIPATED THAT THESE COSTS WILL BE 4AX LOSSES INCURRED OVER A PERIOD IN EXCESS OF YEARS $ERIVATIVES 0ROVISIONS /THER /THER TEMPORARY DIFFERENCES /THER PROVISIONS PRIMARILY RELATE TO CASH SETTLED SHARE BASED PAYMENTS INDEMNITIES WARRANTIES AND LEGAL CLAIMS )T IS ANTICIPATED THAT THESE COSTS WILL BE INCURRED OVER A äVE YEAR PERIOD 4HE AMOUNT OF DEFERRED TAX CREDITED CHARGED TO THE INCOME STATEMENT IS AS FOLLOWS
53 MILLION #APITAL ALLOWANCES IN EXCESS OF DEPRECIATION &AIR VALUE ADJUSTMENTS 4AX LOSSES $ERIVATIVES 0ROVISIONS /THER TEMPORARY DIFFERENCES
126 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 26. Deferred tax CONTINUED 27. Retirement benefits 4HE CURRENT EXPECTATION REGARDING THE MATURITY OF DEFERRED TAX BALANCES IS 4HE 'ROUP OPERATES DEäNED CONTRIBUTION AND DEäNED BENEäT PENSION PLANS FOR THE MAJORITY OF ITS EMPLOYEES )T ALSO OPERATES POST RETIREMENT MEDICAL ARRANGEMENTS 53 MILLION IN SOUTHERN !FRICA AND .ORTH !MERICA $EFERRED TAX ASSETS 2ECOVERABLE WITHIN MONTHS $EäNED CONTRIBUTION PLANS 2ECOVERABLE AFTER MONTHS 4HE DEäNED CONTRIBUTION PENSION AND MEDICAL COST REPRESENTS THE ACTUAL CONTRIBUTIONS PAYABLE BY THE 'ROUP TO THE VARIOUS PLANS !T $ECEMBER THERE WERE NO MATERIAL OUTSTANDING OR PREPAID CONTRIBUTIONS AND SO NO ACCRUAL OR $EFERRED TAX LIABILITIES PREPAYMENT HAS BEEN DISCLOSED IN THE BALANCE SHEET IN RELATION TO THESE PLANS 0AYABLE WITHIN MONTHS 0AYABLE AFTER MONTHS 4HE ASSETS OF THE DEäNED CONTRIBUTION PLANS ARE HELD SEPARATELY IN INDEPENDENTLY ADMINISTERED FUNDS 4HE CHARGE IN RESPECT OF THESE PLANS IS CALCULATED ON THE BASIS OF THE CONTRIBUTION PAYABLE BY THE 'ROUP IN THE äNANCIAL YEAR 4HE CHARGE FOR THE YEAR FOR DEäNED CONTRIBUTION PENSION SCHEMES NET OF AMOUNTS CAPITALISED WAS 4HE 'ROUP HAD THE FOLLOWING BALANCES IN RESPECT OF WHICH NO DEFERRED TAX ASSET HAS MILLION MILLION AND FOR DEäNED CONTRIBUTION MEDICAL SCHEMES BEEN RECOGNISED NET OF AMOUNTS CAPITALISED WAS MILLION MILLION
/THER 4AX LOSSES Ð 4AX LOSSES Ð TEMPORARY $EäNED BENEäT PENSION PLANS AND POST RETIREMENT MEDICAL PLANS 53 MILLION REVENUE CAPITAL DIFFERENCES 4OTAL 4HE MAJORITY OF THE DEäNED BENEäT PENSION PLANS ARE FUNDED 4HE ASSETS OF THESE $ECEMBER PLANS ARE HELD SEPARATELY FROM THOSE OF THE 'ROUP IN INDEPENDENTLY ADMINISTERED 7ITHIN ONE YEAR Ð ÐÐÐFUNDS IN ACCORDANCE WITH STATUTORY REQUIREMENTS OR LOCAL PRACTICE THROUGHOUT THE /NE TO äVE YEARS Ð Ð WORLD 4HE UNFUNDED PENSION PLANS ARE PRINCIPALLY IN 3OUTH !MERICA !FTER äVE YEARS ÐÐ 4HE POST RETIREMENT MEDICAL ARRANGEMENTS PROVIDE HEALTH BENEäTS TO RETIRED .O EXPIRY DATE EMPLOYEES AND CERTAIN DEPENDANTS %LIGIBILITY FOR COVER IS DEPENDENT UPON CERTAIN CRITERIA 4HE MAJORITY OF THESE PLANS ARE UNFUNDED
$ECEMBER 4HE 'ROUPÓS PROVISION OF ANTI RETROVIRAL THERAPY TO ()6 POSITIVE STAFF HAS NOT 7ITHIN ONE YEAR Ð Ð Ð Ð SIGNIäCANTLY IMPACTED THE POST RETIREMENT MEDICAL PLAN LIABILITY /NE TO äVE YEARS Ð Ð )NDEPENDENT QUALIäED ACTUARIES CARRY OUT FULL VALUATIONS EVERY THREE YEARS USING !FTER äVE YEARS Ð Ð THE PROJECTED UNIT METHOD 4HE ACTUARIES HAVE UPDATED THE VALUATIONS TO .O EXPIRY DATE $ECEMBER
4HE 'ROUP ALSO HAS UNUSED TAX CREDITS OF MILLION MILLION FOR WHICH NO DEFERRED TAX ASSET IS RECOGNISED IN THE BALANCE SHEET 4HESE TAX CREDITS HAVE NO Financial statements EXPIRY DATE
.O LIABILITY HAS BEEN RECOGNISED IN RESPECT OF TEMPORARY DIFFERENCES ASSOCIATED WITH INVESTMENTS IN SUBSIDIARIES BRANCHES AND ASSOCIATES AND INTERESTS IN JOINT VENTURES WHERE THE 'ROUP IS IN A POSITION TO CONTROL THE TIMING OF THE REVERSAL OF THE TEMPORARY DIFFERENCES AND IT IS PROBABLE THAT SUCH DIFFERENCES WILL NOT REVERSE IN THE FORESEEABLE FUTURE 4HE AGGREGATE AMOUNT OF TEMPORARY DIFFERENCES ASSOCIATED WITH INVESTMENTS IN SUBSIDIARIES BRANCHES AND ASSOCIATES AND INTERESTS IN JOINT VENTURES FOR WHICH A DEFERRED TAX LIABILITY HAS NOT BEEN RECOGNISED IS MILLION MILLION 4HE DECREASE FROM THE PREVIOUS YEAR IS PRIMARILY AS A RESULT OF A CHANGE TO TAX LEGISLATION
Anglo American plc Annual Report 2009 127 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
27. Retirement benefits CONTINUED 4HE ACTUAL RETURN ON PLAN ASSETS IN RESPECT OF DEäNED BENEäT PENSION SCHEMES WAS 4HE 'ROUPÓS PLANS IN RESPECT OF PENSION AND POST RETIREMENT HEALTHCARE ARE SUMMARISED A GAIN OF MILLION LOSS OF MILLION AS FOLLOWS )NCOME STATEMENT 4HE AMOUNTS RECOGNISED IN THE INCOME STATEMENT ARE AS FOLLOWS 3OUTHERN 4HE 3OUTHERN 4HE 53 MILLION !FRICA !MERICAS %UROPE 4OTAL !FRICA !MERICAS %UROPE 4OTAL !SSETS 0OST 0OST $EäNED RETIRE RETIRE MENT MENT BENEäT 0ENSION MEDICAL 4OTAL 0ENSION MEDICAL 4OTAL PENSION PLANS 53 MILLION PLANS PLANS PLANS PLANS PLANS PLANS IN SURPLUS ÐÐ Ð Ð !NALYSIS OF THE AMOUNT CHARGED TO OPERATING PROäT !MOUNTS ARE INCLUDED IN Ò/THER NON CURRENT ASSETSÓ #URRENT SERVICE COSTS 0AST SERVICE COSTS ÐÐÐ Ð 4OTAL WITHIN OPERATING COSTS 3OUTHERN 4HE 3OUTHERN 4HE 53 MILLION !FRICA !MERICAS %UROPE 4OTAL !FRICA !MERICAS %UROPE 4OTAL !NALYSIS OF THE AMOUNT CHARGED TO NET äNANCE COSTS ,IABILITIES %XPECTED RETURN ON PLAN ASSETS $EäNED BENEäT )NTEREST COSTS ON PLAN LIABILITIES PENSION PLANS .ET CHARGECREDIT TO NET IN DEäCIT Ð Ð äNANCE COSTS Ð 0OST 4OTAL CHARGE TO THE INCOME RETIREMENT STATEMENT MEDICAL PLANS IN DEäCIT Ð Ð )NCLUDED IN Ò)NVESTMENT INCOMEÓ )NCLUDED IN Ò)NTEREST EXPENSEÓ
53 MILLION !CTUARIAL ASSUMPTIONS $EäNED BENEäT PENSION PLANS 4HE PRINCIPAL ASSUMPTIONS USED TO DETERMINE THE ACTUARIAL PRESENT VALUE OF BENEäT 0RESENT VALUE OF LIABILITIES OBLIGATIONS AND PENSION CHARGES AND CREDITS UNDER )!3 %MPLOYEE "ENEäTS ARE &AIR VALUE OF PLAN ASSETS DETAILED BELOW SHOWN AS WEIGHTED AVERAGES .ET DEäCIT SURPLUS 3URPLUS RESTRICTION .ET DEäCIT AFTER SURPLUS 3OUTHERN 4HE 3OUTHERN 4HE !FRICA !MERICAS %UROPE !FRICA !MERICAS %UROPE RESTRICTION $EäNED BENEäT PENSION PLANS !VERAGE DISCOUNT RATE FOR PLAN !CTUARIAL GAINLOSS ON PLAN LIABILITIES ASSETS !VERAGE RATE OF INåATION !CTUARIAL LOSS GAIN ON PLAN LIABILITIES !VERAGE RATE OF INCREASE IN SALARIES !VERAGE RATE OF INCREASE OF 0OST RETIREMENT MEDICAL PLANS PENSIONS IN PAYMENT 0RESENT VALUE OF LIABILITIES !VERAGE LONG TERM RATE OF &AIR VALUE OF PLAN ASSETS RETURN ON PLAN ASSETS .ET DEäCIT 0OST RETIREMENT MEDICAL PLANS !VERAGE DISCOUNT RATE FOR PLAN LIABILITIES NA NA !CTUARIAL GAIN ON PLAN ASSETS Ð ÐÐ !VERAGE RATE OF INåATION NA NA !CTUARIAL LOSS GAIN ON PLAN LIABILITIES %XPECTED AVERAGE INCREASE IN HEALTHCARE COSTS NA NA .ET EXPERIENCE GAINS ON PENSION PLAN ASSETS WERE MILLION LOSS OF MILLION GAINS OF MILLION GAINS OF MILLION 4HE LONG TERM EXPECTED RETURN ON PLAN ASSETS HAS BEEN SET WITH REFERENCE TO CURRENT MARKET YIELDS ON .ET EXPERIENCE LOSSES ON PENSION PLAN LIABILITIES WERE MILLION MILLION MILLION GOVERNMENT AND CORPORATE BONDS AND EXPECTED EQUITY BOND OUTPERFORMANCE IN THE RELEVANT JURISDICTIONS MILLION 4HE EXPECTED RETURN ON CASH ASSETS HAS BEEN SET WITH REFERENCE TO EXPECTED BANK BASE RATES 4HE OVERALL LONG TERM EXPECTED RATE OF RETURN FOR EACH CLASS IS WEIGHTED BY THE ASSET ALLOCATION TO THE CLASS AT THE .ET EXPERIENCE GAINS ON MEDICAL PLAN ASSETS WERE NIL MILLION LOSSES OF MILLION BALANCE SHEET DATE LOSSES OF MILLION .ET EXPERIENCE LOSSES ON MEDICAL PLAN LIABILITIES WERE MILLION MILLION MILLION GAINS OF MILLION -ORTALITY ASSUMPTIONS ARE DETERMINED BASED ON STANDARD MORTALITY TABLES WITH )NCLUDES ACTUARIAL GAINS OF MILLION DUE TO A CHANGE IN MODELLING METHODOLOGY ADJUSTMENTS AS APPROPRIATE TO REåECT EXPERIENCE OF CONDITIONS LOCALLY )N SOUTHERN !FRICA THE 0! TABLES THE 0! TABLES ARE USED 4HE MAIN SCHEMES IN #UMULATIVE NET ACTUARIAL LOSSES RECOGNISED IN THE #ONSOLIDATED STATEMENT OF %UROPE USE THE 3!03 AND 08! TABLES 08! TABLES 4HE MAIN SCHEMES COMPREHENSIVE INCOME ARE MILLION MILLION MILLION IN THE !MERICAS USE THE 26 !4 AND 50 TABLES 26 !4 MILLION MILLION AND 50 TABLES 4HE MORTALITY TABLES USED IMPLY THAT A MALE OR FEMALE AGED AT THE BALANCE SHEET DATE HAS THE FOLLOWING FUTURE LIFE EXPECTANCY 4HE MARKET VALUE OF ASSETS WAS USED TO DETERMINE THE FUNDING LEVEL OF THE PLANS 4HE MARKET VALUE OF THE ASSETS OF THE FUNDED PLANS WAS SUFäCIENT TO COVER -ALE &EMALE OF THE BENEäTS THAT HAD ACCRUED TO MEMBERS AFTER ALLOWING 9EARS FOR EXPECTED INCREASES IN FUTURE EARNINGS AND PENSIONS #OMPANIES WITHIN THE 3OUTHERN !FRICA 'ROUP ARE PAYING CONTRIBUTIONS AS REQUIRED IN ACCORDANCE WITH LOCAL ACTUARIAL ADVICE 4HE !MERICAS !S THE MAJORITY OF THE DEäNED BENEäT PENSION PLANS ARE CLOSED TO NEW MEMBERS IT %UROPE IS EXPECTED THAT CONTRIBUTIONS IN LOCAL CURRENCY WILL INCREASE AS THE MEMBERS AGE
128 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 27. Retirement benefits CONTINUED 4HE MARKET VALUE OF THE PENSION ASSETS IN DEäNED BENEäT PENSION PLANS AND LONG TERM EXPECTED RATE OF RETURN AS AT $ECEMBER AND $ECEMBER ARE AS FOLLOWS
3OUTHERN !FRICA 4HE !MERICAS %UROPE 4OTAL 2ATE OF &AIR VALUE 2ATE OF &AIR VALUE 2ATE OF &AIR VALUE &AIR VALUE RETURN 53 MILLION RETURN 53 MILLION RETURN 53 MILLION 53 MILLION !T $ECEMBER %QUITY "ONDS /THER &AIR VALUE OF PENSION PLAN ASSETS 0RESENT VALUE OF UNFUNDED OBLIGATIONS Ð 0RESENT VALUE OF FUNDED OBLIGATIONS 0RESENT VALUE OF PENSION PLAN LIABILITIES .ET SURPLUSDEäCIT IN PENSION PLANS 3URPLUS RESTRICTION RELATED TO PENSION PLANS Ð 2ECOGNISED PENSION PLAN ASSETSLIABILITIES !MOUNTS IN THE BALANCE SHEET 0ENSION ASSETS Ð Ð 0ENSION LIABILITIES Ð
!T $ECEMBER %QUITY "ONDS /THER &AIR VALUE OF PENSION PLAN ASSETS 0RESENT VALUE OF UNFUNDED OBLIGATIONS Ð 0RESENT VALUE OF FUNDED OBLIGATIONS 0RESENT VALUE OF PENSION PLAN LIABILITIES .ET SURPLUSDEäCIT IN PENSION PLANS 3URPLUS RESTRICTION RELATED TO PENSION PLANS Ð Ð 2ECOGNISED PENSION PLAN ASSETSLIABILITIES !MOUNTS IN THE BALANCE SHEET Financial statements 0ENSION ASSETS Ð Ð 0ENSION LIABILITIES Ð
2ELATES TO AN ADDITIONAL LIABILITY REQUIRED IN ACCORDANCE WITH )&2)# )!3 Ð 4HE ,IMIT ON A $EäNED "ENEäT !SSET -INIMUM &UNDING 2EQUIREMENTS AND THEIR )NTERACTION
Anglo American plc Annual Report 2009 129 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
27. Retirement benefits CONTINUED 4HE CHANGES IN THE FAIR VALUE OF PLAN ASSETS ARE AS FOLLOWS -OVEMENT ANALYSIS 4HE CHANGES IN THE PRESENT VALUE OF DEäNED BENEäT OBLIGATIONS ARE AS FOLLOWS 0OST 0OST RETIRE RETIRE MENT MENT 0OST 0OST 0ENSION MEDICAL 4OTAL 0ENSION MEDICAL 4OTAL RETIRE RETIRE 53 MILLION PLANS PLANS PLANS PLANS PLANS PLANS MENT MENT 0ENSION MEDICAL 4OTAL 0ENSION MEDICAL 4OTAL !T *ANUARY 53 MILLION PLANS PLANS PLANS PLANS PLANS PLANS %XPECTED RETURN !T *ANUARY !CTUARIAL GAINSLOSSES Ð #URRENT SERVICE COSTS #ONTRIBUTIONS PAID BY EMPLOYER 0AST SERVICE COSTS AND EFFECTS OF #ONTRIBUTIONS PAID BY OTHER SETTLEMENTS AND CURTAILMENTS ÐÐÐ Ð MEMBERS )NTEREST COSTS "ENEäTS PAID !CTUARIAL LOSSES GAINS #URRENCY MOVEMENTS "ENEäTS PAID !T $ECEMBER #ONTRIBUTIONS PAID BY OTHER MEMBERS !SSUMED HEALTHCARE TREND RATES HAVE A SIGNIäCANT EFFECT ON THE AMOUNTS RECOGNISED 4RANSFER TO LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR IN THE INCOME STATEMENT ! CHANGE IN ASSUMED HEALTHCARE COST TREND RATES WOULD SALE Ð ÐÐÐHAVE THE FOLLOWING EFFECTS #URRENCY MOVEMENTS INCREASE DECREASE !T $ECEMBER 53 MILLION %FFECT ON THE SUM OF SERVICE COSTS AND INTEREST COSTS %FFECT ON DEäNED BENEäT OBLIGATIONS
4HE 'ROUP EXPECTS TO CONTRIBUTE APPROXIMATELY MILLION TO ITS DEäNED BENEäT PENSION PLANS AND MILLION TO ITS POST RETIREMENT MEDICAL PLANS IN
28. Called-up share capital and share-based payments #ALLED UP SHARE CAPITAL
.UMBER OF SHARES 53 MILLION .UMBER OF SHARES 53 MILLION .UMBER OF SHARES 53 MILLION !UTHORISED CUMULATIVE PREFERENCE SHARES OF a EACH Ð Ð Ð /RDINARY SHARES OF 53 CENTS EACH #ALLED UP ALLOTTED AND FULLY PAID CUMULATIVE PREFERENCE SHARES OF a EACH Ð Ð Ð
/RDINARY SHARES OF 53 CENTS EACH !T *ANUARY /THER Ð Ð !T $ECEMBER
130 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 28. Called-up share capital and share-based payments CONTINUED !T $ECEMBER THE )NVESTMENT #OMPANIES TOGETHER HELD $URING ORDINARY SHARES OF 53 CENTS EACH WERE ALLOTTED TO CERTAIN !NGLO !MERICAN PLC SHARES WITH A MARKET VALUE OF NON EXECUTIVE DIRECTORS BY SUBSCRIPTION OF THEIR AFTER TAX DIRECTORSÓ FEES MILLION MILLION WHICH REPRESENTED OF THE ORDINARY ORDINARY SHARES SHARES IN ISSUE EXCLUDING TREASURY SHARES 4HE )NVESTMENT #OMPANIES ARE NOT PERMITTED TO HOLD MORE THAN AN AGGREGATE OF OF THE ISSUED SHARE CAPITAL OF )N NO ORDINARY SHARES WERE PURCHASED BY THE #OMPANY AND HELD IN TREASURY !NGLO !MERICAN PLC AT ANY ONE TIME ORDINARY SHARES %XCLUDING SHARES HELD IN TREASURY BUT INCLUDING THE SHARES HELD BY THE 'ROUP IN OTHER STRUCTURES AS OUTLINED IN THE 4ENON !LTHOUGH THE 'ROUP HAS NO VOTING RIGHTS IN THE )NVESTMENT #OMPANIES AND CANNOT AND %MPLOYEE BENEäT TRUST SECTIONS BELOW THE NUMBER OF CALLED UP ALLOTTED AND APPOINT OR REMOVE TRUSTEES OF THE CHARITABLE TRUSTS THE )NVESTMENT #OMPANIES FULLY PAID ORDINARY SHARES AS AT $ECEMBER WAS MEET THE ACCOUNTING DEäNITION OF A SUBSIDIARY IN ACCORDANCE WITH )!3 MILLION MILLION #ONSOLIDATED AND 3EPARATE &INANCIAL 3TATEMENTS !S A RESULT THE )NVESTMENT #OMPANIES ARE CONSOLIDATED IN ACCORDANCE WITH THE DEäNITIONS OF )!3 AND THE !T $ECEMBER THE #OMPANY HELD ORDINARY SHARES OF PRINCIPLES SET OUT IN 3)# #ONSOLIDATION Ð 3PECIAL 0URPOSE %NTITIES 53 CENTS IN TREASURY ORDINARY SHARES %MPLOYEE BENEäT TRUST !T GENERAL MEETINGS EVERY MEMBER WHO IS PRESENT IN PERSON HAS ONE VOTE ON A 4HE PROVISION OF SHARES TO CERTAIN OF THE #OMPANYÓS SHARE OPTION AND SHARE SHOW OF HANDS AND ON A POLL EVERY MEMBER WHO IS PRESENT IN PERSON OR BY PROXY INCENTIVE SCHEMES IS FACILITATED BY AN EMPLOYEE BENEäT TRUST $URING HAS ONE VOTE FOR EVERY ORDINARY SHARE HELD SHARES SHARES WERE SOLD TO EMPLOYEES ON EXERCISE OF THEIR OPTIONS AND PROVISIONAL ALLOCATIONS WERE MADE TO OPTIONS ALREADY AWARDED )N THE EVENT OF WINDING UP THE HOLDERS OF THE CUMULATIVE PREFERENCE SHARES WILL BE 4HE COST OF SHARES PURCHASED BY THE TRUST IS PRESENTED AGAINST RETAINED EARNINGS ENTITLED TO THE REPAYMENT OF A SUM EQUAL TO THE NOMINAL CAPITAL PAID UP OR CREDITED 4HE EMPLOYEE BENEäT TRUST HAS WAIVED THE RIGHT TO RECEIVE DIVIDENDS ON THESE SHARES AS PAID UP ON THE CUMULATIVE PREFERENCE SHARES HELD BY THEM AND ANY ACCRUED DIVIDEND WHETHER SUCH DIVIDEND HAS BEEN EARNED OR DECLARED OR NOT CALCULATED UP 4HE MARKET VALUE OF THE SHARES SHARES HELD BY THE TO THE DATE OF THE WINDING UP TRUST AT $ECEMBER WAS MILLION MILLION
.O ORDINARY SHARES WERE ALLOTTED ON EXERCISE OF EMPLOYEE SHARE OPTION PLANS 4HE COSTS OF OPERATING THE TRUST ARE BORNE BY THE 'ROUP BUT ARE NOT MATERIAL NIL 3HARE BASED PAYMENTS 4ENON $URING THE YEAR ENDED $ECEMBER THE 'ROUP HAD SIX SHARE BASED PAYMENT 4ENON )NVESTMENT (OLDINGS 0TY ,IMITED 4ENON A WHOLLY OWNED SUBSIDIARY OF ARRANGEMENTS WITH EMPLOYEES THE DETAILS OF WHICH ARE DESCRIBED IN THE !NGLO !MERICAN 3OUTH !FRICA ,IMITED !!3! HAS ENTERED INTO AGREEMENTS WITH 2EMUNERATION REPORT !LL OF THE 'ROUPÓS SCHEMES ARE EQUITY SETTLED EITHER BY AWARD %POCH )NVESTMENT (OLDINGS ,IMITED %POCH %POCH 4WO )NVESTMENT (OLDINGS OF OPTIONS TO ACQUIRE ORDINARY SHARES %3/3 3!9% AND FORMER !!# %XECUTIVE 3HARE ,IMITED %POCH 4WO AND 4ARL )NVESTMENTS (OLDINGS ,IMITED 4ARL COLLECTIVELY THE )NCENTIVE 3CHEME OR AWARD OF ORDINARY SHARES "30 ,4)0 AND 3)0 4HE %3/3 AND )NVESTMENT #OMPANIES EACH OWNED BY INDEPENDENT CHARITABLE TRUSTS WHOSE FORMER !!# %XECUTIVE 3HARE )NCENTIVE 3CHEME ARE NOW CLOSED TO NEW PARTICIPANTS TRUSTEES ARE INDEPENDENT OF THE 'ROUP 5NDER THE TERMS OF THESE AGREEMENTS THE HAVING BEEN REPLACED WITH THE "30 )NVESTMENT #OMPANIES HAVE PURCHASED !NGLO !MERICAN PLC SHARES ON THE MARKET AND HAVE GRANTED TO 4ENON THE RIGHT TO NOMINATE A THIRD PARTY WHICH MAY INCLUDE 4HE TOTAL SHARE BASED PAYMENT CHARGE RELATING TO !NGLO !MERICAN PLC SHARES FOR THE !NGLO !MERICAN PLC BUT NOT ANY OF ITS SUBSIDIARIES TO TAKE TRANSFER OF THE !NGLO YEAR WAS MADE UP AS FOLLOWS Financial statements !MERICAN PLC SHARES EACH HAS PURCHASED ON THE MARKET 4ENON PAID THE )NVESTMENT #OMPANIES OF THE COST OF THE !NGLO !MERICAN PLC SHARES INCLUDING ASSOCIATED 53 MILLION COSTS FOR THIS RIGHT TO NOMINATE WHICH TOGETHER WITH SUBSCRIPTIONS BY 4ENON FOR "30 NON VOTING PARTICIPATING REDEEMABLE PREFERENCE SHARES IN THE )NVESTMENT ,4)0 #OMPANIES PROVIDED ALL THE FUNDING REQUIRED TO ACQUIRE THE !NGLO !MERICAN PLC /THER SCHEMES SHARES THROUGH THE MARKET 4HESE PAYMENTS BY 4ENON WERE SOURCED FROM THE CASH RESOURCES OF !!3! 4ENON IS ABLE TO EXERCISE ITS RIGHT OF NOMINATION AT ANY TIME UP TO $ECEMBER AGAINST PAYMENT OF AN AVERAGE AMOUNT OF PER SHARE TO %POCH PER SHARE TO %POCH 4WO AND PER SHARE TO 4ARL WHICH WILL BE EQUAL TO OF THE TOTAL COSTS RESPECTIVELY INCURRED BY %POCH %POCH 4WO AND 4ARL IN PURCHASING SHARES NOMINATED FOR TRANSFER TO THE THIRD PARTY 4HESE FUNDS WILL THEN BECOME AVAILABLE FOR REDEMPTION OF THE PREFERENCE SHARES ISSUED BY THE )NVESTMENT #OMPANIES 4HE AMOUNT PAYABLE BY THE THIRD PARTY ON RECEIPT OF THE !NGLO !MERICAN PLC SHARES WILL ACCRUE TO 4ENON AND IN ACCORDANCE WITH PARAGRAPH OF )!3 ANY RESULTING GAIN OR LOSS RECORDED BY 4ENON WILL NOT BE RECOGNISED IN THE INCOME STATEMENT OF !NGLO !MERICAN PLC
5NDER THE AGREEMENTS THE )NVESTMENT #OMPANIES WILL RECEIVE DIVIDENDS ON THE SHARES THEY HOLD AND HAVE AGREED TO WAIVE THE RIGHT TO VOTE THOSE SHARES 4HE PREFERENCE SHARES ISSUED TO THE CHARITABLE TRUSTS ARE ENTITLED TO A PARTICIPATING RIGHT OF UP TO OF THE PROäT AFTER TAX OF %POCH AND OF THE PROäT AFTER TAX OF %POCH 4WO AND 4ARL 4HE PREFERENCE SHARES ISSUED TO 4ENON WILL CARRY A äXED COUPON OF PLUS A PARTICIPATING RIGHT OF UP TO OF THE PROäT AFTER TAX OF %POCH AND OF THE PROäT AFTER TAX OF %POCH 4WO AND 4ARL !NY REMAINING DISTRIBUTABLE EARNINGS IN THE )NVESTMENT #OMPANIES AFTER THE ABOVE DIVIDENDS ARE THEN AVAILABLE FOR DISTRIBUTION AS ORDINARY DIVIDENDS TO THE CHARITABLE TRUSTS
4HE STRUCTURE EFFECTIVELY PROVIDES 4ENON WITH A BENEäCIAL INTEREST IN THE PRICE RISK ON THESE SHARES TOGETHER WITH A PARTICIPATION IN FUTURE DIVIDEND RECEIPTS 4HE )NVESTMENT #OMPANIES WILL RETAIN LEGAL TITLE TO THE SHARES UNTIL 4ENON EXERCISES ITS RIGHT TO NOMINATE A TRANSFEREE
Anglo American plc Annual Report 2009 131 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
28. Called-up share capital and share-based payments CONTINUED 4HE FAIR VALUES OF OPTIONS GRANTED UNDER THE %3/3 AND 3!9% SCHEMES BEING THE MORE MATERIAL OPTION SCHEMES WERE CALCULATED USING A "LACK 3CHOLES MODEL .O %3/3 AWARDS WERE GRANTED IN OR 4HE ASSUMPTIONS USED IN THESE CALCULATIONS FOR THE CURRENT AND PRIOR YEARS ARE SET OUT IN THE TABLE BELOW
!RRANGEMENT 3!9% 3!9% $ATE OF GRANT .UMBER OF INSTRUMENTS %XERCISE PRICE a 3HARE PRICE AT THE DATE OF GRANT a #ONTRACTUAL LIFE YEARS 6ESTING CONDITIONS %XPECTED VOLATILITY %XPECTED OPTION LIFE YEARS 2ISK FREE INTEREST RATE %XPECTED DEPARTURES PA PA %XPECTED OUTCOME OF MEETING PERFORMANCE CRITERIA AT DATE OF GRANT NA NA &AIR VALUE PER OPTION GRANTED WEIGHTED AVERAGE a
4HE FAIR VALUE OF ORDINARY SHARES AWARDED UNDER THE "30 ,4)0 AND ,4)0 Ð 2/#% BEING THE MORE MATERIAL SHARE SCHEMES WAS CALCULATED USING A "LACK 3CHOLES MODEL 4HE FAIR VALUE OF SHARES AWARDED UNDER THE ,4)0 Ð 432 SCHEME WAS CALCULATED USING A -ONTE #ARLO MODEL 4HE ASSUMPTIONS USED IN THESE CALCULATIONS FOR THE CURRENT AND PRIOR YEARS ARE SET OUT IN THE TABLE BELOW
!RRANGEMENT "30 ,4)0 ,4)0 Ð 2/#% ,4)0 Ð 432 "30 ,4)0 Ð 2/#% ,4)0 Ð 432 $ATE OF GRANT .UMBER OF INSTRUMENTS %XERCISE PRICE a ÐÐÐÐ ÐÐÐ 3HARE PRICE AT THE DATE OF GRANT a #ONTRACTUAL LIFE YEARS 6ESTING CONDITIONS %XPECTED VOLATILITY %XPECTED OPTION LIFE YEARS 2ISK FREE INTEREST RATE %XPECTED DEPARTURES PA PA PA PA PA PA PA %XPECTED OUTCOME OF MEETING PERFORMANCE CRITERIA AT DATE OF GRANT NA NA &AIR VALUE PER OPTION GRANTED WEIGHTED AVERAGE a
4HE NUMBER OF INSTRUMENTS USED IN THE FAIR VALUE MODELS DIFFERS FROM THE TOTAL NUMBER OF INSTRUMENTS AWARDED IN THE YEAR DUE TO AWARDS MADE SUBSEQUENT TO THE FAIR VALUE CALCULATIONS 4HE FAIR VALUE CALCULATED PER THE ASSUMPTIONS ABOVE HAS BEEN APPLIED TO THE TOTAL NUMBER OF AWARDS 4HE DIFFERENCE IN INCOME STATEMENT CHARGE IS NOT CONSIDERED SIGNIäCANT .UMBER OF YEARS OF CONTINUOUS EMPLOYMENT 4HREE YEARS OF CONTINUOUS EMPLOYMENT WITH ENHANCEMENT SHARES HAVING VARIABLE VESTING BASED ON NON MARKET BASED PERFORMANCE CONDITIONS 4HREE YEARS OF CONTINUOUS EMPLOYMENT 6ARIABLE VESTING DEPENDENT ON THREE YEARS OF CONTINUOUS EMPLOYMENT AND 'ROUP 2/#% TARGET BEING ACHIEVED 6ARIABLE VESTING DEPENDENT ON THREE YEARS OF CONTINUOUS EMPLOYMENT AND MARKET BASED PERFORMANCE CONDITIONS BEING ACHIEVED
4HE EXPECTED VOLATILITY IS BASED ON HISTORIC VOLATILITY OVER THE LAST äVE YEARS 4HE EXPECTED LIFE IS THE AVERAGE EXPECTED PERIOD TO EXERCISE 4HE RISK FREE INTEREST RATE IS THE YIELD ON ZERO COUPON 5+ GOVERNMENT BONDS WITH A TERM SIMILAR TO THE EXPECTED LIFE OF THE OPTION
4HE CHARGES ARISING IN RESPECT OF THE OTHER EMPLOYEE SHARE SCHEMES THAT THE 'ROUP OPERATED DURING THE YEAR ARE NOT CONSIDERED MATERIAL
132 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 28. Called-up share capital and share-based payments CONTINUED ! RECONCILIATION OF OPTION MOVEMENTS FOR THE MORE SIGNIäCANT SHARE BASED PAYMENT ARRANGEMENTS OVER THE YEAR TO $ECEMBER AND THE PRIOR YEAR IS SHOWN BELOW !LL OPTIONS OUTSTANDING AT $ECEMBER WITH AN EXERCISE DATE ON OR PRIOR TO $ECEMBER ARE DEEMED EXERCISABLE /PTIONS WERE EXERCISED REGULARLY DURING THE YEAR AND THE WEIGHTED AVERAGE SHARE PRICE FOR THE YEAR ENDED $ECEMBER WAS a a
%XECUTIVE 3HARE /PTION 3CHEME /PTIONS TO ACQUIRE ORDINARY SHARES OF 53 CENTS WERE OUTSTANDING UNDER THE TERMS OF THIS SCHEME AS FOLLOWS
!T $ECEMBER
/PTIONS /PTIONS /PTIONS /PTIONS /PTIONS /PTIONS /PTION PRICE OUTSTANDING GRANTED EXERCISED FORFEITED EXPIRED OUTSTANDING 9EAR OF GRANT $ATE EXERCISABLE PER SHARE a *AN IN YEAR IN YEAR IN YEAR IN YEAR $EC *UNE TO *UNE Ð Ð Ð Ð /CTOBER TO /CTOBER Ð Ð Ð Ð -ARCH TO -ARCH Ð Ð 3EPTEMBER TO 3EPTEMBER Ð Ð Ð Ð !PRIL TO !PRIL Ð Ð 3EPTEMBER TO 3EPTEMBER Ð Ð Ð Ð -ARCH TO -ARCH Ð Ð 3EPTEMBER TO 3EPTEMBER Ð Ð Ð Ð -ARCH TO -ARCH Ð Ð !UGUST TO !UGUST Ð Ð Ð -ARCH TO &EBRUARY Ð Ð !UGUST TO !UGUST Ð Ð Ð .OVEMBER TO .OVEMBER Ð Ð Ð Ð *ANUARY TO *ANUARY Ð Ð Ð Ð !UGUST TO *ULY Ð Ð Ð Ð !UGUST TO !UGUST Ð Ð Ð Ð Ð Ð
!T $ECEMBER
/PTIONS /PTIONS /PTIONS /PTIONS /PTIONS /PTIONS /PTION PRICE OUTSTANDING GRANTED EXERCISED FORFEITED EXPIRED OUTSTANDING 9EAR OF GRANT $ATE EXERCISABLE PER SHARE a *AN IN YEAR IN YEAR IN YEAR IN YEAR $EC Financial statements *UNE TO *UNE Ð Ð /CTOBER TO /CTOBER Ð Ð Ð -ARCH TO -ARCH Ð Ð 3EPTEMBER TO 3EPTEMBER Ð Ð !PRIL TO !PRIL Ð Ð 3EPTEMBER TO 3EPTEMBER Ð Ð Ð -ARCH TO -ARCH Ð Ð 3EPTEMBER TO 3EPTEMBER Ð Ð Ð -ARCH TO -ARCH Ð Ð !UGUST TO !UGUST Ð Ð -ARCH TO &EBRUARY Ð Ð !UGUST TO !UGUST Ð Ð .OVEMBER TO .OVEMBER Ð Ð Ð *ANUARY TO *ANUARY Ð Ð Ð Ð !UGUST TO *ULY Ð Ð Ð Ð !UGUST TO !UGUST Ð Ð Ð Ð Ð
3EE PAGE FOR FOOTNOTE
Anglo American plc Annual Report 2009 133 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
28. Called-up share capital and share-based payments CONTINUED 3!9% 3HARE /PTION 3CHEME /PTIONS TO ACQUIRE ORDINARY SHARES OF 53 CENTS WERE OUTSTANDING UNDER THE TERMS OF THIS SCHEME AS FOLLOWS
!T $ECEMBER
/PTIONS /PTIONS /PTIONS /PTIONS /PTIONS /PTIONS /PTION PRICE OUTSTANDING GRANTED EXERCISED FORFEITED EXPIRED OUTSTANDING 9EAR OF GRANT $ATE EXERCISABLE PER SHARE a *AN IN YEAR IN YEAR IN YEAR IN YEAR $EC *ULY TO $ECEMBER Ð Ð Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð Ð Ð
!T $ECEMBER
/PTIONS /PTIONS /PTIONS /PTIONS /PTIONS /PTIONS /PTION PRICE OUTSTANDING GRANTED EXERCISED FORFEITED EXPIRED OUTSTANDING 9EAR OF GRANT $ATE EXERCISABLE PER SHARE a *AN IN YEAR IN YEAR IN YEAR IN YEAR $EC *ULY TO $ECEMBER Ð Ð Ð Ð *ULY TO $ECEMBER Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð Ð Ð 3EPTEMBER TO &EBRUARY Ð ÐÐ 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð Ð 3EPTEMBER TO &EBRUARY Ð Ð Ð Ð
3EE PAGE FOR FOOTNOTE
134 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 28. Called-up share capital and share-based payments CONTINUED &ORMER !!# %XECUTIVE 3HARE )NCENTIVE 3CHEME
!T $ECEMBER !LL OPTIONS RELATING TO THE FORMER !!# %XECUTIVE 3HARE )NCENTIVE 3CHEME WERE EXERCISED OR EXPIRED DURING
!T $ECEMBER
/PTIONS /PTIONS /PTIONS /PTIONS /PTIONS /PTIONS OUTSTANDING GRANTED EXERCISED FORFEITED EXPIRED OUTSTANDING 9EAR OF GRANT $ATE EXERCISABLE *AN IN YEAR IN YEAR IN YEAR IN YEAR $EC *ANUARY TO $ECEMBER Ð Ð Ð *ANUARY TO *ANUARY Ð Ð Ð Ð Ð Ð
3EE FOLLOWING PAGE FOR FOOTNOTE
,ONG 4ERM )NCENTIVE 0LAN /RDINARY SHARES OF 53 CENTS MAY BE AWARDED FOR NO CONSIDERATION UNDER THE TERMS OF THIS SCHEME 4HE NUMBER OF SHARES OUTSTANDING IS SHOWN BELOW
!T $ECEMBER
3HARES 3HARES 3HARES 3HARES 3HARES 3HARES OUTSTANDING CONDITIONALLY VESTED FORFEITED EXPIRED OUTSTANDING 9EAR OF GRANT 6ESTING DATE *AN AWARDED IN YEAR IN YEAR IN YEAR IN YEAR $EC -ARCH Ð Ð Ð -ARCH Ð Ð -ARCH Ð Ð Ð !UGUST Ð Ð -ARCH Ð Ð Ð
!T $ECEMBER
3HARES 3HARES 3HARES 3HARES 3HARES 3HARES OUTSTANDING CONDITIONALLY VESTED FORFEITED EXPIRED OUTSTANDING 9EAR OF GRANT 6ESTING DATE *AN AWARDED IN YEAR IN YEAR IN YEAR IN YEAR $EC
!PRIL Ð Ð Ð Financial statements *UNE Ð Ð Ð Ð -ARCH Ð Ð -ARCH Ð Ð -ARCH Ð Ð Ð !UGUST Ð Ð Ð Ð Ð
3EE FOLLOWING PAGE FOR FOOTNOTES
Anglo American plc Annual Report 2009 135 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
28. Called-up share capital and share-based payments CONTINUED "ONUS 3HARE 0LAN /RDINARY SHARES OF 53 CENTS MAY BE AWARDED UNDER THE TERMS OF THIS SCHEME FOR NO CONSIDERATION 4HE NUMBER OF SHARES OUTSTANDING IS SHOWN BELOW
!T $ECEMBER
3HARES 3HARES 3HARES 3HARES 3HARES 3HARES OUTSTANDING CONDITIONALLY VESTED FORFEITED EXPIRED OUTSTANDING 9EAR OF GRANT 0ERFORMANCE PERIOD END DATE *AN AWARDED IN YEAR IN YEAR IN YEAR IN YEAR $EC $ECEMBER Ð Ð Ð Ð $ECEMBER Ð Ð $ECEMBER Ð Ð $ECEMBER Ð Ð $ECEMBER Ð Ð Ð
!T $ECEMBER
3HARES 3HARES 3HARES 3HARES 3HARES 3HARES OUTSTANDING CONDITIONALLY VESTED FORFEITED EXPIRED OUTSTANDING 9EAR OF GRANT 0ERFORMANCE PERIOD END DATE *AN AWARDED IN YEAR IN YEAR IN YEAR IN YEAR $EC $ECEMBER Ð Ð Ð Ð $ECEMBER Ð Ð $ECEMBER Ð Ð $ECEMBER Ð Ð $ECEMBER Ð Ð Ð
3HARE )NCENTIVE 0LAN /RDINARY SHARES OF 53 CENTS MAY BE AWARDED UNDER THE TERMS OF THIS SCHEME FOR NO CONSIDERATION 4HE NUMBER OF SHARES OUTSTANDING IS SHOWN BELOW
!WARDS OUTSTANDING AT !WARDS OUTSTANDING AT $EC $EC ,ATEST RELEASE DATE 3HARE )NCENTIVE 0LAN $ECEMBER
4HE EARLY EXERCISE OF SHARE OPTIONS IS PERMITTED AT THE DISCRETION OF THE #OMPANY UPON THE TERMINATION OF EMPLOYMENT ILL HEALTH OR DEATH 4HE ,4)0 AWARDS ARE CONTINGENT ON PRE ESTABLISHED PERFORMANCE CRITERIA BEING MET &URTHER INFORMATION IN RESPECT OF THIS SCHEME IS SHOWN IN THE 2EMUNERATION REPORT 4HE "30 WAS APPROVED BY SHAREHOLDERS IN AS A REPLACEMENT FOR THE %3/3 AND THE $EFERRED "ONUS 0LAN &URTHER INFORMATION IN RESPECT OF THE "30 INCLUDING PERFORMANCE CONDITIONS IS SHOWN IN THE 2EMUNERATION REPORT
29. Consolidated equity analysis !N ANALYSIS OF $EFERRED TAX AND 4AX ON ITEMS TRANSFERRED FROM EQUITY BY INDIVIDUAL ITEM PRESENTED IN THE #ONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME IS PRESENTED BELOW
53 MILLION $EFERRED TAX 2EVALUATION OF AVAILABLE FOR SALE INVESTMENTS #ASH åOW HEDGES !CTUARIAL NET LOSS ON POST RETIREMENT BENEäT SCHEMES .ET DEFERRED TAX RECOGNISED DIRECTLY IN EQUITY 4AX ON ITEMS TRANSFERRED FROM EQUITY 4RANSFERRED TO INCOME STATEMENT SALE OF AVAILABLE FOR SALE INVESTMENTS Ð 4RANSFERRED TO INCOME STATEMENT CASH åOW HEDGES 4RANSFERRED TO INITIAL CARRYING AMOUNT OF HEDGED ITEMS CASH åOW HEDGES Ð .ET TAX ON TOTAL TRANSFERRED FROM EQUITY
&AIR VALUE AND OTHER RESERVES COMPRISE
#ONVERTIBLE !VAILABLE #ASH åOW 4OTAL FAIR VALUE AND 53 MILLION DEBT RESERVE FOR SALE RESERVE HEDGE RESERVE /THER RESERVES OTHER RESERVES "ALANCE AT *ANUARY Ð 4OTAL COMPREHENSIVE INCOME Ð Ð /THER Ð Ð Ð "ALANCE AT *ANUARY Ð 4OTAL COMPREHENSIVE INCOME Ð Ð )SSUE OF CONVERTIBLE BOND Ð Ð Ð $ISPOSAL OF BUSINESSES Ð Ð Ð "ALANCE AT $ECEMBER
/THER RESERVES COMPRISE A LEGAL RESERVE OF MILLION MILLION A REVALUATION RESERVE OF MILLION MILLION AND A CAPITAL REDEMPTION RESERVE OF MILLION MILLION
136 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 30. Consolidated cash flow analysis A 2ECONCILIATION OF PROäT BEFORE TAX TO CASH INåOWS FROM OPERATIONS
53 MILLION 0ROäT BEFORE TAX $EPRECIATION AND AMORTISATION 3HARE BASED PAYMENT CHARGES .ET PROäT ON DISPOSALS /PERATING AND äNANCING REMEASUREMENTS .ON CASH ELEMENT OF OPERATING SPECIAL ITEMS .ET äNANCE COSTS BEFORE REMEASUREMENTS 3HARE OF NET INCOME FROM ASSOCIATES 0ROVISIONS $ECREASEINCREASE IN INVENTORIES )NCREASE DECREASE IN OPERATING RECEIVABLES $ECREASE INCREASE IN OPERATING PAYABLES $EFERRED STRIPPING /THER ADJUSTMENTS #ASH INåOWS FROM OPERATIONS
B 2ECONCILIATION TO THE BALANCE SHEET
#ASH AND CASH -EDIUM AND LONG TERM #URRENT äNANCIAL ASSET EQUIVALENTS 3HORT TERM BORROWINGS BORROWINGS INVESTMENTS 53 MILLION "ALANCE SHEET "ALANCE SHEET Ð DISPOSAL GROUPS Ð Ð Ð Ð Ð "ANK OVERDRAFTS Ð Ð Ð Ð "ANK OVERDRAFTS Ð DISPOSAL GROUPS Ð Ð Ð Ð Ð Ð Ð .ET DEBT CLASSIäCATIONS
Ò3HORT TERM BORROWINGSÓ ON THE BALANCE SHEET INCLUDE OVERDRAFTS WHICH ARE INCLUDED WITHIN CASH AND CASH EQUIVALENTS IN DETERMINING NET DEBT $ISPOSAL GROUP BALANCES ARE SHOWN WITHIN Ò!SSETS CLASSIäED AS HELD FOR SALEÓ AND Ò,IABILITIES DIRECTLY ASSOCIATED WITH ASSETS CLASSIäED AS HELD FOR SALEÓ ON THE BALANCE SHEET Financial statements C -OVEMENT IN NET DEBT
#ASH $EBT DUE $EBT DUE #URRENT .ET DEBT 4OTAL NET DEBT AND CASH WITHIN AFTER äNANCIAL ASSET EXCLUDING INCLUDING 53 MILLION EQUIVALENTS ONE YEAR ONE YEAR INVESTMENTS HEDGES (EDGES HEDGES "ALANCE AT *ANUARY Ð #ASH åOW !CQUISITION OF BUSINESSES Ð Ð Ð 2ECLASSIäCATIONS Ð Ð Ð Ð Ð -OVEMENT IN FAIR VALUE Ð Ð /THER NON CASH MOVEMENTS Ð Ð Ð Ð #URRENCY MOVEMENTS Ð "ALANCE AT *ANUARY #ASH åOW 5NWINDING OF DISCOUNT ON CONVERTIBLE BOND Ð Ð Ð Ð %QUITY COMPONENT OF CONVERTIBLE BOND Ð Ð Ð Ð 2ECLASSIäCATIONS Ð Ð Ð Ð Ð -OVEMENT IN FAIR VALUE Ð Ð Ð /THER NON CASH MOVEMENTS Ð Ð #URRENCY MOVEMENTS Ð "ALANCE AT $ECEMBER
4HE 'ROUP OPERATES IN CERTAIN COUNTRIES PRINCIPALLY 3OUTH !FRICA AND 6ENEZUELA WHERE THE EXISTENCE OF EXCHANGE CONTROLS MAY RESTRICT THE USE OF CERTAIN CASH BALANCES )N ADDITION THE USE OF CASH BALANCES OF MILLION MILLION ARE SUBJECT TO CERTAIN LEGAL RESTRICTIONS 4HESE RESTRICTIONS ARE NOT EXPECTED TO HAVE A MATERIAL EFFECT ON THE 'ROUPÓS ABILITY TO MEET ONGOING OBLIGATIONS $ERIVATIVE INSTRUMENTS THAT PROVIDE AN ECONOMIC HEDGE OF ASSETS AND LIABILITIES IN NET DEBT ARE INCLUDED ABOVE TO REåECT THE TRUE NET DEBT POSITION OF THE 'ROUP AT THE YEAR END 4HESE CONSIST OF NET CURRENT DERIVATIVE ASSETS OF MILLION MILLION NET LIABILITIES AND NET NON CURRENT DERIVATIVE LIABILITIES OF MILLION MILLION NET ASSETS WHICH ARE CLASSIäED WITHIN Ò/THER äNANCIAL ASSETS DERIVATIVES Ó AND Ò/THER äNANCIAL LIABILITIES DERIVATIVES Ó ON THE BALANCE SHEET 2ELATES TO AMOUNTS INVESTED IN UNLISTED PREFERENCE SHARES GUARANTEED BY .EDBANK ,IMITED AND .EDBANK 'ROUP ,IMITED PENDING COMPLETION OF THE DISPOSAL OF THE 'ROUPÓS INTEREST IN THE "OOYSENDAL JOINT VENTURE 4HIS AMOUNT WAS RECEIVED UPON COMPLETION OF THE TRANSACTION IN *UNE 4HE ISSUE OF THE CONVERTIBLE BOND HAD A NET IMPACT ON DEBT DUE AFTER ONE YEAR AT THE DATE OF ISSUE OF MILLION DUE TO THE CONVERSION FEATURE OF MILLION WHICH IS PRESENTED SEPARATELY IN EQUITY
Anglo American plc Annual Report 2009 137 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
31. EBITDA by segment
53 MILLION "Y SEGMENT 0LATINUM $IAMONDS #OPPER .ICKEL )RON /RE AND -ANGANESE -ETALLURGICAL #OAL 4HERMAL #OAL /THER -INING AND )NDUSTRIAL %XPLORATION #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS %")4$!
$UE TO THE PORTFOLIO AND MANAGEMENT STRUCTURE CHANGES ANNOUNCED IN /CTOBER THE SEGMENTS HAVE CHANGED FROM THOSE REPORTED AT $ECEMBER #OMPARATIVES HAVE BEEN RECLASSIäED TO ALIGN WITH CURRENT YEAR PRESENTATION
%")4$! IS STATED BEFORE SPECIAL ITEMS AND REMEASUREMENTS AND IS RECONCILED TO OPERATING PROäT INCLUDING ATTRIBUTABLE SHARE OF ASSOCIATES BEFORE SPECIAL ITEMS AND REMEASUREMENTS AND TO Ò4OTAL PROäT FROM OPERATIONS AND ASSOCIATESÓ AS FOLLOWS
53 MILLION 4OTAL PROäT FROM OPERATIONS AND ASSOCIATES /PERATING SPECIAL ITEMS AND REMEASUREMENTS INCLUDING ASSOCIATES .ET PROäT ON DISPOSALS INCLUDING ASSOCIATES !SSOCIATESÓ äNANCING SPECIAL ITEMS AND REMEASUREMENTS 3HARE OF ASSOCIATESÓ INTEREST TAX AND MINORITY INTERESTS /PERATING PROäT INCLUDING ASSOCIATES BEFORE SPECIAL ITEMS AND REMEASUREMENTS $EPRECIATION AND AMORTISATION SUBSIDIARIES AND JOINT VENTURES $EPRECIATION AND AMORTISATION ASSOCIATES %")4$!
%")4$! IS RECONCILED TO Ò#ASH INåOWS FROM OPERATIONSÓ AS FOLLOWS
53 MILLION %")4$! 3HARE OF OPERATING PROäT OF ASSOCIATES BEFORE SPECIAL ITEMS AND REMEASUREMENTS #ASH ELEMENT OF OPERATING SPECIAL ITEMS $EPRECIATION AND AMORTISATION IN ASSOCIATES 3HARE BASED PAYMENT CHARGES 0ROVISIONS $ECREASEINCREASE IN INVENTORIES )NCREASE DECREASE IN OPERATING RECEIVABLES $ECREASE INCREASE IN OPERATING PAYABLES $EFERRED STRIPPING /THER ADJUSTMENTS #ASH INåOWS FROM OPERATIONS
138 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 32. Acquisitions !CQUISITION OF SUBSIDIARIES 4HE 'ROUP MADE NO MATERIAL ACQUISITIONS OF SUBSIDIARIES IN THE YEAR ENDED $ECEMBER
)N THE YEAR ENDED $ECEMBER FAIR VALUES SHOWN PRINCIPALLY INCLUDE äNAL ADJUSTMENTS TO THE FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED IN THE !NGLO &ERROUS "RAZIL 3! ACQUISITION INCLUDING THE RECOGNITION OF PROVISIONS IN RESPECT OF CERTAIN POWER ARRANGEMENTS
4HE CARRYING VALUE AND FAIR VALUE OF THE NET ASSETS AT THE DATE OF ACQUISITION OF A CONTROLLING INTEREST AND RELATED NET CASH OUTåOWS ARE SHOWN BELOW
4OTAL 4OTAL 4OTAL 53 MILLION CARRYING VALUE FAIR VALUE FAIR VALUE .ET ASSETS ACQUIRED 4ANGIBLE ASSETS /THER NON CURRENT ASSETS Ð Ð #URRENT ASSETS #URRENT LIABILITIES .ON CURRENT LIABILITIES Ð -INORITY INTERESTS Ð Ð !DD 6ALUE ATTRIBUTABLE TO RESERVES AND RESOURCES ACQUIRED NET OF DEFERRED TAX &AIR VALUE OF NET ASSETS ACQUIRED 'OODWILL ARISING ON ACQUISITIONS 4OTAL COST OF ACQUISITIONS 3ATISäED BY .ET CASH ACQUIRED Ð .ET CASH PAID
2EPRESENTS THE 'ROUPÓS SHARE OF VALUE IMPLICIT IN THE TRANSACTION OF RESERVES AND RESOURCES CAPITALISED WITHIN TANGIBLE ASSETS 2EPRESENTS NET CASH PAID TO ACQUIRE A CONTROLLING INTEREST AND THEREFORE EXCLUDES MILLION PAID TO ACQUIRE MINORITY INTERESTS IN EXISTING SUBSIDIARIES MILLION )N THE YEAR ENDED $ECEMBER THIS PRINCIPALLY RELATED TO !NGLO &ERROUS "RAZIL 3! !NGLO &ERROUS "RAZIL 3! AND !NGLO 0LATINUM ,IMITED 7HEN TOTALLED WITH NET CASH PAID TO ACQUIRE CONTROL THE NET CASH PAID FOR ACQUISITION OF SUBSIDIARIES IN THE YEAR ENDED $ECEMBER IS MILLION MILLION
)N THE YEAR ENDED $ECEMBER THE 'ROUP PURCHASED SHARES IN !NGLO 0LATINUM ,IMITED FOR TOTAL CONSIDERATION OF MILLION 4HE CASH PAID IN THE YEAR ENDED $ECEMBER WAS MILLION !T $ECEMBER THE 'ROUPÓS SHAREHOLDING IN !NGLO 0LATINUM ,IMITED WAS 4HE INCREASE IN THE
'ROUPÓS SHAREHOLDING SINCE $ECEMBER IS DUE TO TREASURY SHARES PURCHASED BY !NGLO 0LATINUM ,IMITED IN THE YEAR Financial statements
/N !UGUST THE 'ROUP ACQUIRED A SHAREHOLDING IN !NGLO &ERROUS "RAZIL 3! WHICH HOLDS A INTEREST IN THE -INAS 2IO IRON ORE PROJECT -INAS 2IO AND A INTEREST IN !MAP AT A PRICE OF 2 PER SHARE !T THAT TIME THE 'ROUP COMMITTED TO EXTEND THE OFFER TO THE MINORITY SHAREHOLDERS OF !NGLO &ERROUS "RAZIL 3! 4HIS OFFER WAS FORMALLY MADE ON /CTOBER AND REMAINED OPEN THROUGH THE äRST QUARTER OF RESULTING IN A 'ROUP SHAREHOLDING IN !NGLO &ERROUS "RAZIL 3! AT $ECEMBER OF 4OTAL CASH PAID TO ACQUIRE A CONTROLLING INTEREST WAS BILLION AND A FURTHER BILLION INCLUDING CASH SETTLEMENT OF A RELATED DERIVATIVE INSTRUMENT BILLION WAS PAID TO ACQUIRE MINORITY INTERESTS )N THE YEAR ENDED $ECEMBER MILLION WAS PAID TO ACQUIRE REMAINING MINORITY INTERESTS 4HESE TRANSACTIONS FOLLOWED ON FROM THE ACQUISITION IN OF A INTEREST IN EACH OF -INAS 2IO AND ,,8 -INAS 2IO WHICH OWNS THE PORT OF !¢U !S A RESULT OF THESE TRANSACTIONS THE 'ROUPÓS EFFECTIVE SHAREHOLDING IN EACH OF THE OPERATING ENTITIES AT $ECEMBER WAS IN -INAS 2IO IN ,,8 -INAS 2IO AND IN !MAP IN -INAS 2IO IN ,,8 -INAS 2IO AND IN !MAP
Anglo American plc Annual Report 2009 139 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
32. Acquisitions CONTINUED $ISPOSALS OF SUBSIDIARIES AND BUSINESSES IN THE YEAR ENDED $ECEMBER !CQUISITION OF MATERIAL JOINT VENTURES 4HE 'ROUP MADE NO MATERIAL ACQUISITIONS OF JOINT VENTURES IN THE YEAR ENDED 4HE DISPOSALS OF ,EBOWA AND "OOYSENDAL WERE THE ONLY MATERIAL DISPOSALS OF A $ECEMBER ONE SUBSIDIARY OR A JOINT VENTURE IN THE YEAR 4HE ONLY MATERIAL DISPOSALS OF ASSOCIATES IN THE YEAR RELATED TO THE SALE OF THE 'ROUPÓS REMAINING INVESTMENTS IN 4ONGAAT (ULETT 4HE FAIR VALUE OF THE NET ASSETS ACQUIRED AND RELATED NET CASH OUTåOW FOR THE PRIOR AND (ULAMIN WHICH GENERATED A COMBINED NET CASH INåOW OF MILLION NET OF YEAR ARE SHOWN BELOW TRANSACTION COSTS 53 MILLION ,EBOWA AND "OOYSENDAL .ET ASSETS ACQUIRED $URING THE YEAR ENDED $ECEMBER THE 'ROUP DISPOSED OF A INTEREST IN 4ANGIBLE ASSETS THE "OOYSENDAL JOINT VENTURE AND A INTEREST IN ,EBOWA AND CERTAIN OTHER JOINT 6ALUE ATTRIBUTABLE TO RESERVES AND RESOURCES ACQUIRED VENTURE PROJECTS 4HE DISPOSAL OF "OOYSENDAL TO -VELA TOOK PLACE ON *UNE 4OTAL CONSIDERATION WAS MILLION EXCLUDING TRANSACTION AND DEAL FACILITATION /THER TANGIBLE ASSETS COSTS OF WHICH MILLION WAS RECEIVED IN ADVANCE IN THE PRIOR YEAR INVESTED #URRENT ASSETS IN UNLISTED PREFERENCE SHARES AND AN ESCROW ACCOUNT 5PON COMPLETION OF THE #URRENT LIABILITIES TRANSACTION THE PREFERENCE SHARES WERE SOLD WHILST MILLION REMAINS IN AN ESCROW .ON CURRENT LIABILITIES ACCOUNT PENDING COMPLETION OF DOCUMENTATION 4HE DISPOSAL OF ,EBOWA TO !NOORAQ &AIR VALUE OF NET ASSETS ACQUIRED AND TOTAL COST OF ACQUISITIONS WAS COMPLETED ON *UNE FOR TOTAL CONSIDERATION OF MILLION EXCLUDING 3ATISäED BY TRANSACTION AND DEAL FACILITATION COSTS 4HE FAIR VALUE OF THE CONSIDERATION WAS MILLION EXCLUDING TRANSACTION AND DEAL FACILITATION COSTS 4HE 'ROUP .ET CASH ACQUIRED COMMENCED EQUITY ACCOUNTING ITS REMAINING INTEREST IN ,EBOWA FROM *UNE $EFERRED CONSIDERATION !T $ECEMBER THE 'ROUP HELD A INTEREST IN ,EBOWA 4HESE .ET CASH PAID TRANSACTIONS WERE PART OF PREVIOUSLY ANNOUNCED BLACK ECONOMIC EMPOWERMENT DEALS
2ELATES TO THE ACQUISITION OF &OXLEIGH AND FAIR VALUE ADJUSTMENTS ON THE ACQUISITION OF A INTEREST IN 4HE NET ASSET POSITION AT THE DATES OF DISPOSAL TOGETHER WITH THE RESULTING PROäT ON -INAS 2IO WHICH TOOK PLACE IN $URING FURTHER CONSIDERATION OF MILLION WHICH IS CONTINGENT ON CERTAIN CRITERIA BEING MET WAS RECOGNISED IN RESPECT OF THE ACQUISITION OF THE INTEREST DISPOSAL AND RELATED NET CASH INåOW IS SHOWN BELOW IN -INAS 2IO 4HIS WAS REDUCED FROM THE MILLION RECOGNISED IN THE SIX MONTHS ENDED *UNE AS A RESULT OF A CHANGE IN THE ASSUMPTIONS WITH REGARDS TO PAYMENT AND PURCHASE OF AN ADDITIONAL INTEREST IN -INAS 2IO TOGETHER WITH AN ADJUSTMENT TO THE NET DEFERRED TAX LIABILITY RECOGNISED TO REåECT THE FUTURE 53 MILLION TAX BENEäT FROM CASH PAYMENTS MADE ON ACQUISITION 4HESE ADJUSTMENTS RESULTED IN AMENDMENTS TO THE .ET ASSETS DISPOSED Ò6ALUE ATTRIBUTABLE TO RESERVES AND RESOURCES ACQUIREDÓ AND DEFERRED TAX IN THE ACQUISITION BALANCE SHEET )N THE YEAR ENDED $ECEMBER THERE WAS NET CASH PAID OF MILLION MILLION FOR OTHER 4ANGIBLE ASSETS JOINT VENTURE ACQUISITIONS 4HIS RESULTED IN TOTAL NET CASH PAID FOR INVESTMENTS IN JOINT VENTURES IN THE YEAR #URRENT ASSETS ENDED $ECEMBER OF MILLION MILLION #URRENT LIABILITIES /N &EBRUARY -ETALLURGICAL #OAL COMPLETED THE ACQUISITION OF A .ON CURRENT LIABILITIES INTEREST IN THE &OXLEIGH JOINT VENTURE IN 1UEENSLAND !USTRALIA 4HE TOTAL COST OF 'ROUPÓS SHARE OF NET ASSETS IMMEDIATELY PRIOR TO DISPOSAL ACQUISITION WAS MILLION 4HE 'ROUP HAS PROPORTIONATELY CONSOLIDATED OF ,ESS 2ETAINED INVESTMENTS IN ASSOCIATES &OXLEIGH FROM &EBRUARY .ET ASSETS DISPOSED .ET GAIN ON DISPOSALS 33. Disposals of subsidiaries and businesses .ET SALE PROCEEDS 0ROCEEDS RECEIVED IN PRIOR YEAR 53 MILLION .ET ASSETS DISPOSED .ON CASH CONSIDERATION 4ANGIBLE ASSETS #OSTS ACCRUED /THER NON CURRENT ASSETS $EAL FACILITATION CHARGES #URRENT ASSETS .ET CASH AND CASH EQUIVALENTS DISPOSED #URRENT LIABILITIES .ET CASH INåOW FROM DISPOSALS OF ,EBOWA AND "OOYSENDAL .ON CURRENT LIABILITIES ! PORTION OF THE PROCEEDS WAS INVESTED IN UNLISTED PREFERENCE SHARES WHEN RECEIVED &OLLOWING COMPLETION .ET ASSETS OF THE TRANSACTION THESE WERE SOLD AND MILLION IS INCLUDED IN THE #ONSOLIDATED CASH åOW STATEMENT WITHIN Ò0ROCEEDS FROM SALE OF äNANCIAL ASSET INVESTMENTSÓ -INORITY INTERESTS 2EPRESENTS ORDINARY SHARES IN !NOORAQ AND PREFERENCE SHARES IN 0LATEAU 2ESOURCES 0ROPRIETARY ,IMITED 'ROUPÓS SHARE OF NET ASSETS IMMEDIATELY PRIOR TO DISPOSAL ,ESS 2ETAINED INVESTMENTS IN ASSOCIATES Ð $ISPOSALS OF BUSINESSES IN THE YEAR ENDED $ECEMBER .ET ASSETS DISPOSED )N THE YEAR ENDED $ECEMBER .AMAKWA 3ANDS WAS THE ONLY MATERIAL #UMULATIVE TRANSLATION DIFFERENCES RECYCLED FROM RESERVES Ð DISPOSAL OF A BUSINESS /N /CTOBER .AMAKWA 3ANDS WAS SOLD TO %XXARO .ET GAIN ON DISPOSALS 2ESOURCES ,IMITED FOR CONSIDERATION OF MILLION INCLUDING DEFERRED .ET SALE PROCEEDS CONSIDERATION /N .OVEMBER AS PART OF THE SAME TRANSACTION THE 'ROUP 0ROCEEDS RECEIVED IN PRIOR YEAR Ð COMPLETED THE SALE OF A INTEREST IN BOTH THE "LACK -OUNTAIN ZINC LEAD AND COPPER OPERATION AND THE 'AMSBERG ZINC PROJECT FOR CONSIDERATION OF MILLION .ON CASH CONSIDERATION Ð &OR FURTHER DETAILS OF THE DISPOSAL OF .AMAKWA 3ANDS REFER TO THE 'ROUPÓS äNANCIAL #OSTS ACCRUED STATEMENTS FOR THE YEAR ENDED $ECEMBER $EAL FACILITATION CHARGES Ð $EFERRED CONSIDERATION Ð .ET CASH AND CASH EQUIVALENTS DISPOSED 0ROCEEDS NOT YET RECEIVED Ð 2EALISED FOREIGN EXCHANGE Ð .ET CASH INåOW FROM DISPOSALS
)NCLUDES NET ASSETS OF MILLION NO LONGER CONSOLIDATED FOLLOWING LOSS OF CONTROL OF A SUBSIDIARY .ET CASH OF MILLION HAS BEEN RECEIVED IN THE YEAR ENDED $ECEMBER IN RESPECT OF DEFERRED CONSIDERATION FOR DISPOSALS IN 4HIS RESULTED IN A TOTAL NET CASH INåOW OF MILLION FROM DISPOSALS OF SUBSIDIARIES AND BUSINESSES IN THE YEAR ENDED $ECEMBER
140 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 34. Disposal groups and non-current assets held for sale III /THER 0LATINUM DISPOSAL GROUPS INCLUDING "OOYSENDAL AND ,EBOWA WHICH WERE PREVIOUSLY !NGLO !MERICAN 3UR CLASSIäED AS HELD FOR SALE AT $ECEMBER WERE DISPOSED OF IN *UNE !NGLO !MERICAN INHERITED A AGREEMENT WITH #ODELCO THE #HILEAN STATE MINING 2EFER TO NOTE FOR MORE DETAILS ON THE 0LATINUM DISPOSALS COMPANY WHEN IT ACQUIRED $ISPUTADA DE ,AS #ONDES SINCE RENAMED !NGLO !MERICAN 3UR IN 4HE AGREEMENT GRANTS #ODELCO THE RIGHT SUBJECT TO CERTAIN 4HE FOLLOWING ASSETS AND LIABILITIES RELATING TO DISPOSAL GROUPS WERE CLASSIäED AS HELD FOR CONDITIONS AND LIMITATIONS TO ACQUIRE UP TO A MINORITY INTEREST IN !NGLO SALE 4HE 'ROUP EXPECTS TO COMPLETE THE SALE OF THESE BUSINESSES WITHIN MONTHS OF !MERICAN 3UR THE WHOLLY OWNED 'ROUP COMPANY THAT OWNS THE ,OS "RONCES AND THE YEAR END %L 3OLDADO COPPER MINES AND THE #HAGRES SMELTER 4HESE CONDITIONS INCLUDE LIMITING THE WINDOW FOR EXERCISING THE RIGHT TO ONCE EVERY THREE YEARS IN THE MONTH OF *ANUARY UNTIL *ANUARY 4HE RIGHT WAS NOT EXERCISED IN 4HE CALCULATIONS OF 4ARMAC THE PRICE AT WHICH #ODELCO CAN EXERCISE ITS RIGHT ARE COMPLEX AND CONäDENTIAL BUT DISPOSAL 53 MILLION GROUPS 4OTAL DO INTER ALIA TAKE ACCOUNT OF COMPANY PROäTABILITY OVER A äVE YEAR PERIOD )NTANGIBLE ASSETS Ð !NGLO !MERICAN 3OUTH !FRICA ,IMITED 4ANGIBLE ASSETS !NGLO !MERICAN 3OUTH !FRICA ,IMITED !!3! A WHOLLY OWNED SUBSIDIARY OF THE $EFERRED TAX ASSETS Ð #OMPANY IS A DEFENDANT IN SEPARATE LAWSUITS EACH ONE ON BEHALF OF A FORMER /THER NON CURRENT ASSETS MINEWORKER OR HIS DEPENDENTS OR SURVIVORS WHO ALLEGEDLY CONTRACTED SILICOSIS 4OTAL NON CURRENT ASSETS WORKING FOR GOLD MINING COMPANIES IN WHICH !!3! WAS A SHAREHOLDER AND TO WHICH )NVENTORIES Ð !!3! PROVIDED VARIOUS TECHNICAL AND ADMINISTRATIVE SERVICES 4HE AGGREGATE 4RADE AND OTHER RECEIVABLES AMOUNT OF THE CLAIMS IS LESS THAN MILLION ALTHOUGH IF THESE CLAIMS ARE DETERMINED ADVERSELY TO !!3! THERE ARE A SUBSTANTIAL NUMBER OF ADDITIONAL FORMER #ASH AND CASH EQUIVALENTS MINEWORKERS WHO MAY SEEK TO BRING SIMILAR CLAIMS 4HE äRST TRIAL OF THESE CLAIMS IS 4OTAL CURRENT ASSETS EXPECTED TO BE IN BUT THE ARRANGEMENTS HAVE NOT YET BEEN AGREED 4OTAL ASSETS 4RADE AND OTHER PAYABLES 37. Operating leases 3HORT TERM BORROWINGS Ð !T $ECEMBER THE 'ROUP HAD THE FOLLOWING OUTSTANDING COMMITMENTS UNDER 3HORT TERM PROVISIONS Ð NON CANCELLABLE OPERATING LEASES 4OTAL CURRENT LIABILITIES 53 MILLION -EDIUM AND LONG TERM BORROWINGS Ð %XPIRY DATE 2ETIREMENT BENEäT OBLIGATIONS Ð 7ITHIN ONE YEAR $EFERRED TAX LIABILITIES /NE TO TWO YEARS 0ROVISIONS FOR LIABILITIES AND CHARGES 4WO TO äVE YEARS /THER NON CURRENT LIABILITIES Ð !FTER äVE YEARS 4OTAL NON CURRENT LIABILITIES 4OTAL LIABILITIES
.ET ASSETS Financial statements /PERATING LEASES RELATE PRINCIPALLY TO LAND AND BUILDINGS VEHICLES AND SHIPPING VESSELS
4ARMAC DISPOSAL GROUPS RELATE TO CERTAIN OF ITS %UROPEAN BUSINESSES 4ARMAC IS INCLUDED IN THE /THER -INING AND )NDUSTRIAL SEGMENT 38. Related party transactions 2ELATES TO 0LATINUM DISPOSAL GROUPS 4HE 'ROUP HAS A RELATED PARTY RELATIONSHIP WITH ITS SUBSIDIARIES JOINT VENTURES AND ASSOCIATES SEE NOTE 4HE NET CARRYING AMOUNT OF ASSETS AND ASSOCIATED LIABILITIES CLASSIäED AS HELD FOR SALE DURING WAS WRITTEN DOWN BY MILLION NIL 4HE #OMPANY AND ITS SUBSIDIARIES IN THE ORDINARY COURSE OF BUSINESS ENTER INTO VARIOUS SALES PURCHASE AND SERVICE TRANSACTIONS WITH JOINT VENTURES AND ASSOCIATES 35. Capital commitments AND OTHERS IN WHICH THE 'ROUP HAS A MATERIAL INTEREST 4HESE TRANSACTIONS ARE UNDER TERMS THAT ARE NO LESS FAVOURABLE THAN THOSE ARRANGED WITH THIRD PARTIES 4HESE
53 MILLION TRANSACTIONS ARE NOT CONSIDERED TO BE SIGNIäCANT #ONTRACTED BUT NOT PROVIDED $IVIDENDS RECEIVED FROM ASSOCIATES DURING THE YEAR TOTALLED MILLION MILLION AS DISCLOSED IN THE #ONSOLIDATED CASH åOW STATEMENT 36. Contingent liabilities and contingent assets I #ONTINGENT LIABILITIES !T $ECEMBER THE 'ROUP HAD PROVIDED LOANS TO JOINT VENTURES OF MILLION 4HE 'ROUP IS SUBJECT TO VARIOUS CLAIMS WHICH ARISE IN THE ORDINARY COURSE OF BUSINESS MILLION 4HESE LOANS ARE INCLUDED IN äNANCIAL ASSET INVESTMENTS !DDITIONALLY AND AS SET OUT IN THE DEMERGER AGREEMENT !NGLO !MERICAN AND -ONDI HAVE AGREED TO INDEMNIFY EACH OTHER SUBJECT TO CERTAIN LIMITATIONS AGAINST !T $ECEMBER THE DIRECTORS OF THE #OMPANY AND THEIR IMMEDIATE RELATIVES CERTAIN LIABILITIES (AVING TAKEN APPROPRIATE LEGAL ADVICE THE 'ROUP BELIEVES THAT THE CONTROLLED OF THE VOTING SHARES OF THE #OMPANY LIKELIHOOD OF A MATERIAL LIABILITY ARISING IS REMOTE !T $ECEMBER CONTINGENT LIABILITIES IN RESPECT OF THE 'ROUPÓS SUBSIDIARIES COMPRISE AGGREGATE AMOUNTS OF 2EMUNERATION AND BENEäTS RECEIVED BY DIRECTORS ARE DISCLOSED IN THE DIRECTORSÓ MILLION MILLION IN RESPECT OF LOANS AND PERFORMANCE GUARANTEES REMUNERATION REPORT 2EMUNERATION AND BENEäTS OF KEY MANAGEMENT PERSONNEL GIVEN TO BANKS AND OTHER THIRD PARTIES AND ARE PRIMARILY IN RESPECT OF ENVIRONMENTAL INCLUDING DIRECTORS ARE GIVEN IN NOTE RESTORATION AND DECOMMISSIONING OBLIGATIONS &OR INFORMATION RELATING TO CONTINGENT LIABILITIES IN RESPECT OF ASSOCIATES AND JOINT VENTURES REFER TO NOTES AND )NFORMATION RELATING TO PENSION FUND ARRANGEMENTS IS DISCLOSED IN NOTE RESPECTIVELY
.O CONTINGENT LIABILITIES WERE SECURED ON THE ASSETS OF THE 'ROUP AT $ECEMBER OR $ECEMBER
II #ONTINGENT ASSETS 4HERE WERE NO SIGNIäCANT CONTINGENT ASSETS IN THE 'ROUP AT $ECEMBER OR $ECEMBER
Anglo American plc Annual Report 2009 141 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
38. Related party transactions CONTINUED 0URSUANT TO THE REäNANCING OF $E "EERS AND TO SATISFY THE REQUIREMENTS OF THE 2ELATED PARTY TRANSACTIONS WITH $E "EERS LENDERS TO $E "EERS THE SHAREHOLDERS OF $E "EERS INCLUDING THE 'ROUP HAVE !T $ECEMBER THE 'ROUP HELD MILLION MILLION OF AS APPLICABLE AGREED TO NON CUMULATIVE REDEEMABLE PREFERENCE SHARES IN $" )NVESTMENTS THE HOLDING I DEFER THE RECEIPT OF DIVIDENDS OR CAPITAL ON THEIR ORDINARY SHA RES UNTIL CERTAIN COMPANY OF $E "EERS 3OCI¤T¤ !NONYME äNANCIAL TESTS Ò.ORMALISATIONÓ ARE MET AND THIS IS CURRENTLY ANTICIPATED TO BE DURING 3ET OUT BELOW ARE DETAILS OF CERTAIN TRANSACTIONS AND ARRANGEMENTS ENTERED INTO II DEFER THE RECEIPT OF DIVIDENDS AND MANDATORY REDEMPTION UNDER THE PREFERENCE BY THE 'ROUP WITH OR FOR THE BENEäT OF CERTAIN RELATED PARTIES OF THE #OMPANY SHARES IN $E "EERS 3! UNTIL .ORMALISATION 4HE TOTAL AMOUNT DEFERRED BY !NGLO FOR THE PURPOSES OF THE 5NITED +INGDOM ,ISTING !UTHORITY ,ISTING RULES BEING !MERICAN IS APPROXIMATELY MILLION 4HE DIVIDENDS OR INTEREST IN RESPECT #ENTRAL (OLDINGS ,IMITED AND CERTAIN OF ITS SUBSIDIARIES TOGETHER Ò#(,Ó AND OF SUCH DIVIDENDS WILL CONTINUE TO ACCRUE ON THE PREFERENCE SHARES UNTIL THEY $" )NVESTMENTS 3! AND $E "EERS 3! TOGETHER Ò$E "EERSÓ WHICH ARE RELATED ARE PAID AND THE PREFERENCE SHARES REDEEMED AND PARTIES FOR THE PURPOSES OF SUCH RULES BY VIRTUE OF BEING COMPANIES IN WHICH III ENTER INTO AN AGREEMENT WHICH EFFECTIVELY FORMALISES IN FAVOUR OF THE LENDERS -R .& /PPENHEIMER A DIRECTOR OF THE #OMPANY HAS A RELEVANT INTEREST FOR THE TO $E "EERS THE DEFERRAL OF THE RIGHTS TO DIVIDENDS OR OTHER DISTRIBUTIONS IN PURPOSES OF SUCH RULES RESPECT OF THEIR RESPECTIVE ORDINARY SHARES AND AS APPLICABLE PREFERENCE SHARES AND PAYMENTS UNDER THE SHAREHOLDER LOANS UNTIL .ORMALISATION AND )T WAS AGREED THAT THE DIVIDENDS DECLARED BY $E "EERS TO THE 'ROUP AND THE OTHER THE SUBORDINATION THEREOF SHAREHOLDERS IN $E "EERS INCLUDING #(, WOULD BE EXCHANGED FOR LOAN OBLIGATIONS 4HE TOTAL AMOUNT OF DIVIDENDS EXCHANGED AMOUNTED TO MILLION IN THE YEAR !S PART OF THE PROCESS OF FACILITATING THE AGREED EQUITY SUBSCRIPTION BY ALL THE ENDED $ECEMBER 4HIS TOTAL HAS INCREASED DURING BY MILLION SHAREHOLDERS OF $E "EERS A TEMPORARY RE RANKING OF DISTRIBUTION RIGHTS WAS AGREED 4HE LOANS ARE SUBORDINATED AND ARE INTEREST FREE FOR TWO YEARS AT WHICH POINT THEY WHICH WILL RESULT FOLLOWING .ORMALISATION IN A MILLION DISTRIBUTION TO THE BECOME INTEREST BEARING IN LINE WITH MARKET RATES AT THE DATES OF THE INITIAL SHAREHOLDERS OF $E "EERS INCLUDING THE 'ROUP AND #(, PRO RATA TO THEIR INDIVIDUAL REINVESTMENT EQUITY SUBSCRIPTIONS AS REFERRED TO ABOVE WHICH WILL BE PAID IN PRIORITY TO EXISTING PREFERENCES ON DISTRIBUTIONS UNDER THE TERMS OF THE PREFERENCE SHARES IN $E "EERS )N !PRIL THE SHAREHOLDERS OF $E "EERS PROVIDED AN ADDITIONAL LOAN TO $E "EERS 4HE NET EFFECT OF THIS RE PRIORITISATION ON !NGLO !MERICAN IN THE EVENT OF THERE PROPORTIONATE TO THEIR SHAREHOLDINGS TOTALLING MILLION !NGLO !MERICAN HOLDS BEING INSUFäCIENT CASH TO PAY ALL DIVIDENDS THEN DUE IS A DEFERRAL OF APPROXIMATELY A INTEREST AND THEREFORE PROVIDED A LOAN OF MILLION 4HE LOAN IS INTEREST MILLION OF DIVIDENDS WHICH WILL CONTINUE TO ACCRUE INTEREST UNTIL PAID FREE FOR TWO YEARS AT WHICH POINT IT REVERTS TO A RATE OF INTEREST EQUAL TO ,)"/2 PLUS BASIS POINTS UNTIL !PRIL AND THEN PROVIDED ALL INTEREST PAYMENTS ARE UP TO DATE REDUCES TO ,)"/2 PLUS BASIS POINTS )N THE EVENT OF A RIGHTS ISSUE OR OTHER SHARE ISSUE BY $E "EERS THE 'ROUP WOULD HAVE THE OPTION TO APPLY AMOUNTS OUTSTANDING UNDER THE LOAN IN SUBSCRIBING FOR ORDINARY SHARES IN $E "EERS AT THE ISSUE PRICE APPLICABLE TO THE RELEVANT SHARE ISSUE WHICH WILL BE DETERMINED AT THE TIME OF THE RELEVANT ISSUE 4HE LOAN IS SUBORDINATED IN FAVOUR OF THIRD PARTY BANKS LENDERS AND PREFERENCE SHAREHOLDERS INCLUDING !NGLO !MERICAN AND IS REPAYABLE AFTER TEN YEARS 4HESE LOANS ARE INCLUDED IN äNANCIAL ASSET INVESTMENTS
)N &EBRUARY THE SHAREHOLDERS OF $E "EERS AGREED AS PART OF THE $E "EERS GROUPÓS REäNANCING INCLUDING THIRD PARTY DEBT REäNANCING THAT ADDITIONAL EQUITY WAS REQUIRED BY $E "EERS 4HE SHAREHOLDERS OF $E "EERS INCLUDING #(, HAVE ACCORDINGLY ALL AGREED TO SUBSCRIBE IN PROPORTION TO THEIR CURRENT SHAREHOLDING FOR BILLION OF ADDITIONAL EQUITY IN $E "EERS SUBJECT TO THE FULäLMENT OF CERTAIN CONDITIONS 4HE 'ROUPÓS SHARE OF SUCH ADDITIONAL EQUITY IN LINE WITH ITS EQUITY HOLDING IN $E "EERS AMOUNTS TO MILLION #(,ÓS SHARE OF SUCH ADDITIONAL EQUITY IN LINE WITH ITS EQUITY HOLDING IN $E "EERS AMOUNTS TO MILLION 4HE SHAREHOLDERS HAVE FURTHER AGREED THAT THE SUBSCRIPTION DOES NOT CONSTITUTE A SUBSCRIPTION EVENT UNDER THE ARRANGEMENTS
142 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 39. Group companies 4HE PRINCIPAL SUBSIDIARIES JOINT VENTURES ASSOCIATES AND PROPORTIONATELY CONSOLIDATED JOINT ARRANGEMENTS OF THE 'ROUP AT $ECEMBER AND THE 'ROUP PERCENTAGE OF EQUITY CAPITAL JOINT ARRANGEMENTS AND JOINT VENTURE INTERESTS ARE SET OUT BELOW !LL THESE INTERESTS ARE HELD INDIRECTLY BY THE PARENT COMPANY AND ARE CONSOLIDATED WITHIN THESE äNANCIAL STATEMENTS !S PERMITTED BY SECTION OF THE #OMPANIES !CT THE 'ROUP HAS RESTRICTED THE INFORMATION PROVIDED TO ITS PRINCIPAL SUBSIDIARIES IN ORDER TO AVOID A STATEMENT OF EXCESSIVE LENGTH
$UE TO THE PORTFOLIO AND MANAGEMENT STRUCTURE CHANGES ANNOUNCED IN /CTOBER THE SEGMENTS HAVE CHANGED FROM THOSE REPORTED AT $ECEMBER #OMPARATIVES HAVE BEEN RECLASSIäED TO ALIGN WITH CURRENT YEAR PRESENTATION
0ERCENTAGE OF EQUITY OWNED 3UBSIDIARY UNDERTAKINGS #OUNTRY OF INCORPORATION "USINESS 0LATINUM !NGLO 0LATINUM ,IMITED 3OUTH !FRICA 0LATINUM
#OPPER !NGLO !MERICAN 3UR 3! #HILE #OPPER !NGLO !MERICAN .ORTE 3! #HILE #OPPER -INERA 1UELLAVECO 3! 0ERU #OPPER PROJECT
.ICKEL !NGLO !MERICAN "RASIL ,IMITADA "ARRO !LTO "RAZIL .ICKEL PROJECT !NGLO !MERICAN "RASIL ,IMITADA #ODEMIN "RAZIL .ICKEL -INERA ,OMA DE .¨QUEL #! 6ENEZUELA .ICKEL
)RON /RE AND -ANGANESE +UMBA )RON /RE ,IMITED 3OUTH !FRICA )RON ORE !NGLO &ERROUS "RAZIL 3! "RAZIL )RON ORE !NGLO &ERROUS -INAS 2IO -INERA¢O 3! "RAZIL )RON ORE PROJECT !NGLO &ERROUS !MAP -INERA¢O ,IMITADA "RAZIL )RON ORE SYSTEM
-ETALLURGICAL #OAL !NGLO #OAL (OLDINGS !USTRALIA ,IMITED !USTRALIA #OAL Financial statements 4HERMAL #OAL !NGLO #OAL 3OUTH !FRICA #OAL
/THER -INING AND )NDUSTRIAL "LACK -OUNTAIN -INING 0TY ,IMITED 3OUTH !FRICA :INC LEAD AND COPPER 'AMSBERG :INC 3OUTH !FRICA :INC PROJECT !MBASE %XPLORATION .AMIBIA 0ROPRIETARY ,IMITED 3KORPION .AMIBIA :INC !NGLO !MERICAN "RASIL ,IMITADA #ATALO "RAZIL .IOBIUM ,ISHEEN )RELAND :INC AND LEAD #OPEBRS ,IMITADA "RAZIL &ERTILISERS AND ACID 3TEEL ENGINEERING WORKS AND 3CAW -ETALS-OLY #OP!LTA3TEEL 3OUTH !FRICA#HILE#ANADA GRINDING MEDIA 0EACE 2IVER #OAL 0ARTNERSHIP #ANADA #OAL 4ARMAC 'ROUP ,IMITED 5+ #ONSTRUCTION MATERIALS 4ARMAC &RANCE 3! &RANCE #ONSTRUCTION MATERIALS ,AUSITZER 'RAUWACKE 'MB( 'ERMANY #ONSTRUCTION MATERIALS 7+3- 3! 0OLAND #ONSTRUCTION MATERIALS 4ARMAC #: AS #ZECH 2EPUBLIC #ONSTRUCTION MATERIALS 4ARMAC 32, 2OMANIA #ONSTRUCTION MATERIALS +OCA "ETON !GREGA -INING AND #ONSTRUCTION )NDUSTRY AND 4RADING #OMPANY ,IMITED 4URKEY #ONSTRUCTION MATERIALS 5NITED -ARINE (OLDINGS ,IMITED 5+ #ONSTRUCTION MATERIALS
4HE PROPORTION OF VOTING RIGHTS OF SUBSIDIARIES HELD BY THE 'ROUP IS THE SAME AS THE PROPORTION OF EQUITY OWNED UNLESS STATED ! DIVISION OF !NGLO /PERATIONS ,IMITED A WHOLLY OWNED SUBSIDIARY 0REVIOUSLY "LACK -OUNTAIN AND 'AMSBERG :INC WERE DIVISIONS OF !NGLO /PERATIONS ,IMITED A WHOLLY OWNED SUBSIDIARY /N .OVEMBER OF EACH OF "LACK -OUNTAIN -INING 0TY ,IMITED AND 'AMSBERG :INC WERE SOLD 'AMSBERG :INC IS A DIVISION OF "LACK -OUNTAIN -INING 0TY ,IMITED 4HE 'ROUPÓS INTEREST IN THE ,ISHEEN OPERATIONS IS HELD THROUGH !NGLO !MERICAN ,ISHEEN -INING ,IMITED +ILLORAN ,ISHEEN -INING ,IMITED AND ,ISHEEN -ILLING ,IMITED 4HE 'ROUP OWNS OF THE EQUITY OF EACH OF THESE COMPANIES
Anglo American plc Annual Report 2009 143 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
39. Group companies CONTINUED
0ERCENTAGE OF EQUITY OWNED *OINT VENTURES #OUNTRY OF INCORPORATION "USINESS #OMPA¬¨A -INERA $O¬A )N¤S DE #OLLAHUASI 3#- #HILE #OPPER ,,8 -INAS 2IO ,OG¨STICA 3! "RAZIL 0ORT !) &UTTAIN 4ARMAC 1UARRY 0RODUCTS ,IMITED $UBAI #ONSTRUCTION MATERIALS -IDLAND 1UARRY 0RODUCTS ,IMITED 5+ #ONSTRUCTION MATERIALS
0ERCENTAGE OF EQUITY OWNED !SSOCIATES #OUNTRY OF INCORPORATION "USINESS $" )NVESTMENTS 3! ,UXEMBOURG $IAMONDS 3AMANCOR (OLDINGS 0TY ,IMITED 3OUTH !FRICA -ANGANESE 'ROOTE %YLANDT -INING #OMPANY 0TY ,IMITED '%-#/ !USTRALIA -ANGANESE 4ASMANIAN %LECTRO -ETALLURGICAL #OMPANY 0TY ,IMITED 4%-#/ !USTRALIA -ANGANESE 1UEENSLAND #OAL -INE -ANAGEMENT 0TY ,IMITED !USTRALIA #OAL #ERREJ®N :ONA .ORTE 3! #OLOMBIA #OAL #ARBONES DEL #ERREJ®N ,,# !NGUILLA #OAL #ARBONES DEL 'UASARE 3! 6ENEZUELA #OAL 3UGAR STARCH GLUCOSE AND 4ONGAAT (ULETT ,IMITED 3OUTH !FRICA PROPERTY DEVELOPMENT Ð (ULAMIN ,IMITED 3OUTH !FRICA !LUMINIUM Ð
0ERCENTAGE OWNED 0ROPORTIONATELY CONSOLIDATED JOINTLY CONTROLLED OPERATIONS ,OCATION "USINESS $RAYTON !USTRALIA #OAL -ORANBAH .ORTH !USTRALIA #OAL 'ERMAN #REEK !USTRALIA #OAL &OXLEIGH !USTRALIA #OAL $AWSON !USTRALIA #OAL
!LL EQUITY INTERESTS SHOWN ARE ORDINARY SHARES $URING THE 'ROUP CEASED ACCOUNTING FOR -IDLAND 1UARRY 0RODUCTS ,IMITED AS A SUBSIDIARY AND BEGAN ACCOUNTING FOR IT AS A JOINT VENTURE AS IT WAS CONSIDERED TO BE JOINTLY CONTROLLED 4HESE ENTITIES HAVE A *UNE YEAR END &ORMERLY 4HE 4ONGAAT (ULETT 'ROUP ,IMITED )N !UGUST THE 'ROUP SOLD ITS REMAINING INVESTMENT IN 4ONGAAT (ULETT ,IMITED 5NBUNDLED FROM 4ONGAAT (ULETT IN *UNE )N *ULY THE 'ROUP SOLD ITS REMAINING INVESTMENT IN (ULAMIN ,IMITED 4HE WHOLLY OWNED SUBSIDIARY !NGLO #OAL (OLDINGS !USTRALIA ,IMITED HOLDS THE PROPORTIONATELY CONSOLIDATED JOINTLY CONTROLLED OPERATIONS
40. Events occurring after end of year )N &EBRUARY THE 'ROUP ANNOUNCED ITS COMMITMENT TO TAKE UP ITS FULL ALLOCATION OF SHARES UNDER THE RIGHTS OFFER ANNOUNCED BY !NGLO 0LATINUM !NGLO 0LATINUM EXPECTS TO RAISE APPROXIMATELY BILLION THROUGH THE RIGHTS OFFER OF WHICH THE 'ROUPÓS SHARE OF IS APPROXIMATELY BILLION 4HE 'ROUP HAS ALSO AGREED TO UNDERWRITE THE MINORITY PORTION OF THE RIGHTS OFFER
3UBSEQUENT TO $ECEMBER $E "EERS HAS ANNOUNCED A BILLION RIGHTS ISSUE 4HE 'ROUP HAS ACCORDINGLY AGREED TO SUBSCRIBE FOR ADDITIONAL EQUITY IN PROPORTION TO ITS CURRENT SHAREHOLDING AND WILL THEREFORE CONTRIBUTE MILLION 2EFER TO NOTE FOR FURTHER DETAILS
$URING THE äRST QUARTER OF !NGLO !MERICAN AGREED THE SALES OF 4ARMACÓS AGGREGATES BUSINESSES IN &RANCE 'ERMANY 0OLAND AND THE #ZECH 2EPUBLIC AND ITS 0OLISH CONCRETE PRODUCTS BUSINESS WITH EXPECTED TOTAL PROCEEDS OF APPROXIMATELY MILLION
7ITH THE EXCEPTION OF THE ABOVE THERE HAVE BEEN NO MATERIAL REPORTABLE EVENTS SINCE $ECEMBER
144 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 41. Financial statements of the parent company A "ALANCE SHEET OF THE #OMPANY !NGLO !MERICAN PLC AS AT $ECEMBER
53 MILLION .OTE &IXED ASSETS &IXED ASSET INVESTMENTS C #URRENT ASSETS !MOUNTS DUE FROM SUBSIDIARIES 0REPAYMENTS AND OTHER DEBTORS #ASH AT BANK AND IN HAND #REDITORS DUE WITHIN ONE YEAR #ASH HELD ON BEHALF OF SUBSIDIARIES !MOUNTS OWED TO SUBSIDIARIES /THER CREDITORS .ET CURRENT ASSETS 4OTAL ASSETS LESS CURRENT LIABILITIES ,IABILITIES DUE AFTER MORE THAN ONE YEAR #ONVERTIBLE BOND Ð .ET ASSETS
#APITAL AND RESERVES #ALLED UP SHARE CAPITAL B 3HARE PREMIUM ACCOUNT B #APITAL REDEMPTION RESERVE B /THER RESERVES B 3HARE BASED PAYMENT RESERVE B #ONVERTIBLE DEBT RESERVE B Ð 0ROäT AND LOSS ACCOUNT B 4OTAL SHAREHOLDERSÓ FUNDS EQUITY
4HE äNANCIAL STATEMENTS OF !NGLO !MERICAN PLC REGISTERED NUMBER WERE APPROVED BY THE "OARD OF DIRECTORS ON &EBRUARY Financial statements
Cynthia Carroll René Médori #HIEF EXECUTIVE &INANCE DIRECTOR
Anglo American plc Annual Report 2009 145 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Financial statements Notes to the financial statements continued
41. Financial statements of the parent company CONTINUED B 2ECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERSÓ FUNDS
#ALLED UP 3HARE #APITAL 3HARE BASED #ONVERTIBLE 0ROäT SHARE PREMIUM REDEMPTION /THER PAYMENT DEBT AND LOSS 53 MILLION CAPITAL ACCOUNT RESERVE RESERVES RESERVE RESERVE ACCOUNT 4OTAL "ALANCE AT *ANUARY Ð 0ROäT FOR THE äNANCIAL YEAR Ð Ð Ð Ð Ð Ð )SSUE OF TREASURY SHARES UNDER EMPLOYEE SHARE SCHEMES Ð Ð Ð Ð Ð Ð 3HARE BASED PAYMENTS ÐÐÐÐÐÐ #APITAL CONTRIBUTION TO GROUP UNDERTAKINGS Ð Ð Ð Ð Ð Ð 4RANSFER BETWEEN SHARE BASED PAYMENT RESERVE AND PROäT AND LOSS ACCOUNT Ð Ð Ð Ð Ð Ð 3HARE BUYBACKS Ð Ð Ð Ð Ð Ð $IVIDENDS PAID Ð Ð Ð Ð Ð Ð "ALANCE AT *ANUARY Ð 0ROäT FOR THE äNANCIAL YEAR Ð Ð Ð Ð Ð Ð )SSUE OF TREASURY SHARES UNDER EMPLOYEE SHARE SCHEMES Ð Ð Ð Ð Ð Ð 3HARE BASED PAYMENTS Ð Ð Ð Ð Ð Ð #APITAL CONTRIBUTION TO GROUP UNDERTAKINGS Ð Ð Ð Ð Ð Ð 4RANSFER BETWEEN SHARE BASED PAYMENT RESERVE AND PROäT AND LOSS ACCOUNT Ð Ð Ð Ð Ð Ð )SSUE OF CONVERTIBLE BOND Ð Ð Ð Ð Ð Ð "ALANCE AT $ECEMBER
!T $ECEMBER OTHER RESERVES OF MILLION MILLION WERE NOT DISTRIBUTABLE UNDER THE #OMPANIES !CT !T $ECEMBER MILLION MILLION OF THE #OMPANY PROäT AND LOSS ACCOUNT OF MILLION MILLION WAS NOT DISTRIBUTABLE UNDER THE #OMPANIES !CT $IVIDENDS PAID RELATE ONLY TO SHAREHOLDERS ON THE 5NITED +INGDOM PRINCIPAL REGISTER EXCLUDING DIVIDENDS WAIVED BY 'REENWOOD .OMINEES ,IMITED AS NOMINEES FOR "UTTERäELD 4RUST 'UERNSEY ,IMITED THE TRUSTEE FOR THE !NGLO !MERICAN EMPLOYEE SHARE SCHEME $IVIDENDS PAID TO SHAREHOLDERS ON THE *OHANNESBURG BRANCH REGISTER ARE DISTRIBUTED BY A 3OUTH !FRICAN SUBSIDIARY IN ACCORDANCE WITH THE TERMS OF THE $IVIDEND !CCESS 3HARE 0ROVISIONS OF !NGLO !MERICAN PLCÓS !RTICLES OF !SSOCIATION
4HE AUDIT FEE IN RESPECT OF THE PARENT COMPANY WAS &EES PAYABLE TO $ELOITTE FOR NON AUDIT SERVICES TO THE #OMPANY ARE NOT REQUIRED TO BE DISCLOSED BECAUSE THEY ARE INCLUDED WITHIN THE CONSOLIDATED DISCLOSURE IN NOTE
C &IXED ASSET INVESTMENTS
)NVESTMENTS IN SUBSIDIARIES 53 MILLION #OST !T *ANUARY !DDITIONS Ð #APITAL CONTRIBUTIONS !T $ECEMBER 0ROVISIONS FOR IMPAIRMENT !T *ANUARY AND $ECEMBER .ET BOOK VALUE !T $ECEMBER
146 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 41. Financial statements of the parent company CONTINUED #ONVERTIBLE DEBT D !CCOUNTING POLICIES !NGLO !MERICAN PLC THE #OMPANY #ONVERTIBLE BONDS ARE REGARDED AS COMPOUND INSTRUMENTS CONSISTING OF A LIABILITY 4HE !NGLO !MERICAN PLC THE #OMPANY BALANCE SHEET AND RELATED NOTES HAVE BEEN AND AN EQUITY COMPONENT !T THE DATE OF ISSUE THE FAIR VALUE OF THE LIABILITY PREPARED IN ACCORDANCE WITH 5NITED +INGDOM 'ENERALLY !CCEPTED !CCOUNTING COMPONENT IS ESTIMATED USING THE PREVAILING MARKET INTEREST RATE FOR SIMILAR 0RINCIPLES 5+ '!!0 AND IN ACCORDANCE WITH 5+ COMPANY LAW 4HE äNANCIAL NON CONVERTIBLE DEBT AND IS RECORDED WITHIN BORROWINGS 4HE DIFFERENCE BETWEEN INFORMATION HAS BEEN PREPARED ON A HISTORICAL COST BASIS AS MODIäED BY THE THE PROCEEDS OF ISSUE OF THE CONVERTIBLE BOND AND THE FAIR VALUE ASSIGNED TO THE REVALUATION OF CERTAIN äNANCIAL INSTRUMENTS LIABILITY COMPONENT REPRESENTING THE EMBEDDED OPTION TO CONVERT THE LIABILITY INTO EQUITY OF THE #OMPANY IS INCLUDED IN EQUITY ! SUMMARY OF THE PRINCIPAL ACCOUNTING POLICIES IS SET OUT BELOW )SSUE COSTS ARE APPORTIONED BETWEEN THE LIABILITY AND EQUITY COMPONENTS OF THE 4HE PREPARATION OF äNANCIAL STATEMENTS IN ACCORDANCE WITH 5+ '!!0 REQUIRES THE CONVERTIBLE BONDS WHERE APPROPRIATE BASED ON THEIR RELATIVE CARRYING AMOUNTS AT USE OF ESTIMATES AND ASSUMPTIONS THAT AFFECT THE REPORTED AMOUNTS OF ASSETS AND THE DATE OF ISSUE 4HE PORTION RELATING TO THE EQUITY COMPONENT IS CHARGED DIRECTLY LIABILITIES AT THE DATE OF THE äNANCIAL STATEMENTS AND THE REPORTED AMOUNTS OF AGAINST EQUITY REVENUES AND EXPENSES DURING THE PERIOD !LTHOUGH THESE ESTIMATES ARE BASED ON MANAGEMENTÓS BEST KNOWLEDGE OF THE AMOUNT EVENT OR ACTIONS FOLLOWING 4HE INTEREST EXPENSE ON THE LIABILITY COMPONENT IS CALCULATED BY APPLYING THE IMPLEMENTATION OF THESE STANDARDS ACTUAL RESULTS MAY DIFFER FROM THOSE ESTIMATED EFFECTIVE INTEREST RATE FOR SIMILAR NON CONVERTIBLE DEBT TO THE LIABILITY COMPONENT OF THE INSTRUMENT 4HE DIFFERENCE BETWEEN THIS AMOUNT AND THE INTEREST PAID IS ADDED !S PERMITTED BY SECTION OF THE #OMPANIES !CT THE PROäT AND LOSS TO THE CARRYING AMOUNT OF THE LIABILITY ACCOUNT OF THE #OMPANY IS NOT PRESENTED AS PART OF THESE äNANCIAL STATEMENTS 4HE PROäT AFTER TAX FOR THE YEAR OF THE #OMPANY AMOUNTED TO MILLION MILLION
3IGNIäCANT ACCOUNTING POLICIES $EFERRED TAX $EFERRED TAX IS PROVIDED IN FULL ON ALL TIMING DIFFERENCES THAT RESULT IN AN OBLIGATION AT THE BALANCE SHEET DATE TO PAY MORE TAX OR A RIGHT TO PAY LESS TAX AT A FUTURE DATE SUBJECT TO THE RECOVERABILITY OF DEFERRED TAX ASSETS $EFERRED TAX ASSETS AND LIABILITIES ARE NOT DISCOUNTED
3HARE BASED PAYMENTS 4HE #OMPANY HAS APPLIED THE REQUIREMENTS OF &23 3HARE BASED 0AYMENT )N ACCORDANCE WITH THE TRANSITIONAL PROVISIONS &23 HAS BEEN APPLIED TO ALL GRANTS OF EQUITY INSTRUMENTS AFTER .OVEMBER THAT HAD NOT VESTED AS AT *ANUARY
4HE #OMPANY MAKES EQUITY SETTLED SHARE BASED PAYMENTS TO THE DIRECTORS WHICH ARE MEASURED AT FAIR VALUE AT THE DATE OF GRANT AND EXPENSED ON A STRAIGHT LINE BASIS OVER THE VESTING PERIOD BASED ON THE #OMPANYÓS ESTIMATE OF SHARES THAT WILL EVENTUALLY Financial statements VEST &OR THOSE SHARE SCHEMES WITH MARKET VESTING CONDITIONS THE FAIR VALUE IS DETERMINED USING THE -ONTE #ARLO METHOD AT THE GRANT DATE 4HE FAIR VALUE OF SHARE OPTIONS ISSUED WITH NON MARKET VESTING CONDITIONS HAS BEEN CALCULATED USING THE "LACK 3CHOLES MODEL &OR ALL OTHER SHARE AWARDS THE FAIR VALUE IS DETERMINED BY REFERENCE TO THE MARKET VALUE OF THE SHARE AT THE DATE OF GRANT &OR ALL SHARE SCHEMES WITH NON MARKET RELATED VESTING CONDITIONS THE LIKELIHOOD OF VESTING HAS BEEN TAKEN INTO ACCOUNT WHEN DETERMINING THE ASSOCIATED CHARGE 6ESTING ASSUMPTIONS ARE REVIEWED DURING EACH REPORTING PERIOD TO ENSURE THEY REåECT CURRENT EXPECTATIONS
4HE #OMPANY ALSO MAKES EQUITY SETTLED SHARE BASED PAYMENTS TO CERTAIN EMPLOYEES OF CERTAIN SUBSIDIARY UNDERTAKINGS %QUITY SETTLED SHARE BASED PAYMENTS THAT ARE MADE TO EMPLOYEES OF THE #OMPANYÓS SUBSIDIARIES ARE TREATED AS INCREASES IN EQUITY OVER THE VESTING PERIOD OF THE AWARD WITH A CORRESPONDING INCREASE IN THE #OMPANYÓS INVESTMENTS IN SUBSIDIARIES BASED ON AN ESTIMATE OF THE NUMBER OF SHARES THAT WILL EVENTUALLY VEST
!NY PAYMENTS RECEIVED FROM SUBSIDIARIES ARE APPLIED TO REDUCE THE RELATED INCREASES IN INVESTMENTS IN SUBSIDIARIES
!CCOUNTING FOR SHARE BASED PAYMENTS IS THE SAME AS UNDER )&23 AND DETAILS ON THE SCHEMES AND OPTION PRICING MODELS RELEVANT TO THE CHARGE INCLUDED IN THE #OMPANY äNANCIAL STATEMENTS ARE SET OUT IN NOTE TO THE CONSOLIDATED äNANCIAL STATEMENTS OF THE 'ROUP FOR THE YEAR ENDED $ECEMBER
)NVESTMENTS )NVESTMENTS REPRESENT EQUITY HOLDINGS IN SUBSIDIARIES JOINT VENTURES AND ASSOCIATES AND ARE HELD AT COST LESS PROVISION FOR IMPAIRMENT
Anglo American plc Annual Report 2009 147 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Ore Reserves and Mineral Resources Introduction
4HE /RE 2ESERVE AND -INERAL 2ESOURCE ESTIMATES PRESENTED IN THIS !NNUAL 2EPORT ARE PREPARED IN ACCORDANCE WITH THE !NGLO !MERICAN PLC !! PLC 0OLICY FOR THE 2EPORTING OF /RE 2ESERVES AND -INERAL 2ESOURCES 4HIS POLICY REQUIRES THAT THE !USTRALASIAN #ODE FOR 2EPORTING OF %XPLORATION 2ESULTS -INERAL 2ESOURCES AND /RE 2ESERVES EDITION THE */2# #ODE BE USED AS A MINIMUM STANDARD 3OME !NGLO !MERICAN PLC SUBSIDIARIES HAVE A PRIMARY LISTING IN 3OUTH !FRICA WHERE PUBLIC REPORTING IS CARRIED OUT IN ACCORDANCE WITH THE 3OUTH !FRICAN #ODE FOR 2EPORTING OF -INERAL 2ESOURCES AND -INERAL 2ESERVES THE 3!-2%# #ODE 4HE 3!-2%# #ODE IS SIMILAR TO THE */2# #ODE AND THE /RE 2ESERVE AND -INERAL 2ESOURCE TERMINOLOGY APPEARING IN THIS SECTION FOLLOWS THE DEäNITIONS IN BOTH THE */2# AND 3!-2%# #ODES
4HE INFORMATION ON /RE 2ESERVES AND -INERAL 2ESOURCES WAS PREPARED BY OR UNDER THE SUPERVISION OF #OMPETENT 0ERSONS AS DEäNED IN THE */2# OR 3!-2%# #ODES !LL #OMPETENT 0ERSONS HAVE SUFäCIENT EXPERIENCE RELEVANT TO THE STYLE OF MINERALISATION AND TYPE OF DEPOSIT UNDER CONSIDERATION AND TO THE ACTIVITY WHICH THEY ARE UNDERTAKING !LL THE #OMPETENT 0ERSONS CONSENT TO THE INCLUSION IN THIS REPORT OF THE INFORMATION IN THE FORM AND CONTEXT IN WHICH IT APPEARS 4HE NAMES OF THE #OMPETENT 0ERSONS ARE LODGED WITH THE !NGLO !MERICAN PLC #OMPANY 3ECRETARY AND ARE AVAILABLE ON REQUEST
!NGLO !MERICAN 'ROUP COMPANIES ARE SUBJECT TO A COMPREHENSIVE PROGRAMME OF REVIEWS AIMED AT PROVIDING ASSURANCE IN RESPECT OF /RE 2ESERVE AND -INERAL 2ESOURCE ESTIMATES 4HE REVIEWS ARE CONDUCTED BY SUITABLY QUALIäED #OMPETENT 0ERSONS FROM WITHIN THE !NGLO !MERICAN 'ROUP OR BY INDEPENDENT CONSULTANTS 4HE FREQUENCY AND DEPTH OF THE REVIEWS IS A FUNCTION OF THE PERCEIVED RISKS ANDOR UNCERTAINTIES ASSOCIATED WITH A PARTICULAR /RE 2ESERVE AND -INERAL 2ESOURCE THE OVERALL VALUE THEREOF AND TIME THAT HAS LAPSED SINCE AN INDEPENDENT THIRD PARTY REVIEW HAS BEEN CONDUCTED 4HOSE OPERATIONSPROJECTS SUBJECT TO INDEPENDENT THIRD PARTY REVIEWS DURING THE YEAR ARE INDICATED IN FOOTNOTES TO THE TABLES
4HE */2# AND 3!-2%# #ODES REQUIRE THE USE OF REASONABLE ECONOMIC ASSUMPTIONS 4HESE INCLUDE LONG RANGE COMMODITY PRICE FORECASTS WHICH ARE PREPARED BY IN HOUSE SPECIALISTS LARGELY USING ESTIMATES OF FUTURE SUPPLY AND DEMAND AND LONG TERM ECONOMIC OUTLOOKS /RE 2ESERVE ESTIMATES ARE DYNAMIC AND ARE INåUENCED BY CHANGING ECONOMIC CONDITIONS TECHNICAL ISSUES ENVIRONMENTAL REGULATIONS AND RELEVANT NEW INFORMATION AND THEREFORE CAN VARY FROM YEAR TO YEAR -INERAL 2ESOURCE ESTIMATES ALSO CHANGE AND TEND TO BE INåUENCED MOSTLY BY NEW INFORMATION PERTAINING TO THE UNDERSTANDING OF THE DEPOSIT AND SECONDLY BY THE CONVERSION TO /RE 2ESERVES
4HE ESTIMATES OF /RE 2ESERVES AND -INERAL 2ESOURCES ARE STATED AS AT $ECEMBER 5NLESS OTHERWISE STATED -INERAL 2ESOURCES ARE ADDITIONAL TO THOSE RESOURCES WHICH HAVE BEEN MODIäED TO PRODUCE THE /RE 2ESERVES 4HE äGURES IN THE TABLES HAVE BEEN ROUNDED AND IF USED TO DERIVE TOTALS AND AVERAGES COULD CAUSE MINOR COMPUTATIONAL DIFFERENCES /RE 2ESERVES IN THE CONTEXT OF THIS !NNUAL 2EPORT HAVE THE SAME MEANING AS Ò-INERAL 2ESERVESÓ AS DEäNED BY THE 3!-2%# #ODE
!N Ò/RE 2ESERVEÓ IS THE ECONOMICALLY MINEABLE PART OF A -EASURED ANDOR )NDICATED -INERAL 2ESOURCE )T INCLUDES DILUTING MATERIALS AND ALLOWANCES FOR LOSSES WHICH MAY OCCUR WHEN THE MATERIAL IS MINED !PPROPRIATE ASSESSMENTS AND STUDIES HAVE BEEN CARRIED OUT AND INCLUDE CONSIDERATION OF AND MODIäCATION BY REALISTICALLY ASSUMED MINING METALLURGICAL ECONOMIC MARKETING LEGAL ENVIRONMENTAL SOCIAL AND GOVERNMENTAL FACTORS 4HESE ASSESSMENTS DEMONSTRATE AT THE TIME OF REPORTING THAT EXTRACTION COULD REASONABLY BE JUSTIäED /RE 2ESERVES ARE SUB DIVIDED IN ORDER OF INCREASING CONäDENCE INTO 0ROBABLE /RE 2ESERVES AND 0ROVED /RE 2ESERVES ! Ò0ROVED /RE 2ESERVEÓ IS THE ECONOMICALLY MINEABLE PART OF A -EASURED -INERAL 2ESOURCE )T INCLUDES DILUTING MATERIALS AND ALLOWANCES FOR LOSSES WHICH MAY OCCUR WHEN THE MATERIAL IS MINED !PPROPRIATE ASSESSMENTS AND STUDIES HAVE BEEN CARRIED OUT AND INCLUDE CONSIDERATION OF AND MODIäCATION BY REALISTICALLY ASSUMED MINING METALLURGICAL ECONOMIC MARKETING LEGAL ENVIRONMENTAL SOCIAL AND GOVERNMENTAL FACTORS 4HESE ASSESSMENTS DEMONSTRATE AT THE TIME OF REPORTING THAT EXTRACTION COULD REASONABLY BE JUSTIäED ! Ò0ROBABLE /RE 2ESERVEÓ IS THE ECONOMICALLY MINEABLE PART OF AN )NDICATED AND IN SOME CIRCUMSTANCES A -EASURED -INERAL 2ESOURCE )T INCLUDES DILUTING MATERIALS AND ALLOWANCES FOR LOSSES WHICH MAY OCCUR WHEN THE MATERIAL IS MINED !PPROPRIATE ASSESSMENTS AND STUDIES HAVE BEEN CARRIED OUT AND INCLUDE CONSIDERATION OF AND MODIäCATION BY REALISTICALLY ASSUMED MINING METALLURGICAL ECONOMIC MARKETING LEGAL ENVIRONMENTAL SOCIAL AND GOVERNMENTAL FACTORS 4HESE ASSESSMENTS DEMONSTRATE AT THE TIME OF REPORTING THAT EXTRACTION COULD REASONABLY BE JUSTIäED ! Ò-INERAL 2ESOURCEÓ IS A CONCENTRATION OR OCCURRENCE OF MATERIAL OF INTRINSIC ECONOMIC INTEREST IN OR ON THE %ARTHÓS CRUST IN SUCH FORM QUALITY AND QUANTITY THAT THERE ARE REASONABLE PROSPECTS FOR EVENTUAL ECONOMIC EXTRACTION 4HE LOCATION QUANTITY GRADE GEOLOGICAL CHARACTERISTICS AND CONTINUITY OF A -INERAL 2ESOURCE ARE KNOWN ESTIMATED OR INTERPRETED FROM SPECIäC GEOLOGICAL EVIDENCE AND KNOWLEDGE -INERAL 2ESOURCES ARE SUB DIVIDED IN ORDER OF INCREASING GEOLOGICAL CONäDENCE INTO )NFERRED )NDICATED AND -EASURED CATEGORIES ! Ò-EASURED -INERAL 2ESOURCEÓ IS THAT PART OF A -INERAL 2ESOURCE FOR WHICH TONNAGE DENSITIES SHAPE PHYSICAL CHARACTERISTICS GRADE AND MINERAL CONTENT CAN BE ESTIMATED WITH A HIGH LEVEL OF CONäDENCE )T IS BASED ON DETAILED AND RELIABLE EXPLORATION SAMPLING AND TESTING INFORMATION GATHERED THROUGH APPROPRIATE TECHNIQUES FROM LOCATIONS SUCH AS OUTCROPS TRENCHES PITS WORKINGS AND DRILL HOLES 4HE LOCATIONS ARE SPACED CLOSELY ENOUGH TO CONäRM GEOLOGICAL AND GRADE CONTINUITY !N Ò)NDICATED -INERAL 2ESOURCEÓ IS THAT PART OF A -INERAL 2ESOURCE FOR WHICH TONNAGE DENSITIES SHAPE PHYSICAL CHARACTERISTICS GRADE AND MINERAL CONTENT CAN BE ESTIMATED WITH A REASONABLE LEVEL OF CONäDENCE )T IS BASED ON EXPLORATION SAMPLING AND TESTING INFORMATION GATHERED THROUGH APPROPRIATE TECHNIQUES FROM LOCATIONS SUCH AS OUTCROPS TRENCHES PITS WORKINGS AND DRILL HOLES 4HE LOCATIONS ARE TOO WIDELY OR INAPPROPRIATELY SPACED TO CONäRM GEOLOGICAL ANDOR GRADE CONTINUITY BUT ARE SPACED CLOSELY ENOUGH FOR CONTINUITY TO BE ASSUMED !N Ò)NFERRED -INERAL 2ESOURCEÓ IS THAT PART OF A -INERAL 2ESOURCE FOR WHICH TONNAGE GRADE AND MINERAL CONTENT CAN BE ESTIMATED WITH A LOW LEVEL OF CONäDENCE )T IS INFERRED FROM GEOLOGICAL EVIDENCE AND ASSUMED BUT NOT VERIäED GEOLOGICAL ANDOR GRADE CONTINUITY )T IS BASED ON INFORMATION GATHERED THROUGH APPROPRIATE TECHNIQUES FROM LOCATIONS SUCH AS OUTCROPS TRENCHES PITS WORKINGS AND DRILL HOLES WHICH MAY BE LIMITED OR OF UNCERTAIN QUALITY AND RELIABILITY
$UE TO THE UNCERTAINTY THAT MAY BE ATTACHED TO SOME )NFERRED -INERAL 2ESOURCES IT CANNOT BE ASSUMED THAT ALL OR PART OF AN )NFERRED -INERAL 2ESOURCE WILL NECESSARILY BE UPGRADED TO AN )NDICATED OR -EASURED 2ESOURCE AFTER CONTINUED EXPLORATION
)T IS ACCEPTED THAT MINE DESIGN AND PLANNING MAY INCLUDE A PORTION OF )NFERRED -INERAL 2ESOURCES )NFERRED -INERAL 2ESOURCES IN THE ,IFE OF -INE ,/- ARE DESCRIBED AS Ò)NFERRED IN ,/- Ó SEPARATELY FROM THE REMAINING )NFERRED -INERAL 2ESOURCES DESCRIBED AS Ò)NFERRED EX ,/- Ó AS REQUIRED 4HESE RESOURCES ARE DECLARED WITHOUT APPLICATION OF ANY MODIFYING FACTORS /PERATIONS AND PROJECTS WHICH FALL BELOW THE INTERNAL THRESHOLD ATTRIBUTABLE INTEREST FOR REPORTING HAVE BEEN EXCLUDED FROM THE /RE 2ESERVES AND -INERAL 2ESOURCES ESTIMATES 4HE 8IWAN PROJECT IS NOT REPORTED AS THE PROJECT HAS BEEN DISPOSED OF DURING )N 3OUTH !FRICA THE -INERALS AND 0ETROLEUM 2ESOURCES $EVELOPMENT !CT .UMBER OF -02$! WAS IMPLEMENTED ON -AY AND EFFECTIVELY TRANSFERRED CUSTODIANSHIP OF THE PREVIOUSLY PRIVATELY HELD MINERAL RIGHTS TO THE 3TATE -INING COMPANIES WERE GIVEN UP TO TWO YEARS TO APPLY FOR PROSPECTING PERMIT CONVERSIONS AND äVE YEARS TO APPLY FOR MINING LICENCE CONVERSIONS FOR EXISTING OPERATIONS
! 0ROSPECTING 2IGHT IS A NEW ORDER RIGHT ISSUED IN TERMS OF THE -02$! THAT IS VALID FOR UP TO äVE YEARS WITH THE POSSIBILITY OF A FURTHER EXTENSION OF THREE YEARS THAT CAN BE OBTAINED EITHER BY THE CONVERSION OF EXISTING /LD /RDER 0ROSPECTING 2IGHTS OR THROUGH NEW APPLICATIONS !N %XPLORATION 2IGHT IS IDENTICAL TO A 0ROSPECTING 2IGHT BUT IS COMMODITY SPECIäC IN RESPECT OF PETROLEUM AND GAS AND IS VALID FOR UP TO THREE YEARS WHICH CAN BE RENEWED FOR A MAXIMUM OF THREE PERIODS NOT EXCEEDING TWO YEARS EACH
! -INING 2IGHT IS A NEW ORDER RIGHT ISSUED IN TERMS OF THE -02$! VALID FOR UP TO YEARS OBTAINED EITHER BY THE CONVERSION OF AN EXISTING /LD /RDER -INING 2IGHT OR AS A NEW ORDER RIGHT PURSUANT TO THE EXERCISE OF THE EXCLUSIVE RIGHT OF THE HOLDER OF A NEW ORDER 0ROSPECTING 2IGHT OR PURSUANT TO AN APPLICATION FOR A NEW -INING 2IGHT ! 0RODUCTION 2IGHT IS IDENTICAL TO A -INING 2IGHT BUT IS COMMODITY SPECIäC IN RESPECT OF PETROLEUM AND GAS
)N PREPARING THE /RE 2ESERVE AND -INERAL 2ESOURCE STATEMENT FOR 3OUTH !FRICAN ASSETS !NGLO !MERICAN PLC HAS ADOPTED THE FOLLOWING REPORTING PRINCIPLES IN RESPECT OF 0ROSPECTING 2IGHTS AND -INING 2IGHTS
Ú 7HERE APPLICATIONS FOR NEW ORDER -INING 2IGHTS AND 0ROSPECTING 2IGHTS HAVE BEEN SUBMITTED AND THESE ARE STILL BEING PROCESSED BY THE RELEVANT REGULATORY AUTHORITIES THE RELEVANT RESERVES AND RESOURCES HAVE BEEN INCLUDED IN THE STATEMENT Ú 7HERE APPLICATIONS FOR NEW ORDER 0ROSPECTING 2IGHTS HAVE BEEN INITIALLY REFUSED BY THE REGULATORY AUTHORITIES BUT ARE THE SUBJECT OF ONGOING LEGAL PROCESS AND DISCUSSIONS WITH THE RELEVANT AUTHORITIES AND WHERE !NGLO !MERICAN PLC HAS REASONABLE EXPECTATIONS THAT THE 0ROSPECTING 2IGHTS WILL BE GRANTED IN DUE COURSE THE RELEVANT RESOURCES HAVE BEEN INCLUDED IN THE STATEMENT ANY ASSOCIATED COMMENTS APPEAR IN THE FOOTNOTES
148 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 - WorldReginfo
Ore Reserves & Mineral Resources Ð 149 -OZ TO BE NS OF L WAS COMPLETED #ONTAINED METAL Ð AND THEREFORE ARE SERVES HAVE BEEN -OZ ERATIONS BETWEEN GT AND R -OGALAKWENA -INE INCLUSIVE IS HIGH MAY STILL BE MINED DUE Ò/THER INDIRECT #OSTSÓ AND Ò3TAY IN Ð TONNES / /2% 2%3%26%3 #ONTAINED METAL Ð NING PAY LIMIT 4HE PAY LIMIT CALCULATION NOW PORTING OF -INERAL 2ESOURCES AND /RE 2ESERVES ERWISE NOTED 2OUNDING OF äGURES MAY CAUSE L 2ESOURCES AND -INERAL 2ESERVES 4HE EPORTABLE /RE 2ESERVES FOR "OKONI 0LATINUM -INE ERENSKY AND 5' 2EEF -INERAL 2ESOURCES ARE TONNES E 2ESERVES AT !MANDELBULTÓS 4UMELA -INE 3HAFT 0ROJECT PROVED OZTON Ð E 2ESERVES AT !MANDELBULTÓS 4UMELA -INE 3HAFT 0ROJECT PORTIO 'RADE RTH AND #ENTRAL PREVIOUSLY 002UST .ORTH A NEW EVALUATION MODE % 0'% FOR CURRENT MINING OPERATIONS CANNOT BE GEOLOGICALLY ASSESSED -T -OZ OF PREVIOUSLY REPORTED /RE 2ESERVES 4HESE /RE 2E SE OF -T -OZ REALLOCATED BACK TO -INERAL 2ESOURCES E /RE 2ESERVES STATEMENT T % 0'% 4HE 5' 2EEF RESERVE PAY LIMIT VARIES ACROSS ALL OP OZTON FROM Ð D PIT DESIGN !S A CONSEQUENCE THE TOTAL /RE 2ESERVE TONNAGE FO TURE AND ECONOMIC PARAMETERS #ERTAIN AREAS WHERE THE PAY LIMIT #OST WHICH CONSISTS OF Ò$IRECT #ASH #OSTÓ ON AND OFF MINE % 0'% -TON Ð -T Annual Report 2009 Report Annual 4ONNES SED DURING RESULTING IN A CHANGE OF THE ATTRIBUTABLE AND R AND 4HE PAY LIMIT CALCULATION WAS BASED ON THE PLAN -TON Ð -T GATED INTO THE SUMMATION TABULATIONS OUNCES -OZ PER SHORT TON OZTON /RE 2ESERVES ATTRIBUTABLE TO !NGLO 0LATINUM ,IMITED UNLESS OTH A WERE COMPILED IN ACCORDANCE WITH THE !USTRALASIAN #ODE FOR 2E SUMPTIONS !T THE ASSUMED METAL PRICES AND EXCHANGE RATE THE /R COMPLIANCE WITH 4HE 3OUTH !FRICAN #ODE FOR 2EPORTING OF -INERA IVIDUAL OPERATIONS APPEAR IN THE !NGLO 0LATINUM !NNUAL 2EPORT - PECIäC REEF 4(% -).%2!, 2%3/52#%3 !2% 2%0/24%$ !3 !$$)4)/.!, 4 NGLO 0LATINUM IS SUMPTIONS !T THE ASSUMED METAL PRICES AND EXCHANGE RATE THE /R EGATED IN THE TOTAL /RE 2ESERVE äGURES /PERATING TAILINGS DAMS Platinum 2009 December 31 estimates as at Anglo American plc American Anglo HE TOTAL /RE 2ESERVES INCREASED SIGNIäCANTLY !T -OGALAKWENA .O DES IN GRAMMES PER TONNE GT E PROVED TO BE UNECONOMIC 4HIS RESULTED IN A DECREASE OF PORATED SIGNIäCANT ADDITIONAL DRILL HOLES RESULTING IN A REVISE E PERCENTAGE DECREASED FROM TO EQUIVALENT TO A DECREA RMANT DAMS HAVE BEEN EVALUATED AND THE TAILINGS FORM PART OF TH PAY LIMIT VARIES ACROSS ALL OPERATIONS BETWEEN GT AND G PREVIOUSLY REPORTED /RE 2ESERVES 4HESE /RE 2ESERVES HAVE BEEN 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL LUDING DEPTH OF THE ORE BODY GEOLOGICAL COMPLEXITY INFRASTRUC AREA WHERE THE BUSINESS PLAN RETURNS A POSITIVE .06 AND PROäT 0ROVED 0ROVED 0ROVED 0ROVED HE ESTIMATION OF THE OVERALL COSTS 4HIS COST AMOUNT IS TERMED 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE #LASSIäCATION 4OTAL ALTERNATIVE UNITS LO !MERICAN PLCÓS INTEREST IN ! 0ROVED PRIMARY ORE STOCKPILE 4HE CALCULATION OF THE PAY LIMIT HAS BEEN MODIäED BETWEEN 4HE "%% TRANSACTION ANNOUNCED WITH !NOORAQ 2ESOURCES WAS äNALI 4HESE ARE REPORTED SEPARATELY AS 0ROVED /RE 2ESERVES AND AGGRE #ONTAINED METAL IS PRESENTED IN METRIC TONNES AND MILLION TROY TONNAGE IN MILLION SHORT TONS -TON AND GRADE IN TROY OUNCES $ECREASE IN /RE 2ESERVES IS MAINLY ATTRIBUTABLE TO ECONOMIC AS $ECREASE IN /RE 2ESERVES IS MAINLY ATTRIBUTABLE TO ECONOMIC AS QUOTED AS DRY METRIC TONNES 4HE RESERVE CUT OFF IS GT FOR FRESH ORE &OR -OGALAKWENA T 4HESE ARE REPORTED SEPARATELY AS /RE 2ESERVES BUT ARE NOT AGGR % 0'% IS THE SUM OF PLATINUM PALLADIUM RHODIUM AND GOLD GRA 0LATINUM 2ESERVES "USINESS #APITALÓ ON AND OFF MINE 4HE -ERENSKY 2EEF RESERVE GT % 0'% 4HE RANGE IS A FUNCTION OF VARIOUS FACTORS INCTO A PROJECT BEING IN RAMP UP OR IN THE CASE OF THE 2USTENBURG 'RADE -ERENSKY 2EEF AND 5' 2EEF INCLUDES Ò3TAY IN "USINESS #APITALÓ BOTH ON AND OFF MINE IN T 4ONNAGE #ONTAINED METAL 4AILINGS NOT REPORTED AS PART OF THE /RE 2ESERVES !T 2USTENBURG -INE DO !LTERNATIVE UNITS PREVIOUSLY ,EBOWA 0LATINUM -INE !NGLO 0LATINUMÓS ATTRIBUTABL -ERENSKY 2EEF AND 5' 2EEF 2USTENBURGÓS +HUSELEKA -INE +HOMANANI -INE AND 3IPHUMELELE -IN REALLOCATED BACK TO -INERAL 2ESOURCES 5' 2EEF -ERENSKY 2EEF UNECONOMIC 4HIS RESULTED IN A DECREASE OF -T -OZ OF 0LATREEF STOCKPILES OF STOCKPILES INCREASED BY -T EQUIVALENT TO -OZ IN TOGETHER WITH A NEW STRUCTURAL MODEL "OTH MODELS INCOR 0LATREEF 3!-2%# #ODE /PERATIONS AND 0ROJECTS OUTSIDE 3OUTH !FRIC /RE -ERENSKY 2EEF !NGLO 4HE /RE 2ESERVE AND -INERAL 2ESOURCE ESTIMATES WERE COMPILED IN Ore Reserves and Mineral Resources Mineral and Reserves Ore 4HE äGURES REPORTED REPRESENT OF THE -INERAL 2ESOURCES AND REPORTED OVER AN ECONOMIC AND MINEABLE CUT APPROPRIATE TO THE S 4HE */2# #ODE AS A MINIMUM STANDARD $ETAILS OF THE IND COMPUTATIONAL DISCREPANCIES !NG 4AILINGS 0LATREEF 5' 2EEF !LL 2EEFS 0ROVED Anglo Platinum Ore Reserves and Mineral Resources Platinum estimates as at 31 December 2009
!NGLO 0LATINUM 4ONNES 'RADE #ONTAINED METAL #ONTAINED METAL -INERAL 2ESOURCES #LASSIäCATION -ERENSKY 2EEF -T -T % 0'% % 0'% TONNES TONNES -OZ -OZ -EASURED )NDICATED -EASURED AND )NDICATED )NFERRED 5' 2EEF -EASURED )NDICATED -EASURED AND )NDICATED )NFERRED 0LATREEF -EASURED )NDICATED -EASURED AND )NDICATED )NFERRED !LL 2EEFS -EASURED )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED ALTERNATIVE UNITS -TON -TON OZTON OZTON )NFERRED 4AILINGS -EASURED Ð Ð Ð Ð Ð Ð Ð Ð )NDICATED -EASURED AND )NDICATED )NFERRED Ð Ð Ð Ð Ð Ð Ð Ð
$UE TO THE UNCERTAINTY THAT MAY BE ATTACHED TO SOME )NFERRED -INERAL 2ESOURCES IT CANNOT BE ASSUMED THAT ALL OR PART OF AN )NFERRED -INERAL 2ESOURCE WILL NECESSARILY BE UPGRADED TO AN )NDICATED OR -EASURED 2ESOURCE AFTER CONTINUED EXPLORATION 4ONNAGE QUOTED AS DRY METRIC TONNES 'RADE % 0'% IS THE SUM OF PLATINUM PALLADIUM RHODIUM AND GOLD GRADES IN GRAMMES PER TONNE GT #ONTAINED METAL #ONTAINED METAL IS PRESENTED IN METRIC TONNES AND MILLION TROY OUNCES -OZ -ERENSKY 2EEF AND 5' 2EEF 4HE "%% TRANSACTION ANNOUNCED WITH !NOORAQ 2ESOURCES WAS äNALISED DURING RESULTING IN A CHANGE OF THE ATTRIBUTABLE AND REPORTABLE -INERAL 2ESOURCES FOR "OKONI -INE PREVIOUSLY ,EBOWA 0LATINUM -INE !NGLO 0LATINUMÓS ATTRIBUTABLE PERCENTAGE DECREASED FROM TO EQUIVALENT TO A DECREASE OF -T -OZ 4HE -INERAL 2ESOURCES ARE QUOTED OVER A PRACTICAL MINIMUM MINING CUT SUITABLE FOR THE DEPOSIT KNOWN AS THE 2ESOURCE #UT 4HE 2ESOURCE #UT INCLUDES GEOTECHNICAL ASPECTS IN THE HANGING WALL OR FOOTWALL OF THE REEF #HROMITITE STRINGERS ABOVE OR BELOW THE 5' MAIN SEAM OR ANY ÒGEOTECHNICAL WEAK ZONESÓ ARE INCLUDED IN THE 2ESOURCE #UT 4HE MINIMUM BEAM HEIGHT REGARDING THE GEOTECHNICAL ASPECT DEPENDS ON THE MINING METHOD !NGLO 0LATINUM TAKES COGNISANCE OF CUT OFF GRADES DERIVED FROM INFORMATION ON PAY LIMITS IN THE MINING OPERATIONS AND OF ÒREASONABLE AND REALISTIC PROSPECTS FOR EVENTUAL ECONOMIC EXTRACTIONÓ OVER A PERIOD OF TO YEARS .O -INERAL 2ESOURCES ARE EXCLUDED FROM THE DECLARATION RELATIVE TO AS A RESULT OF THE CUT OFF GRADE CONSIDERATION -ERENSKY 2EEF $EPENDING ON THE REEF CHARACTERISTICS A GT TO GT % 0'% CUT OFF HAS BEEN USED TO DEäNE -INERAL 2ESOURCES 5' 2EEF $EPENDING ON THE REEF CHARACTERISTICS A GT TO GT % 0'% CUT OFF HAS BEEN USED TO DEäNE -INERAL 2ESOURCES 5' 2EEF A 4HE DECREASE IN -INERAL 2ESOURCES IS MAINLY ATTRIBUTABLE TO THE DECREASE OF THE ATTRIBUTABLE PERCENTAGE DUE TO THE äNALISATION OF THE "%% TRANSACTION WITH !NOORAQ 2ESOURCES B 4HE DECREASE IS OFF SET BY AN INCREASE OF -INERAL 2ESOURCES DUE TO ECONOMIC ASSUMPTIONS !T THE ASSUMED METAL PRICES AND EXCHANGE RATE THE /RE 2ESERVES AT !MANDELBULTÓS 4UMELA -INE 3HAFT 0ROJECT PORTIONS OF 2USTENBURGÓS +HUSELEKA -INE +HOMANANI -INE AND 3IPHUMELELE -INE PROVED TO BE UNECONOMIC AND ARE RE ALLOCATED BACK TO -INERAL 2ESOURCES 4HIS RESULTED IN AN INCREASE OF THE -INERAL 2ESOURCES BY -T -OZ C !DDITIONALLY NEW INFORMATION AT $ER "ROCHEN PROJECT RESULTED IN AN INCREASE OF THE -INERAL 2ESOURCES BY -T EQUIVALENT TO -OZ 0LATREEF ! GT % 0'% CUT OFF HAS BEEN USED TO DEäNE -INERAL 2ESOURCES $URING FOR -OGALAKWENA .ORTH AND #ENTRAL PREVIOUSLY 002UST .ORTH A NEW EVALUATION MODEL WAS COMPLETED TOGETHER WITH A NEW STRUCTURAL MODEL 4HIS RESULTED IN A REVISED PIT DESIGN AND A CONSEQUENT SIGNIäCANT INCREASE IN REPORTED /RE 2ESERVES !S A CONSEQUENCE THE REMAINING -INERAL 2ESOURCES FOR -OGALAKWENA DECREASED SIGNIäCANTLY BY -T -OZ !LTERNATIVE UNITS TONNAGE IN MILLION SHORT TONS -TON AND GRADE IN TROY OUNCES PER SHORT TON OZTON 4AILINGS /PERATING TAILINGS DAMS FOR CURRENT MINING OPERATIONS CANNOT BE GEOLOGICALLY ASSESSED AND THEREFORE ARE NOT REPORTED AS PART OF THE -INERAL 2ESOURCES !T 2USTENBURG AND 5NION -INE DORMANT DAMS HAVE BEEN EVALUATED AND THE TAILINGS FORM PART OF THE -INERAL 2ESOURCE STATEMENT 4AILINGS DAMS RESOURCES ARE REPORTED SEPARATELY AS -INERAL 2ESOURCES BUT ARE NOT AGGREGATED TO THE GLOBAL -INERAL 2ESOURCE SUMMATION
4HE FOLLOWING /PERATIONS AND 0ROJECTS CONTRIBUTED TO THE COMBINED /RE 2ESERVE AND -INERAL 2ESOURCE ESTIMATES STATED PER REEF EXCLUDING /THER 0ROJECTS -2 -ERENSKY 2EEF 5' 5' 2EEF 02 0LATREEF !NGLO 0LATINUM ,IMITED ATTRIBUTABLE INTEREST "AFOKENG 2ASIMONE 0LATINUM -INE Ð -25' "ATHOPELE -INE Ð 5' PREVIOUSLY PART OF 2USTENBURG -INE "OKONI 0LATINUM -INE Ð -25' PREVIOUSLY ,EBOWA 0LATINUM -INE $ER "ROCHEN 0ROJECT Ð -25' $ISHABA -INE Ð -25' PREVIOUSLY PART OF !MANDELBULT -INE 'A 0HASHA 0'- 0ROJECT Ð -25' +HOMANANI -INE Ð -25' PREVIOUSLY PART OF 2USTENBURG -INE +HUSELEKA -INE Ð -25' PREVIOUSLY PART OF 2USTENBURG -INE +ROONDAL 0LATINUM -INE Ð 5' -AGAZYNSKRAAL *1 Ð -25' -ARIKANA 0LATINUM -INE Ð 5' -ODIKWA 0LATINUM -INE Ð -25' -OGALAKWENA -INE Ð 02 -OTOTOLO 0LATINUM -INE Ð 5' /THER %XPLORATION 0ROJECTS PORTIONS OF $RIEKOP Ð 5' 0ANDORA Ð 5' 2USTENBURG Ð .ON -INE 0ROJECTS Ð -25' PREVIOUSLY PART OF 2USTENBURG -INE 3IPHUMELELE -INE Ð -25' PREVIOUSLY PART OF 2USTENBURG -INE 4HEMBELANI -INE Ð -25' PREVIOUSLY PART OF 2USTENBURG -INE 4UMELA -INE Ð -25' PREVIOUSLY PART OF !MANDELBULT -INE 4WICKENHAM 0LATINUM -INE Ð -25' 5NION -INE Ð -25' 7"*6 Ð -25'
-AGAZYNSKRAAL *1 Ð !NGLO PLATINUMÓS ATTRIBUTABLE INTEREST IN THE JOINT VENTURE IS REåECTED AS 3UBSEQUENT TO -INERAL 2ESOURCE COMPILATION THIS INTEREST HAS MOVED TO 4HE REVISED ATTRIBUTABLE PORTION WILL BE REåECTED IN FUTURE -INERAL 2ESOURCE STATEMENTS 4HE EXTERNAL /RE 2ESERVE AND -INERAL 2ESOURCE AUDITS HAVE BEEN RESCHEDULED TO TAKE PLACE IN
150 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 - WorldReginfo
Ore Reserves & Mineral Resources Ð Ð Ð Ð 151 -OZ -OZ #ONTAINED METAL #ONTAINED METAL Ð Ð Ð Ð NES ONLY &OR MORE -OZ -OZ CATED OR -EASURED 2ESOURCE AFTER Ð Ð Ð Ð TONNES TONNES ITION 4HE "%% TRANSACTION ANNOUNCED WITH !NOORAQ #ONTAINED METAL #ONTAINED METAL Ð Ð Ð Ð TONNES TONNES Ð Ð Ð Ð ENT METAL WAS USED DEäNITION 'RADE 'RADE % 0'% % 0'% % 0'% % 0'% % 0'% % 0'% $YKE Ð -AIN 3ULPHIDE :ONE RELATE TO THE 5NKI %AST AND 7EST MI Ð Ð Ð Ð FERRED -INERAL 2ESOURCE WILL NECESSARILY BE UPGRADED TO AN )NDI % 0'% % 0'% % 0'% % 0'% % 0'% % 0'% -T -T Ð Ð Ð Ð F OF 53T GROSS METAL VALUE WAS APPLIED FOR RESOURCE DEäN Annual Report 2009 Report Annual 4ONNES 4ONNES Ð Ð Ð Ð -T -T OUNCES -OZ OFF OF 53T TOTAL REVENUE CONTRIBUTION FROM THE CONSTITU F OF GT % 0'% WAS APPLIED FOR RESOURCE DEäNITION F OF GT PLATINUM PLUS PALLADIUM WAS APPLIED FOR RESOURCE ES IN GRAMMES PER TONNE GT Platinum 2009 December 31 estimates as at Anglo American plc American Anglo MMES PER TONNE GT ,IMITED 4HE /RE 2ESERVES AND -INERAL 2ESOURCES FOR THE 'REAT IN THE !NGLO 0LATINUM !NNUAL 2EPORT 4OTAL 0ROVED NERAL 2ESOURCES IT CANNOT BE ASSUMED THAT ALL OR PART OF AN )N )NFERRED )NFERRED )NFERRED )NFERRED )NFERRED )NDICATED )NDICATED )NDICATED -EASURED -EASURED -EASURED -EASURED -EASURED #LASSIäCATION #LASSIäCATION !NGLO 0LATINUM HOLDS AN ATTRIBUTABLE INTEREST OF ! CUT OF -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED 0ROJECTS 0ROJECTS /THER Ð /THER #ONTAINED METAL IS PRESENTED IN METRIC TONNES AND MILLION TROY Ð !NGLO 0LATINUM HOLDS AN ATTRIBUTABLE OF THE *6 AREA ! CUT !NGLO 0LATINUM HOLDS AN ATTRIBUTABLE INTEREST OF ! CUT OF !NGLO 0LATINUM HOLDS AN ATTRIBUTABLE INTEREST OF ! CUT OF QUOTED AS DRY METRIC TONNES % 0'% IS THE SUM OF PLATINUM PALLADIUM RHODIUM AND GOLD GRAD% 0'% IS THE SUM OF PLATINUM PALLADIUM AND GOLD GRADES IN GRA 2ESOURCES !NGLO 0LATINUM OWNS AN EFFECTIVE INTEREST IN 3OUTHRIDGE 0LATINUM 0LATINUM 2ESERVES !NOORAQ !NGLO 0LATINUM "OIKGANTSHO 'RADE 4ONNAGE #ONTAINED METAL 0EDRA "RANCA 2IVER 6ALLEY !NOORAQ !NGLO 0LATINUM "OIKGANTSHO 5NKI 2IVER 6ALLEY 3HEBAÓS 2IDGE 5NKI INFORMATION SEE .OTE IN THE #ONSOLIDATED &INANCIAL 3TATEMENT 5NKI 0EDRA "RANCA 'REAT $YKE Ð -3: )NDICATED 'REAT $YKE Ð -3: 0ROBABLE 0LATREEF )NDICATED 3HEBAÓS 2IDGE 2ESOURCES WAS äNALISED DURING CONTINUED EXPLORATION $UE TO THE UNCERTAINTY THAT MAY BE ATTACHED TO SOME )NFERRED -I :IMBABWE !NGLO -INERAL /RE !NGLO :IMBABWE Ore Reserves and Mineral Resources Mineral and Reserves Ore 3OUTH !FRICA #ANADA "RAZIL Ore Reserves and Mineral Resources Copper estimates as at 31 December 2009
Copper 4HE /RE 2ESERVE AND -INERAL 2ESOURCE ESTIMATES WERE COMPILED IN ACCORDANCE WITH THE !USTRALASIAN #ODE FOR 2EPORTING OF -INERAL 2ESOURCES AND /RE 2ESERVES 4HE */2# #ODE AS A MINIMUM STANDARD 4(% -).%2!, 2%3/52#%3 !2% 2%0/24%$ !3 !$$)4)/.!, 4/ /2% 2%3%26%3
4HE äGURES REPORTED REPRESENT OF THE /RE 2ESERVES AND -INERAL 2ESOURCES THE PERCENTAGE ATTRIBUTABLE TO !NGLO !MERICAN PLC IS STATED SEPARATELY 2OUNDING OF äGURES MAY CAUSE COMPUTATIONAL DISCREPANCIES
#OPPER 4ONNES 'RADE #ONTAINED METAL /RE 2ESERVES !TTRIBUTABLE ,/- #LASSIäCATION ,OS "RONCES /0 -T -T #U #U KT KT 3ULPHIDE 4#U 0ROVED &LOTATION 0ROBABLE 4OTAL 3ULPHIDE 4#U 0ROVED $UMP ,EACH 0ROBABLE 4OTAL %L 3OLDADO /0 AND 5' #U #U 3ULPHIDE 4#U 0ROVED &LOTATION 0ROBABLE 4OTAL /XIDE 4#U 0ROVED (EAP ,EACH 0ROBABLE 4OTAL -ANTOS "LANCOS /0 #U #U 3ULPHIDE )#U 0ROVED &LOTATION 0ROBABLE 4OTAL /XIDE !3#U 0ROVED 6AT AND (EAP ,EACH 0ROBABLE 4OTAL /XIDE !3#U 0ROVED $UMP ,EACH 0ROBABLE 4OTAL -ANTOVERDE /0 #U #U /XIDE !3#U 0ROVED (EAP ,EACH 0ROBABLE 4OTAL /XIDE !3#U 0ROVED $UMP ,EACH 0ROBABLE 4OTAL #OLLAHUASI /0 #U #U /XIDE -IXED AND 3ECONDARY 3ULPHIDES 4#U 0ROVED (EAP ,EACH 0ROBABLE 4OTAL 3ULPHIDE 4#U 0ROVED &LOTATION Ð DIRECT FEED 0ROBABLE 4OTAL ,OW 'RADE 3ULPHIDE 4#U 0ROVED Ð Ð Ð Ð Ð Ð &LOTATION Ð STOCKPILE 0ROBABLE 4OTAL
-INING METHOD /0 /PEN 0IT 5' 5NDERGROUND ,/- ,IFE OF -INE IN YEARS BASED ON SCHEDULED /RE 2ESERVES 4#U TOTAL COPPER )#U INSOLUBLE COPPER TOTAL COPPER LESS ACID SOLUBLE COPPER !3#U ACID SOLUBLE COPPER 9EAR ON YEAR CHANGES TO THE /RE 2ESERVES HAVE BEEN DRIVEN BY CHANGES IN THE COPPER PRICE MINING AND PROCESSING COSTS AND CHANGES TO PIT SLOPE ANGLES ,OS "RONCES Ð 3ULPHIDE &LOTATION #HANGES ARE DUE TO AN INCREASE IN THE COPPER PRICE OFFSET AGAINST AN INCREASE IN THE åOTATION CUT OFF GRADE ,OS "RONCES Ð 3ULPHIDE $UMP ,EACH 4HE PRIMARY CHANGE IS DUE TO THE 3ULPHIDE &LOTATION PROCESS WHICH RESULTED IN A TRANSFER OF åOTATION ORE TO LEACH ORE %L 3OLDADO Ð 3ULPHIDE &LOTATION #HANGES ARE DUE TO AN INCREASE IN THE COPPER PRICE OFFSET AGAINST A REDUCTION OF COPPER GRADES RELATED TO AN UPDATED RESOURCE MODEL AND THE INCORPORATION OF A DILUTION FACTOR TO CONVERT -INERAL 2ESOURCES TO /RE 2ESERVES #OLLAHUASI Ð ,OW 'RADE 3ULPHIDE $ECREASE IS DUE TO AN UPDATED RESOURCE MODEL #OPPER 2ESOURCES ! TEST OF REASONABLE EVENTUAL ECONOMIC EXTRACTION IS APPLIED THROUGH CONSIDERATION OF AN OPTIMISED PIT SHELL -ATERIALS OUTSIDE THE OPTIMISED SHELL THAT HAVE POTENTIAL OF EVENTUAL ECONOMIC EXTRACTION VIA UNDERGROUND MEANS ARE INCLUDED IN THE -INERAL 2ESOURCE STATEMENT $UE TO THE UNCERTAINTY THAT MAY BE ATTACHED TO SOME )NFERRED -INERAL 2ESOURCES IT CANNOT BE ASSUMED THAT ALL OR PART OF AN )NFERRED -INERAL 2ESOURCE WILL NECESSARILY BE UPGRADED TO AN )NDICATED OR -EASURED 2ESOURCE AFTER CONTINUED EXPLORATION ,OS "RONCES Ð 3ULPHIDE &LOTATION #HANGES ARE DUE TO AN INCREASE IN THE COPPER PRICE OFFSET AGAINST SOME -INERAL 2ESOURCE TO /RE 2ESERVE CONVERSION %L 3OLDADO Ð 3ULPHIDE &LOTATION $ECREASE DUE TO A REDUCTION IN THE PIT SLOPE ANGLE AN INCREASE IN PROCESSING COSTS AND A REDUCTION IN METALLURGICAL RECOVERY -ANTOS "LANCOS Ð 3ULPHIDE &LOTATION $ECREASE IS DUE TO AN INCREASE IN MINE AND PROCESS COSTS AND A DECREASE IN OVERALL PIT SLOPE ANGLES -ANTOS "LANCOS Ð /XIDE 6AT AND (EAP ,EACH )NCREASE IS MAINLY DUE TO THE INCORPORATION OF )NDICATED 2ESOURCES FROM -ERCEDES WASTE DUMP -T 4#U -ANTOVERDE Ð /XIDE (EAP ,EACH $ECREASE DUE TO THE EXCLUSION OF THE +UROKI SECTOR -T !3#U AND AN INCREASE IN THE MARGINAL CUT OFF GRADE TO !3#U #OLLAHUASI Ð /XIDE -IXED AND 3ECONDARY 3ULPHIDES )NCREASE DUE TO THE INCORPORATION OF ,A "ORRACHA AND $ULCINEA OXIDE ORE BODIES -T 4#U #OLLAHUASI Ð 3ULPHIDE )NCREASE DUE TO APPLICATION OF A HIGHER COPPER PRICE !UDITS RELATED TO THE GENERATION OF THE /RE 2ESERVE AND -INERAL 2ESOURCE STATEMENTS WERE CARRIED OUT BY INDEPENDENT CONSULTANTS DURING AT THE FOLLOWING OPERATIONS ,OS "RONCES %L 3OLDADO -ANTOS "LANCOS AND -ANTOVERDE
152 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 - WorldReginfo
Ore Reserves & Mineral Resources Ð Ð Ð Ð Ð Ð Ð Ð KT Ð Ð Ð 153 Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð KT Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð #U #U #U #U #U Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð #U #U #U #U #U Ð Ð Ð Ð Ð Ð Ð Ð Ð -T Ð Ð 4ONNES 'RADE #ONTAINED METAL Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð -T Annual Report 2009 Report Annual -EASURED -EASURED -EASURED -EASURED -EASURED -EASURED -EASURED 4OTAL )NFERRED 4OTAL )NFERRED 4OTAL )NFERRED 4OTAL )NFERRED 4OTAL )NFERRED 4OTAL )NFERRED 4OTAL )NFERRED 4OTAL )NFERRED 4OTAL )NFERRED 4OTAL )NFERRED 4OTAL )NFERRED 4OTAL )NFERRED )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED EX ,/- )NFERRED EX ,/- )NFERRED EX ,/- )NFERRED EX ,/- )NFERRED EX ,/- )NFERRED EX ,/- )NFERRED EX ,/- )NFERRED EX ,/- )NFERRED EX ,/- )NFERRED EX ,/- )NFERRED EX ,/- )NFERRED EX ,/- -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED Copper 2009 December 31 estimates as at Anglo American plc American Anglo !TTRIBUTABLE #LASSIäCATION 2ESOURCES /XIDE -IXED AND 3ECONDARY 3ULPHIDES 4#U /XIDE !3#U 3ULPHIDE )#U 3ULPHIDE 4#U 3ULPHIDE 4#U /XIDE !3#U -EASURED (EAP ,EACH )NDICATED /XIDE !3#U 3ULPHIDE 4#U -EASURED /XIDE 4#U -EASURED $UMP ,EACH )NDICATED $UMP ,EACH )NDICATED /XIDE !3#U -EASURED ,OW 'RADE 3ULPHIDE 4#U -EASURED (EAP ,EACH )NDICATED $UMP ,EACH )NDICATED &LOTATION Ð STOCKPILE )NDICATED (EAP ,EACH6AT AND (EAP ,EACH )NDICATED )NDICATED &LOTATION Ð DIRECT FEED )NDICATED &LOTATION )NDICATED &LOTATION )NDICATED 3ULPHIDE 4#U &LOTATION )NDICATED #OPPER -INERAL ,OS "RONCES /0 Ore Reserves and Mineral Resources Mineral and Reserves Ore %L 3OLDADO /0 AND 5' -ANTOS "LANCOS /0 #OLLAHUASI /0 -ANTOVERDE /0 Ore Reserves and Mineral Resources Copper estimates as at 31 December 2009
#OPPER 0ROJECTS 4ONNES 'RADE #ONTAINED METAL /RE 2ESERVES !TTRIBUTABLE ,/- #LASSIäCATION 1UELLAVECO /0 -T -T #U #U KT KT 3ULPHIDE 4#U 0ROVED &LOTATION 0ROBABLE 4OTAL
#OPPER 0ROJECTS 4ONNES 'RADE #ONTAINED METAL -INERAL 2ESOURCES !TTRIBUTABLE #LASSIäCATION 1UELLAVECO /0 -T -T #U #U KT KT 3ULPHIDE 4#U -EASURED &LOTATION )NDICATED -EASURED AND )NDICATED )NFERRED IN ,/- )NFERRED EX ,/- 4OTAL )NFERRED ,OS 3ULFATOS #U #U 3ULPHIDE 4#U -EASURED Ð Ð Ð Ð Ð Ð &LOTATION )NDICATED Ð Ð Ð Ð Ð Ð -EASURED AND )NDICATED Ð Ð Ð Ð Ð Ð )NFERRED Ð Ð Ð -ANTOVERDE 3ULPHIDE 0ROJECT #U #U 3ULPHIDE 4#U -EASURED &LOTATION )NDICATED -EASURED AND )NDICATED )NFERRED 0EBBLE /05' #U #U #U !U -O 0ORPHYRY -EASURED )NDICATED -EASURED AND )NDICATED )NFERRED 3AN %NRIQUE -ONOLITO #U #U 3ULPHIDE 4#U -EASURED Ð Ð Ð Ð Ð Ð &LOTATION )NDICATED Ð Ð Ð Ð Ð Ð -EASURED AND )NDICATED Ð Ð Ð Ð Ð Ð )NFERRED Ð Ð Ð
-INING METHOD /0 /PEN 0IT 5' 5NDERGROUND ,/- ,IFE OF -INE IN YEARS BASED ON SCHEDULED /RE 2ESERVES $UE TO THE UNCERTAINTY THAT MAY BE ATTACHED TO SOME )NFERRED -INERAL 2ESOURCES IT CANNOT BE ASSUMED THAT ALL OR PART OF AN )NFERRED -INERAL 2ESOURCE WILL NECESSARILY BE UPGRADED TO AN )NDICATED OR -EASURED 2ESOURCE AFTER CONTINUED EXPLORATION 1UELLAVECO 2ESOURCE MODEL HAS BEEN UPDATED WITH NEW DRILL DATA %STIMATION AND CLASSIäCATION METHODOLOGIES HAVE BEEN IMPROVED )NCREASED METAL PRICES AND CHANGES TO THE PIT SLOPES HAVE ALSO RESULTED IN POSITIVE CHANGES TO THE -INERAL 2ESOURCES !DDITIONAL DRILL DATA HAVE INCREASED CONäDENCE IN /RE 2ESERVE CLASSIäCATION ,OS 3ULFATOS 4EST OF REASONABLE EVENTUAL ECONOMIC EXTRACTION BASED ON AN UNDERGROUND OPERATION 0EBBLE 4HE 2ESOURCES ARE BASED ON DRILLING TO -AY AND A BLOCK MODEL äNALISED IN $ECEMBER 2EPORTED -INERAL 2ESOURCES FALL WITHIN A VOLUME DEäNED BY RESOURCE PRICE ESTIMATES AND ARE BASED ON A CUT OFF GRADE OF #U%Q #ALCULATION OF COPPER EQUIVALENT #U%Q IS BASED ON LONG TERM METAL PRICES AND TAKES INTO CONSIDERATION THE RECOVERY OF COPPER GOLD AND MOLYBDENUM !T A CUT OFF OF #U%Q THE ESTIMATE OF -EASURED 2ESOURCES IS -T AT #U GT !U -O WHILE THE ESTIMATE OF )NDICATED 2ESOURCES IS -T AT #U GT !U -O 0EBBLE CO PRODUCT ESTIMATED GRADES -EASURED 'OLD GT -OLYBDENUM #U%Q AVERAGE GRADE 0EBBLE CO PRODUCT ESTIMATED GRADES )NDICATED 'OLD GT -OLYBDENUM #U%Q AVERAGE GRADE 0EBBLE CO PRODUCT ESTIMATED GRADES )NFERRED 'OLD GT -OLYBDENUM #U%Q AVERAGE GRADE 0EBBLE 3IGNIäCANT CHANGES BETWEEN AND -INERAL 2ESOURCES INCLUDE ADDITIONAL DRILLING AND CHANGES TO SOME OF THE PARAMETERS USED FOR THE DETERMINATION OF THE REASONABLE PROSPECTS PIT COSTS RECOVERIES AND PIT SLOPE ANGLE 4HE 2ESOURCE WAS ALSO AFFECTED BY CHANGES TO THE LONG TERM METAL PRICES THAT IMPACTED ON THE CALCULATION OF THE COPPER EQUIVALENT GRADE 0EBBLE 4HE PROPERTY COMPRISES A CONTINUOUS BLOCK OF LOCATED !LASKA 3TATE MINERAL CLAIMS WHICH TOTAL ACRES HECTARES AND WHICH ARE CURRENTLY VALID 4HE CLAIMS MUST BE RENEWED ANNUALLY BEFORE $ECEMBER THROUGH THE PAYMENT OF RENTAL FEES APPROXIMATELY 53 AND REGISTRATION OF WORK CONDUCTED OR PAYMENT OF CASH IN LIEU APPROX 53 4HERE ARE NO KNOWN FACTORS AFFECTING THE CLAIMS 3AN %NRIQUE -ONOLITO 4EST OF REASONABLE EVENTUAL ECONOMIC EXTRACTION BASED ON AN UNDERGROUND OPERATION
154 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 - WorldReginfo
Ore Reserves & Mineral Resources Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð KT KT KT 155 RISK AND LE PROSPECTS FOR Ð Ð Ð Ð Ð Ð ONTENT OF KT KT KT TH FULLY APPROVED PERMITS CES THAT COULD BE USED TO GRADE BOUNDARIES Ð .IQUELNDIA AND *ACAR¤ CATED OR -EASURED 2ESOURCE AFTER Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð .I .I .I .I .I .I .I Ð Ð Ð Ð Ð Ð C IS STATED SEPARATELY 2OUNDING OF äGURES 2ESOURCES AND /RE 2ESERVES 4HE */2# #ODE .I .I .I .I .I .I .I SSIONS !NGLO !MERICANÓS PARTICIPATION IN ,OMA DE .¨QUEL IS AT Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð -T -T -T HICH INCLUDED A PIT OPTIMISATION FULäLS THE TEST FOR ÕREASONAB 4ONNES 'RADE #ONTAINED METAL 4ONNES 'RADE #ONTAINED METAL 4ONNES 'RADE #ONTAINED METAL SOURCES ARE QUOTED ABOVE A .I CUT OFF AND BELOW AN IRON C EE PAGE FOR ADDITIONAL INFORMATION #URRENTLY THE AREAS WI ALISATION INSIDE A SAPROLITE ENVELOPE DEäNED BY NICKEL AND IRON MBER 4HE 0!% IS CURRENTLY UNDER CONSIDERATION BY THE $.0- METALLURGICAL TREATMENT FACILITY AND LOWER GRADE -INERAL 2ESOUR S DURING AT THE FOLLOWING OPERATIONS "ARRO !LTO #ODEMIN Ð Ð Ð Ð Ð Ð EATED BY HYDROMETALLURGICAL PROCESSES -T -T -T FERRED -INERAL 2ESOURCE WILL NECESSARILY BE UPGRADED TO AN )NDI 4OTAL 4OTAL 4OTAL Annual Report 2009 Report Annual )NFERRED )NFERRED 0ROBABLE 0ROBABLE 0ROBABLE )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED !3 !$$)4)/.!, 4/ /2% 2%3%26%3 4OTAL )NFERRED 4OTAL )NFERRED 4OTAL )NFERRED W AN IRON CONTENT OF )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED EX ,/- )NFERRED EX ,/- )NFERRED EX ,/- RAL 2ESOURCES THE PERCENTAGE ATTRIBUTABLE TO !NGLO !MERICAN PL ACCORDANCE WITH THE !USTRALASIAN #ODE FOR 2EPORTING OF -INERAL ONCESSIONS AND THE RESTORATION OF THE CANCELLED MINING CONCE -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED N PLANT THE CURRENT LIFE OF THE PLANT IS YEARS -INERAL 2E TO "RAZILÓS $EPARTAMENTO .ACIONAL DE 0RODU¢O -INERAL $.0- W Nickel 2009 December 31 estimates as at Anglo American plc American Anglo ON DRILLING TO &EBRUARY AND A BLOCK MODEL äNALISED IN $ECE RE 2ESERVES REPORTED ABOVE -INERAL 2ESOURCES INCLUDE ALL MINER HREE MINING CONCESSIONS ARE DUE FOR RENEWAL IN .OVEMBER S NS HIGHER GRADE -INERAL 2ESOURCES THAT ARE EXPECTED TO FEED A PYRO S ,ATERITE MATERIAL &ERRUGINOUS ,ATERITE IS ENVISAGED TO BE TR ON SCHEDULED /RE 2ESERVES NERAL 2ESOURCES IT CANNOT BE ASSUMED THAT ALL OR PART OF AN )N 2ESOURCE STATEMENTS WERE CARRIED OUT BY INDEPENDENT CONSULTANT !TTRIBUTABLE #LASSIäCATION !TTRIBUTABLE ,/- #LASSIäCATION !TTRIBUTABLE #LASSIäCATION -INERAL 2ESOURCES ARE QUOTED ABOVE A .I CUT OFF AND BELO $UE TO THE INCREASED UNCERTAINTY REGARDING RENEWAL OF MINING C /RE FROM "ARRO !LTO IS CURRENTLY BEING PROCESSED AT THE #ODEMI 2ESOURCES 2ESOURCES 4HE SUBMISSION OF THE 0LANO DE !PROVEITAMENTO %CONOMICO 0!% 0ROJECTS 2ESERVES "ARRO !LTO #ODEMIN Ð .IQUELNDIA AND ACTIVE CONCESSIONS ACCOUNT FOR -T AT .I OF THE /.I AND &E AND IT ALSO INCLUDES THE CANCELLED CONCESSIO MIGHT NOT CONTINUE BEYOND REFER TO NOTE ON PAGE 4 ,OMA DE .¨QUEL EVENTUAL ECONOMIC EXTRACTIONÖ 4HE -INERAL 2ESOURCES ARE BASED 4HE 3APROLITE -INERAL 2ESOURCES TABULATED ARE A COMBINATION OF NEUTRALISE THE ACID IN THE PROPOSED TREATMENT OF THE &ERRUGINOU *ACAR¤ &ERRUGINOUS ,ATERITE -EASURED ,ATERITE -EASURED ,ATERITE -EASURED ,ATERITE -EASURED ,ATERITE,ATERITE 0ROVED 0ROVED ,ATERITE 0ROVED 3APROLITE -EASURED CONTINUED EXPLORATION !UDITS RELATED TO THE GENERATION OF THE /RE 2ESERVE AND -INERAL $UE TO THE UNCERTAINTY THAT MAY BE ATTACHED TO SOME )NFERRED -I -INING METHOD /0 /PEN 0IT ,/- ,IFE OF -INE IN YEARS BASED -INERAL *ACAR¤ .ICKEL "ARRO !LTO /0 .ICKEL -INERAL "ARRO !LTO /0 .ICKEL /RE 4HE /RE 2ESERVE AND -INERAL 2ESOURCE ESTIMATES WERE COMPILED IN Ore Reserves and Mineral Resources Mineral and Reserves Ore AS A MINIMUM STANDARD 4(% -).%2!, 2%3/52#%3 !2% 2%0/24%$4HE äGURES REPORTED REPRESENT OF THE /RE 2ESERVES AND -INE MAY CAUSE COMPUTATIONAL DISCREPANCIES ,OMA DE .¨QUEL /0 #ODEMIN Ð .IQUELNDIA /0 #ODEMIN Ð .IQUELNDIA /0 ,OMA DE .¨QUEL /0 Nickel Ore Reserves and Mineral Resources Niobium and Phosphate products estimates as at 31 December 2009
4HE /RE 2ESERVE AND -INERAL 2ESOURCE ESTIMATES WERE COMPILED IN ACCORDANCE WITH THE !USTRALASIAN #ODE FOR 2EPORTING OF -INERAL 2ESOURCES AND /RE 2ESERVES 4HE */2# #ODE AS A MINIMUM STANDARD 4(% -).%2!, 2%3/52#%3 !2% 2%0/24%$ !3 !$$)4)/.!, 4/ /2% 2%3%26%3
4HE äGURES REPORTED REPRESENT OF THE /RE 2ESERVES AND -INERAL 2ESOURCES THE PERCENTAGE ATTRIBUTABLE TO !NGLO !MERICAN PLC IS STATED SEPARATELY 2OUNDING OF äGURES MAY CAUSE COMPUTATIONAL DISCREPANCIES
Niobium
.IOBIUM 4ONNES 'RADE #ONTAINED PRODUCT /RE 2ESERVES !TTRIBUTABLE ,/- #LASSIäCATION
#ATALO /0 -T -T .B/ .B/ KT KT #ARBONATITE /XIDE 0ROVED 0ROBABLE 4OTAL
.IOBIUM 4ONNES 'RADE #ONTAINED PRODUCT -INERAL 2ESOURCES !TTRIBUTABLE #LASSIäCATION #ATALO /0 -T -T .B/ .B/ KT KT #ARBONATITE -EASURED )NDICATED -EASURED AND )NDICATED )NFERRED IN ,/- )NFERRED EX ,/- 4OTAL )NFERRED
Phosphate products
0HOSPHATE PRODUCTS 4ONNES 'RADE /RE 2ESERVES !TTRIBUTABLE ,/- #LASSIäCATION
#OPEBRS /0 -T -T 0/ 0/ #ARBONATITE 0ROVED 0ROBABLE 4OTAL
0HOSPHATE PRODUCTS 4ONNES 'RADE -INERAL 2ESOURCES !TTRIBUTABLE #LASSIäCATION #OPEBRS /0 -T -T 0/ 0/ #ARBONATITE -EASURED )NDICATED -EASURED AND )NDICATED )NFERRED IN ,/- )NFERRED EX ,/- 4OTAL )NFERRED
-INING METHOD /0 /PEN 0IT ,/- ,IFE OF -INE IN YEARS BASED ON SCHEDULED /RE 2ESERVES $UE TO THE UNCERTAINTY THAT MAY BE ATTACHED TO SOME )NFERRED -INERAL 2ESOURCES IT CANNOT BE ASSUMED THAT ALL OR PART OF AN )NFERRED -INERAL 2ESOURCE WILL NECESSARILY BE UPGRADED TO AN )NDICATED OR -EASURED 2ESOURCE AFTER CONTINUED EXPLORATION
#ATALO -INERAL 2ESOURCES INCLUDE -T OXIDE MATERIAL AND -T FRESH ROCK AND ARE REPORTED ABOVE CUT OFFS OF .B/ AND .B/ RESPECTIVELY 3OME -T OF THE -INERAL 2ESOURCES REPORTED ABOVE ARE LOCATED ON AN ADJACENT MINING CONCESSION THAT BELONGS TO &OSF¤RTIL !N AGREEMENT FOR -INERA¢O #ATALO TO MINE THIS MATERIAL IS IN PLACE SUBJECT TO ROYALTY PAYMENTS
#OPEBRS -INERAL 2ESOURCES ARE QUOTED ABOVE A 0/ CUT OFF AND WITH A #A/ 0/ RATIO BETWEEN AND
156 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 - WorldReginfo
Ore Reserves & Mineral Resources Ð Ð Ð Ð Ð Ð KT KT 157 Ð Ð Ð Ð Ð Ð KT KT Ð Ð Ð Ð Ð Ð 0B 0B 0B 0B :N :N :N :N :N #U #U #U Ð Ð Ð Ð Ð Ð C IS STATED SEPARATELY 2OUNDING OF äGURES 2ESOURCES AND /RE 2ESERVES 4HE */2# #ODE 0B 0B 0B 0B :N :N :N :N :N #U #U #U Ð Ð -T -T 4ONNES 'RADE #ONTAINED METAL 4ONNES 'RADE #ONTAINED METAL Ð Ð -T -T 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL Annual Report 2009 Report Annual 0ROVED 0ROVED 0ROVED 0ROVED )NFERRED )NFERRED )NFERRED 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED -EASURED -EASURED -EASURED -EASURED -EASURED !3 !$$)4)/.!, 4/ /2% 2%3%26%3 4OTAL )NFERRED 4OTAL )NFERRED 4OTAL )NFERRED )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED EX ,/- )NFERRED EX ,/- )NFERRED EX ,/- RAL 2ESOURCES THE PERCENTAGE ATTRIBUTABLE TO !NGLO !MERICAN PL ACCORDANCE WITH THE !USTRALASIAN #ODE FOR 2EPORTING OF -INERAL -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED Zinc 2009 December 31 estimates as at Anglo American plc American Anglo !TTRIBUTABLE #LASSIäCATION !TTRIBUTABLE ,/- #LASSIäCATION 2ESOURCES 2ESERVES :INC -EASURED :INC 0ROVED :INC 0ROVED ,EAD ,EAD #OPPER #OPPER #OPPER :INC )NDICATED ,EAD ,EAD :INC 0ROBABLE $EEPS "LACK -OUNTAIN 5' -INERAL :INC $EEPS MAY CAUSE COMPUTATIONAL DISCREPANCIES AS A MINIMUM STANDARD 4(% -).%2!, 2%3/52#%3 !2% 2%0/24%$4HE äGURES REPORTED REPRESENT OF THE /RE 2ESERVES AND -INE :INC /RE "LACK -OUNTAIN 5' Ore Reserves and Mineral Resources Mineral and Reserves Ore 3WARTBERG 3KORPION /0 ,ISHEEN 5' 4HE /RE 2ESERVE AND -INERAL 2ESOURCE ESTIMATES WERE COMPILED IN Ore Reserves and Mineral Resources Zinc estimates as at 31 December 2009
:INC 4ONNES 'RADE #ONTAINED METAL -INERAL 2ESOURCES CONTINUED !TTRIBUTABLE #LASSIäCATION ,ISHEEN 5' -T -T :N :N KT KT :INC -EASURED )NDICATED -EASURED AND )NDICATED )NFERRED IN ,/- )NFERRED EX ,/- 4OTAL )NFERRED ,EAD 0B -EASURED )NDICATED -EASURED AND )NDICATED )NFERRED IN ,/- )NFERRED EX ,/- 4OTAL )NFERRED 3KORPION /0 :N :N :INC -EASURED )NDICATED -EASURED AND )NDICATED )NFERRED IN ,/- )NFERRED EX ,/- 4OTAL )NFERRED
:INC 0ROJECTS 4ONNES 'RADE #ONTAINED METAL /RE 2ESERVES !TTRIBUTABLE ,/- #LASSIäCATION 'AMSBERG Ð .ORTH /0 Ð -T -T :N :N KT KT :INC 0ROVED Ð Ð Ð 0ROBABLE Ð Ð Ð 4OTAL Ð Ð Ð
:INC 0ROJECTS 4ONNES 'RADE #ONTAINED METAL -INERAL 2ESOURCES !TTRIBUTABLE #LASSIäCATION 'AMSBERG Ð .ORTH /0 -T -T :N :N KT KT :INC -EASURED Ð Ð Ð )NDICATED Ð Ð Ð -EASURED AND )NDICATED Ð Ð Ð )NFERRED 'AMSBERG Ð %AST 5' :N :N :INC -EASURED Ð Ð Ð Ð Ð Ð )NDICATED Ð Ð Ð Ð Ð Ð -EASURED AND )NDICATED Ð Ð Ð Ð Ð Ð )NFERRED Ð Ð Ð
-INING METHOD /0 /PEN 0IT 5' 5NDERGROUND ,/- ,IFE OF -INE IN YEARS BASED ON SCHEDULED /RE 2ESERVES &OR THE POLYMETALLIC DEPOSITS THE TONNAGE äGURES APPLY TO EACH METAL $UE TO THE UNCERTAINTY THAT MAY BE ATTACHED TO SOME )NFERRED -INERAL 2ESOURCES IT CANNOT BE ASSUMED THAT ALL OR PART OF AN )NFERRED -INERAL 2ESOURCE WILL NECESSARILY BE UPGRADED TO AN )NDICATED OR -EASURED 2ESOURCE AFTER CONTINUED EXPLORATION "LACK -OUNTAIN Ð $EEPS "ROKEN (ILL AND THE $EEPS /RE 2ESERVES AND -INERAL 2ESOURCES ARE COMBINED FOR REPORTING PURPOSES AS BOTH DEPOSITS ARE GEOLOGICALLY CONNECTED AND MAKE USE OF THE SAME MINING INFRASTRUCTURE 4HE DECREASE IN /RE 2ESERVES DUE TO PRODUCTION HAS BEEN PARTIALLY OFFSET THROUGH CHANGED ECONOMIC ASSUMPTIONS AND UPDATED RESOURCES MODELLING BASED ON NEW INFORMATION 4HE DEäNITION OF -INERAL 2ESOURCES FOR "ROKEN (ILL AND THE $EEPS IS BASED ON THE SAME ECONOMIC AND äNANCIAL PARAMETERS AS USED FOR THE DEäNITION OF /RE 2ESERVES -EASURED AND )NDICATED 2ESOURCES ARE ESTIMATED TO CONTAIN -T OF MATERIAL GRADING GT SILVER AS A BY PRODUCT )NFERRED 2ESOURCES ARE ESTIMATED TO CONTAIN -T OF MATERIAL GRADING GT SILVER AS A BY PRODUCT ,ISHEEN #HANGES ARE LARGELY ATTRIBUTABLE TO PRODUCTION AS WELL AS CHANGES IN THE RESOURCE MODEL RE CLASSIäCATION OF )NDICATED 2ESOURCES TO )NFERRED 2ESOURCES WHICH ARE NOW NOT AVAILABLE FOR CONVERSION TO /RE 2ESERVES AND STERILISATION OF ORE DUE TO BACK äLLING ON A RETREAT MINING SEQUENCE -INERAL 2ESOURCES ARE CONSTRAINED BY GEOLOGICAL PARAMETERS TOTAL SULPHIDE CONTENT AND ORE THICKNESS AND ARE QUOTED ABOVE A :N%Q CUT OFF 3KORPION 0RODUCTION HAS BEEN PARTIALLY OFF SET BY ADDITIONAL /RE 2ESERVES DERIVED THROUGH IMPROVED METAL PRICE ASSUMPTIONS AND FURTHER GEOLOGICAL INFORMATION !N UPDATE OF THE GEOTECHNICAL MODEL FOR PIT SLOPE DESIGN IS IN PROGRESS -INERAL 2ESOURCES ARE CONSTRAINED BY GEOLOGICAL CONTACTS AND ARE DEäNED USING ECONOMIC VALUES AND A CUT OFF GRADE :N ! MAJOR -INERAL 2ESOURCE MODEL UPDATE BASED ON RECENT DRILLING INFORMATION IS IN PROGRESS "LACK -OUNTAIN Ð 3WARTBERG 4HE 3WARTBERG MINE WAS PLACED ON CARE AND MAINTENANCE FROM *ANUARY 4HE /RE 2ESERVES WERE REMOVED FROM THE MINE PLAN AND CONVERTED TO -INERAL 2ESOURCES )NDICATED 2ESOURCES ARE ESTIMATED TO CONTAIN -T OF MATERIAL GRADING GT SILVER AS A BY PRODUCT )NFERRED 2ESOURCES ARE ESTIMATED TO CONTAIN -T OF MATERIAL GRADING GT SILVER AS A BY PRODUCT 'AMSBERG Ð .ORTH 4HE 'AMSBERG DEPOSIT HAS BEEN RENAMED 'AMSBERG .ORTH TO DISTINGUISH IT FROM THE RECENTLY DISCOVERED 'AMSBERG %AST DEPOSIT 'AMSBERG Ð .ORTH 4HE /RE 2ESERVES PUBLISHED IN WERE BASED ON THE &EASIBILITY 3TUDY )N THE PERIOD BETWEEN AND SUBSTANTIAL CHANGE TOOK PLACE IN THE TECHNO ECONOMIC ENVIRONMENT OF THE 'AMSBERG PROJECT -ARKET COST AND EXCHANGE RATE OUTLOOKS WERE CONSIDERABLY DIFFERENT WHILE SUBSTANTIAL CHANGES HAD BEEN MADE TO THE UNDERSTANDING OF THE RESOURCE AND THE MINERAL EXPLORATION POTENTIAL OF THE GREATER 'AMSBERG ENVIRON !DVANCES IN THE UNDERSTANDING OF THE CHEMISTRY OF MANGANESE REMOVAL AND IMPROVED LEACHING TECHNOLOGY LED TO MORE TECHNICALLY ROBUST AND EFäCIENT METALLURGICAL PROCESS DESIGN OPTIONS WHICH NEEDED INVESTIGATION #HANGES TO THE REGULATORY MINERAL RIGHTS AND SOCIO ECONOMIC ENVIRONMENT POWER SOCIAL COSTS ETC IN 3OUTH !FRICA NEEDED TO BE INCORPORATED INTO THE PROJECT STUDIES ! PRE FEASIBILITY STUDY WHICH WAS INITIATED IN LATE IS NOT YET COMPLETE AND THEREFORE NO /RE 2ESERVES ARE REPORTABLE IN 'AMSBERG Ð .ORTH -INERAL 2ESOURCE ESTIMATES HAVE BEEN UPDATED FOLLOWING INäLL DRILLING CAMPAIGNS CARRIED OUT DURING AND TO BOTH VALIDATE HISTORIC DATA AS WELL AS INCREASE CONäDENCE IN THE -INERAL 2ESOURCES -INERAL 2ESOURCES ARE CONSTRAINED WITHIN MINERALIZED HORIZONS AND WITHIN A PIT SHELL AND ARE REPORTED ABOVE A CUT OFF GRADE OF :N $URING SOME KT OF MATERIAL WITH AN AVERAGE GRADE OF :N WERE MINED VIA THE EXPLORATION ADIT AND PROCESSED AT THE "LACK -OUNTAIN CONCENTRATOR 'AMSBERG Ð %AST 'AMSBERG %AST IS LOCATED KM SOUTH EAST OF 'AMSBERG .ORTH -INERAL 2ESOURCES ARE CONSTRAINED BY GEOLOGY AND ARE QUOTED ABOVE A :N CUT OFF AND ARE SUPPORTED BY A POSITIVE CONCEPT STUDY FOR AN UNDERGROUND MINE UNDERTAKEN IN 4HIS STUDY HAS RECOMMENDED THAT 'AMSBERG %AST IS INCORPORATED IN THE 'AMSBERG .ORTH PRE FEASIBILITY STUDY !S THAT STUDY HAS NOT YET BEEN COMPLETED NO /RE 2ESERVES ARE CURRENTLY REPORTABLE !UDITS RELATED TO THE GENERATION OF THE /RE 2ESERVE AND -INERAL 2ESOURCE STATEMENTS WERE CARRIED OUT BY INDEPENDENT CONSULTANTS DURING AT THE FOLLOWING OPERATIONS "LACK -OUNTAIN 3KORPION
158 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 - WorldReginfo
Ore Reserves & Mineral Resources -T 159 &E &E &E &E &E &E &E &E &E &E &E &E &E &E &E -T UE TO AN ASSOCIATED S IS NOT IN THE CURRENT LIFE OF E 0RODUCT &E CUT OFF GRADE CATED OR -EASURED 2ESOURCE AFTER /RE !NNUAL 2EPORT &E &E -T &E &E &E &E &E &E &E 4ONNES 'RADE 2% 2%0/24%$ !3 !$$)4)/.!, 4/ REASE IS PRIMARILY DUE TO A CONVERSION TO /RE &E &E &E REASE IS PRIMARILY THE RESULT OF A DOWNWARD ADJUSTMENT OF C IS STATED SEPARATELY 2OUNDING OF äGURES ES IN 4HE CONVERSION GAIN WAS OFFSET BY MINING -T ION OF /RE 2ESERVE DEPLETION IN AND A SMALL INCREASE IN &E &E &E )NDICATED )NDICATED )NDICATED -EASURED -EASURED -EASURED -T #LASSIäCATION FERRED -INERAL 2ESOURCES CONSIDERED FOR THE LIFE OF MINE PLAN D 4OTAL )NFERRED 4OTAL )NFERRED 4OTAL )NFERRED 4ONNES 'RADE 3ALEABLE PRODUCT VIOUSLY DEäNED ORE MATERIAL BEING TRANSFERRED TO WASTE 4HE LOS ED FOR THE 4HABAZIMBI -INE LIFE OF MINE SCHEDULING IS A 3ALEABL S DURING AT THE FOLLOWING OPERATIONS +OLOMELA -INE RTING $ETAILS OF THIS PROJECT ARE PRESENTED IN THE +UMBA )RON )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- FERRED -INERAL 2ESOURCE WILL NECESSARILY BE UPGRADED TO AN )NDI )NFERRED EX ,/- )NFERRED EX ,/- )NFERRED EX ,/- -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -T EVIOUSLY REPORTED 7ITHIN 0IT AND /UTSIDE 0IT RESOURCES 4HE DEC VIOUSLY REPORTED 7ITHIN 0IT AND /UTSIDE 0IT RESOURCES Annual Report 2009 Report Annual EVIOUSLY REPORTED 7ITHIN 0IT AND /UTSIDE 0IT RESOURCES 4HE DEC OF THE CONVERSION PROCESS OF -INERAL 2ESOURCES INTO /RE 2ESERV 4OTAL 4OTAL 4OTAL MARGINALLY NEGATED BY A MINOR CORRECTION MADE FOR OVER ESTIMAT 0ROVED 0ROVED 0ROVED 0ROBABLE 0ROBABLE 0ROBABLE -INE RAL 2ESOURCES THE PERCENTAGE ATTRIBUTABLE TO !NGLO !MERICAN PL ACCORDANCE WITH 4HE 3!-2%# #ODE 4(% -).%2!, 2%3/52#%3 ! Iron OreIron 2009 December 31 estimates as at Anglo American plc American Anglo TION IN FOR A SLIGHT IMPROVEMENT IN RESOURCE UTILISATION TION IN AND THE DOWNGRADING OF 0ROBABLE /RE 2ESERVES TO )N TED IN A FURTHER ADDITION OF /RE 2ESERVES 4HE CUT OFF GRADE US ON NEW INFORMATION 4HIS DECREASE IN IRON GRADE RESULTED IN PRE ON SCHEDULED /RE 2ESERVES T FOR MILLION TONNES NERAL 2ESOURCES IT CANNOT BE ASSUMED THAT ALL OR PART OF AN )N OFF VALUE WAS INCLUDED IN THE SCHEDULE AS 2/- S SHAREHOLDING IS BELOW THE INTERNAL THRESHOLD FOR REPO 2ESOURCE STATEMENTS WERE CARRIED OUT BY INDEPENDENT CONSULTANT WHICH DEäNES THE SPATIAL LIMITS OF EVENTUAL ECONOMIC EXTRACTION 4HE -INERAL 2ESOURCES REPRESENT THE COMBINATION OF THE PR 4HE -INERAL 2ESOURCES REPRESENT THE COMBINATION OF THE PRE !TTRIBUTABLE ,/- #LASSIäCATION !TTRIBUTABLE 4HE PRIMARY REASON FOR THE NET INCREASE IS A COMPLETE REVISION 4HE -INERAL 2ESOURCES REPRESENT THE COMBINATION OF THE PR 4HE DECREASE IS MAINLY AS A RESULT OF DEPLETION DUE TO MINING 4HE 3ISHEN 3OUTH )RON /RE 0ROJECT HAS BEEN RENAMED TO +OLOMELA 2ESOURCES /RE /RE 2ESERVES DEPLETION A CORRECTION MADE FOR THE UNDER ESTIMATION OF PRODUCGEOTECHNICAL RISK 'EOLOGICAL BLOCK MODEL UPDATES IN RESUL 4HABAZIMBI -INE Ð /RE 2ESERVES 4HABAZIMBI -INE Ð -INERAL 2ESOURCES 2ESERVES BASED ON A COMPLETE REVISION OF THE /RE 2ESERVE ESTIMA 3ISHEN -INE Ð /RE 2ESERVES /RE 2ESERVES BASED ON A REVISED SCHEDULING PROCESS THAT ALLOWS +OLOMELA -INE +OLOMELA -INE Ð -INERAL 2ESOURCES 3ISHEN -INE Ð -INERAL 2ESOURCES THE IN SITU &E GRADE ESTIMATE OF LOW GRADE ORE MATERIAL BASED MINE PLAN AND ALL MATERIAL THAT COULD BE BENEäCIATED TO AT LEAST THIS CUT -INING METHOD /0 /PEN 0IT ,/- ,IFE OF -INE IN YEARS BASED 4HE TONNAGE IS QUOTED AS DRY METRIC TONNES AND ABBREVIATED AS -4HE -INERAL 2ESOURCES ARE CONSTRAINED BY A RESOURCE PIT SHELL $UE TO THE UNCERTAINTY THAT MAY BE ATTACHED TO SOME )NFERRED -I CONTINUED EXPLORATION 4HE :ANDRIVIERSPOORT 0ROJECT IS NOT REPORTED AS !NGLO !MERICANÓ )RON -INERAL 3ISHEN -INE /0 !UDITS RELATED TO THE GENERATION OF THE /RE 2ESERVE AND -INERAL 3ISHEN -INE /0 )RON /RE 4HE /RE 2ESERVE AND -INERAL 2ESOURCE ESTIMATES WERE COMPILED IN Ore Reserves and Mineral Resources Mineral and Reserves Ore /2% 2%3%26%3 4HE äGURES REPORTED REPRESENT OF THE /RE 2ESERVES AND -INE MAY CAUSE COMPUTATIONAL DISCREPANCIES +OLOMELA -INE /0 4HABAZIMBI -INE /0 +OLOMELA -INE /0 4HABAZIMBI -INE /0 Kumba Iron Ore Ore Reserves and Mineral Resources Iron Ore estimates as at 31 December 2009
Iron Ore Brazil 4HE -INAS 2IO PROJECT IS LOCATED IN THE STATE OF -INAS 'ERAIS "RAZIL AND WILL INCLUDE OPEN PIT MINES AND A BENEäCIATION PLANT PRODUCING HIGH GRADE PELLET FEED WHICH WILL BE TRANSPORTED THROUGH A SLURRY PIPELINE OVER KM TO THE 0ORT OF !¢U IN THE STATE OF 2IO DE *ANEIRO 4HE PROJECT WILL LARGELY BE BASED ON THE TWO MAIN DEPOSITS OF 3ERRA DO 3APO AND )TAPANHOACANGA 4WO ORE TYPES &RIABLE AND (ARD )TABIRITE HAVE BEEN IDENTIäED AT 3ERRA DO 3APO AND )TAPANHOACANGA /NLY THE &RIABLE )TABIRITE IS BEING CONSIDERED FOR 0HASE OF THE PROJECT 4HE PLANNED ANNUAL CAPACITY OF 0HASE IS -TPA OF IRON ORE PELLET FEED WET TONNES FOR START UP DURING IN THE SECOND HALF OF
4HE äGURES REPORTED REPRESENT OF THE -INERAL 2ESOURCES 2OUNDING OF äGURES MAY CAUSE COMPUTATIONAL DISCREPANCIES
!MAP 4ONNES 'RADE -INERAL 2ESOURCES !TTRIBUTABLE #LASSIäCATION !MAP /0 -T -T &E &E #ANGA -EASURED Ð Ð Ð Ð )NDICATED Ð Ð Ð Ð -EASURED AND )NDICATED Ð Ð Ð Ð )NFERRED Ð Ð #OLLUVIUM -EASURED Ð Ð )NDICATED Ð Ð -EASURED AND )NDICATED Ð Ð )NFERRED Ð Ð &RIABLE )TABIRITE AND (EMATITE -EASURED Ð Ð )NDICATED Ð Ð -EASURED AND )NDICATED Ð Ð )NFERRED Ð Ð
-INAS 2IO )RON /RE 0ROJECT 4ONNES 'RADE -INERAL 2ESOURCES !TTRIBUTABLE #LASSIäCATION )TAPANHOACANGA /0 -T -T &E &E &RIABLE )TABIRITE AND (EMATITE -EASURED Ð Ð )NDICATED -EASURED AND )NDICATED )NFERRED (ARD )TABIRITE -EASURED Ð Ð )NDICATED Ð Ð -EASURED AND )NDICATED Ð Ð )NFERRED 3ERRA DO 3APO /0 &E &E &RIABLE )TABIRITE AND (EMATITE -EASURED )NDICATED -EASURED AND )NDICATED )NFERRED (ARD )TABIRITE -EASURED Ð Ð )NDICATED -EASURED AND )NDICATED )NFERRED 3ERRO /0 &E &E &RIABLE )TABIRITE AND (EMATITE -EASURED Ð Ð Ð Ð )NDICATED -EASURED AND )NDICATED )NFERRED (ARD )TABIRITE -EASURED Ð Ð Ð Ð )NDICATED Ð Ð -EASURED AND )NDICATED Ð Ð )NFERRED
-INING METHOD /0 /PEN 0IT $UE TO THE UNCERTAINTY THAT MAY BE ATTACHED TO SOME )NFERRED -INERAL 2ESOURCES IT CANNOT BE ASSUMED THAT ALL OR PART OF AN )NFERRED -INERAL 2ESOURCE WILL NECESSARILY BE UPGRADED TO AN )NDICATED OR -EASURED 2ESOURCE AFTER CONTINUED EXPLORATION !MAP Ð -INERAL 2ESOURCES 4HE CUT OFF GRADE USED IS &E !SSAYS ARE ON A DRY BASIS 4ONNAGES ARE REPORTED ON A WET BASIS WITH AN AVERAGE MOISTURE CONTENT OF WT FOR #OLLUVIUM AND WT FOR &RIABLE )TABIRITE AND (EMATITE ORE !MAP )NCLUDES THE -RIO #RUZ -ARTELO 4ABOCA 4ABOCA ,ESTE AND 6ILA DO -EIO AREAS 4HE 4ABOCA ,ESTE AREA COMPRISES THE FOLLOWING )NFERRED 2ESOURCES #ANGA Ð -T &E #OLLUVIUM Ð -T &E AND &RIABLE )TABIRITE Ð -T &E &RIABLE )TABIRITE AND (EMATITE INCLUDES &RIABLE )TABIRITE !LTERED &RIABLE )TABIRITE AND &RIABLE (EMATITE -INAS 2IO 0ROJECT Ð -INERAL 2ESOURCES 4HE CUT OFF GRADE USED IS &E !SSAYS ARE ON A DRY BASIS 4ONNAGES ARE REPORTED ON A WET BASIS WITH AN AVERAGE MOISTURE CONTENT OF WT FOR &RIABLE ORE &RIABLE )TABIRITE AND (EMATITE INCLUDES &RIABLE )TABIRITE 3EMI #OMPACT )TABIRITE AND &RIABLE (EMATITE )TAPANHOACANGA äGURES COMPRISE MATERIAL ABOVE &E CUT OFF GRADE ,OW GRADE -INERAL 2ESOURCES BETWEEN &E AND &E WERE INCLUDED IN TABLE FOOTNOTES IN AND ARE NOW COMBINED WITH THE PREVIOUSLY REPORTED HIGH GRADE -INERAL 2ESOURCES &RIABLE )TABIRITE AND (EMATITE INCLUDES &RIABLE )TABIRITE 3EMI #OMPACT )TABIRITE 3OFT (EMATITE AND (ARD (EMATITE ! PORTION OF THE ADJACENT 1UARTZ 8 -INERA¢O ,TD PROPERTY IS INCLUDED IN THE äGURES -EASURED -T &E )NDICATED -T &E )NFERRED -T &E 3ERRA DO 3APO &RIABLE )TABIRITE AND (EMATITE INCLUDES &RIABLE )TABIRITE 3EMI #OMPACT )TABIRITE AND 3OFT (EMATITE 4HE &RIABLE )TABIRITE AND (EMATITE INCLUDES AN AREA CONTAINING HIGH !LUMINA CONTENT -T -INERA¢O 4RINDADE ,TD PROPERTIES ARE INCLUDED IN THE äGURES )NDICATED -T &E )NFERRED -T &E 3ERRO äGURES COMPRISE MATERIAL ABOVE &E CUT OFF GRADE ,OW GRADE -INERAL 2ESOURCES BETWEEN &E AND &E WERE INCLUDED IN TABLE FOOTNOTES IN AND ARE NOW COMBINED WITH THE PREVIOUSLY REPORTED HIGH GRADE -INERAL 2ESOURCES &RIABLE )TABIRITE AND (EMATITE INCLUDES &RIABLE )TABIRITE 3EMI #OMPACT )TABIRITE AND (ARD (EMATITE -T &E !UDITS RELATED TO THE GENERATION OF THE -INERAL 2ESOURCE STATEMENTS WERE CARRIED OUT BY INDEPENDENT CONSULTANTS DURING AT THE FOLLOWING OPERATIONS AND PROJECTS !MAP )TAPANHOACANGA 3ERRA DO 3APO AND 3ERRO
160 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 - WorldReginfo
Ore Reserves & Mineral Resources F L 161 EN TRANSFERRED TO AND NERALS AND %NERGY CHANGE FOR EQUITY IN MIC VALUE 0LEASE NOTE ARE ALSO DECLARED AS ERSION OF NEW DRILLHOLE AND PPROVAL OF THE 3OUTH !FRICAN CATED OR -EASURED 2ESOURCE AFTER Ð -N -N -N -N -N -N AS APPLICABLE IMBINTLE AGREEMENT HAS BEEN SIGNED BY BOTH PARTIES E -INING 0TY ,TD ! MAJOR POSITIVE CHANGE IN Ð USE COMPUTATIONAL DISCREPANCIES -N -N -N -N -N -N D AFTER A COMPLETE RERUN OF THE BLOCK MODEL WITH THE ADDITION O RE 2ESERVES CHANGES IN äNAL PILLAR LAYOUT DUE TO INCLUSION OF .TSIMBINTLE PART OF THE ,OWER "ODY REäNEMENT OF THE GEOLOGICA Ð -T -T 4ONNES 'RADE 9IELD 4ONNES 'RADE 9IELD ING 2IGHTS THROUGH A 3ECTION CONVERSION 4HE RIGHTS HAVE BE !CT APPROVAL BY THE 3OUTH !FRICAN $EPARTMENT OF -I DIFYING FACTORS HAVE BEEN USED FOR THE RESOURCE TO RESERVE CONV OUTSTANDING DUE TO INSUFäCIENT DATA 4HIS WILL FOLLOWING THE A DEPLETION DUE TO A RERUN OF THE BLOCK MODEL WITH THE ADDITION ES AND DEPENDING ON MARKET CONDITIONS NOW HAS POTENTIAL ECONO BY .TSIMBINTLE INTO THE -AMATWAN AND 7ESSELS -INING !REA IN EX N THE DENSITY METHODOLOGY USED THE 8 :ONE AND 4OP #UT "ALANCE N OF RE EVALUATED REMNANT ORE BLOCKS Ð -T -T FERRED -INERAL 2ESOURCE WILL NECESSARILY BE UPGRADED TO AN )NDI 4OTAL 4OTAL 4OTAL DE AND NOW INCLUDES -INERAL 2ESOURCES CONTRIBUTED BY .TSIMBINTL Annual Report 2009 Report Annual ND EMPOWERMENT CONSORTIUM .TSIMBINTLE -INING 0TY ,TD 4HE .TS 0ROVED 0ROVED 0ROVED )NFERRED )NFERRED )NFERRED 0ROBABLE 0ROBABLE 0ROBABLE )NDICATED )NDICATED )NDICATED -EASURED -EASURED -EASURED ING 0TY ,TD ! DECREASE IN THE 5PPER "ODY RESOURCE IS REPORTE OR VARIOUS ZONES WITHIN THE OREBODY INCLUSION OF .TSIMBINTLE / USION OF THE 5PPER "ODY INTO THE ,/- 0LAN THE INCLUSION OF THE RAL 2ESOURCES SOURCE "(0 "ILLITON 2OUNDING OF äGURES MAY CA ACCORDANCE WITH 4HE 3!-2%# #ODE AND 4HE */2# #ODE -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED Manganese 2009 December 31 estimates as at Anglo American plc American Anglo TY ,TD EFFECTIVE AS AT !PRIL SUBSEQUENT TO A SECTION (OTAZEL -ANGANESE -INES THEREFORE DROPS TO / TONNAGES STATED AS DRY METRIC TONNES E .TSIMBINTLE 0ROSPECTING 2IGHT TO THE -AMATWAN AND 7ESSELS -IN ALLOWS FOR THE INCLUSION OF PART OF THE 0ROSPECTING 2IGHTS HELD FOR INCLUSION IN INE IN YEARS BASED ON SCHEDULED /RE 2ESERVES TWEEN (OTAZEL -ANGANESE -INES A Mn ON THE WESTERN SIDE WITHIN THE .TSIMBINLE PORTION REMAINS ILABLE FOR MINING AND DEPLETION DUE TO PRODUCTION DJUSTMENT OF THE SUB OUTCROP POSITION IN PLACES AND THE ADDITIO #HANGES IN THE ,OWER "ODY 2ESOURCE ARE APART FROM PRODUCTION E MINED IN THE PROCESS OF ACCESSING THE ECONOMIC - # AND . :ON ND PRODUCTION DEPLETION .EW SCHEDULING SOFTWARE AND UPDATED MO AFTER REMOVAL OF THE 8 ZONE #HANGES ALSO DUE TO A REäNEMENT I NERAL 2ESOURCES IT CANNOT BE ASSUMED THAT ALL OR PART OF AN )N !TTRIBUTABLE ,/- #LASSIäCATION !TTRIBUTABLE #LASSIäCATION -INERAL 2ESOURCES HAVE BEEN DECLARED ABOVE A -N CUT OFF GRA !LL CHANGES ARE AS A RESULT OF DEPLETION DUE TO MINING &IGURES INCLUDE THOSE RESOURCES CONTRIBUTED BY .TSIMBINTLE -IN !N AGREEMENT HAS BEEN REACHED BE #HANGES IN TONNAGES ARE DUE TO A REäNEMENT OF DENSITIES USED F 4HE MAIN REASONS FOR THE INCREASE IN /RE 2ESERVES ARE THE INCL #HANGES ARE THE RESULT OF PRICING CHANGES BETWEEN &9 AND &9 2ESOURCES 2ESERVES '%-#/ Ð -INERAL 2ESOURCES (OTAZEL -ANGANESE -INES AND APPROVED BY THE 3OUTH !FRICAN 'OVERNMENT 4HIS TRANSACTION '%-#/ Ð /RE 2ESERVES -AMATWAN Ð /RE 2ESERVES NEW DRILLHOLE DATA AND SUBSEQUENT GEOLOGICAL RE INTERPRETATION UNDERGROUND FACE SAMPLING DATA GEOLOGICAL RE INTERPRETATION A 7ESSELS Ð -INERAL 2ESOURCES -AMATWAN Ð -INERAL 2ESOURCES TONNAGE IS DUE TO THE INCLUSION OF THE BALANCE OF THE 4OP #UT 'OVERNMENT AND DELINEATION OF OFäCIAL BOUNDARIES BE EVALUATED THAT THE MODELLING AND TONNAGE DECLARATION OF AN AREA OF 7ESSELS Ð /RE 2ESERVES MODEL AFTER THE ADDITION OF NEW DRILLHOLE AND GEOLOGICAL DATA A (OTAZEL -ANGANESE -INES THEREBY ADDING THE RESOURCES WITHIN TH ARE NOW HELD BY A NEW COMPANY CALLED (OTAZEL -ANGANESE -INES 0 -INERAL 2ESOURCE !S A MATTER OF COURSE THIS MATERIAL HAS TO B $-% 4HE !NGLO !MERICAN SHARE OF 7ESSELS AND -AMATWAN MINES 4(% -).%2!, 2%3/52#%3 ).#,5$% /2% 2%3%26%3 4HE äGURES REPORTED REPRESENT OF THE /RE 2ESERVES AND -INE -INING METHOD /0 /PEN 0IT 5' 5NDERGROUND ,/- ,IFE OF - -AMATWAN TONNAGES STATED AS WET METRIC TONNES 7ESSELS AND '%-# $UE TO THE UNCERTAINTY THAT MAY BE ATTACHED TO SOME )NFERRED -I CONTINUED EXPLORATION .TSIMBINTLE /RE 2ESERVES RESULTING IN MORE RESERVES BEING AVA -INERAL '%-#/ /0 -ANGANESE -ANGANESE /RE '%-#/ /0 4HE /RE 2ESERVE AND -INERAL 2ESOURCE ESTIMATES WERE COMPILED IN Ore Reserves and Mineral Resources Mineral and Reserves Ore (OTAZEL Ð 7ESSELS 5' (OTAZEL Ð 7ESSELS 5' (OTAZEL Ð -AMATWAN /0 (OTAZEL Ð -AMATWAN /0 Samancor Manganese Samancor Ore Reserves and Mineral Resources Coal estimates as at 31 December 2009
4HE #OAL 2ESERVE AND #OAL 2ESOURCE ESTIMATES WERE COMPILED IN ACCORDANCE WITH THE !USTRALASIAN #ODE FOR 2EPORTING OF -INERAL 2ESOURCES AND /RE 2ESERVES 4HE */2# #ODE AS A MINIMUM STANDARD 7HERE RELEVANT THE ESTIMATES WERE ALSO PREPARED IN COMPLIANCE WITH REGIONAL CODES AND REQUIREMENTS EG 4HE 3!-2%# #ODE 4HE äGURES REPORTED REPRESENT OF THE /RE 2ESERVES AND -INERAL 2ESOURCES THE PERCENTAGE ATTRIBUTABLE TO !NGLO !MERICAN PLC IS STATED SEPARATELY 2OUNDING OF äGURES MAY CAUSE COMPUTATIONAL DISCREPANCIES $URING !NGLO #OAL WAS RESTRUCTURED INTO THREE DISCRETE BUSINESS UNITS !NGLO !MERICAN -ETALLURGICAL #OAL REPRESENTING THE DOMINANTLY EXPORT METALLURGICAL COAL BUSINESS LOCATED IN !USTRALIA !NGLO !MERICAN 4HERMAL #OAL REPRESENTING THE DOMINANTLY EXPORT AND DOMESTIC THERMAL COAL BUSINESS LOCATED IN 3OUTH !FRICA AND #OLOMBIA AND THE 2EMAINING #OAL MINES AND PROJECTS LOCATED IN #ANADA AND 6ENEZUELA 4(% #/!, 2%3/52#%3 !2% 2%0/24%$ !3 !$$)4)/.!, 4/ 4(% #/!, 2%3%26%3
-ETALLURGICAL #OAL 2ESERVES 2/- 4ONNES 9IELD 3ALEABLE 4ONNES 3ALEABLE 1UALITY !USTRALIA !TTRIBUTABLE ,/- #LASSIäCATION #ALLIDE /# -T -T -T -T KCALKG KCALKG $OMESTIC 0OWER 0ROVED 0ROBABLE 4OTAL #APCOAL /#5' KCALKG KCALKG %XPORT 4HERMAL 0ROVED 0ROBABLE 4OTAL #3. #3. #OKING 0ROVED 0ROBABLE 4OTAL /THER -ETALLURGICAL KCALKG KCALKG 0ROVED Ð Ð Ð 0ROBABLE Ð Ð Ð 4OTAL Ð Ð Ð $AWSON /# KCALKG KCALKG %XPORT 4HERMAL 0ROVED 0ROBABLE 4OTAL #3. #3. #OKING 0ROVED 0ROBABLE 4OTAL $RAYTON /# KCALKG KCALKG %XPORT 4HERMAL 0ROVED 0ROBABLE 4OTAL KCALKG KCALKG $OMESTIC 0OWER 0ROVED Ð Ð Ð 0ROBABLE Ð Ð Ð 4OTAL Ð Ð Ð &OXLEIGH /# KCALKG KCALKG /THER -ETALLURGICAL 0ROVED Ð Ð Ð Ð 0ROBABLE Ð Ð Ð Ð 4OTAL Ð Ð Ð Ð -ORANBAH .ORTH 5' #3. #3. #OKING 0ROVED 0ROBABLE 4OTAL !USTRALIA %XPORT 4HERMAL KCALKG KCALKG 0ROVED 0ROBABLE 4OTAL !USTRALIA #OKING #3. #3. 0ROVED 0ROBABLE 4OTAL !USTRALIA /THER -ETALLURGICAL KCALKG KCALKG 0ROVED Ð Ð Ð 0ROBABLE Ð Ð Ð 4OTAL Ð Ð Ð !USTRALIA $OMESTIC 0OWER KCALKG KCALKG 0ROVED 0ROBABLE 4OTAL
-INING METHOD /# /PEN #AST 5' 5NDERGROUND ,/- ,IFE OF -INE IN YEARS BASED ON SCHEDULED /RE 2ESERVES &OR THE MULTI PRODUCT OPERATIONS THE 2/- TONNAGE äGURES APPLY TO EACH PRODUCT 4HE 3ALEABLE TONNAGE CANNOT BE CALCULATED DIRECTLY FROM THE 2/- RESERVE TONNAGE USING THE AIR DRIED YIELDS AS PRESENTED SINCE THE DIFFERENCE IN MOISTURE CONTENT IS NOT TAKEN INTO ACCOUNT !TTRIBUTABLE PERCENTAGES FOR COUNTRY TOTALS ARE WEIGHTED BY 3ALEABLE TONNES AND SHOULD NOT BE DIRECTLY APPLIED TO THE 2/- TONNAGE !DDITIONAL FOOTNOTES APPEAR AT THE END OF THE SECTION %XPORT 4HERMAL REFERS TO LOW TO HIGH VOLATILE THERMAL COAL PRIMARILY FOR EXPORT IN THE USE OF POWER GENERATION QUALITY MEASURED BY CALORIäC VALUE #6 #OKING REFERS TO A HIGH MEDIUM OR LOW VOLATILE SEMI SOFT SOFT OR HARD COKING COAL PRIMARILY FOR BLENDING AND USE IN STEEL INDUSTRY QUALITY MEASURED AS CRUCIBLE SWELL NUMBER #3. /THER -ETALLURGICAL REFERS TO SEMI SOFT SOFT HARD SEMI HARD OR ANTHRACITE COAL OTHER THAN #OKING #OAL SUCH AS PULVERIZED COAL INJECTION 0#) OR OTHER GENERAL METALLURGICAL COAL FOR THE EXPORT OR DOMESTIC MARKET WITH A WIDER RANGE OF PROPERTIES THAN #OKING #OAL $OMESTIC 0OWER REFERS TO LOW TO HIGH VOLATILE THERMAL OR SEMI SOFT COAL PRIMARILY FOR DOMESTIC CONSUMPTION FOR POWER GENERATION QUALITY MEASURED BY CALORIäC VALUE #6
162 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 - WorldReginfo
Ore Reserves & Mineral Resources Ð Ð Ð Ð Ð 163 KCALKG KCALKG KCALKG KCALKG KCALKG Ð Ð KCALKG KCALKG KCALKG KCALKG KCALKG Ð Ð Ð Ð Ð -4)3 -4)3 -4)3 4ONNES #OAL 1UALITY 4ONNES #OAL 1UALITY 4ONNES #OAL 1UALITY Ð Ð -4)3 -4)3 -4)3 )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED -EASURED -EASURED -EASURED -EASURED -EASURED #LASSIäCATION #LASSIäCATION #LASSIäCATION )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED Annual Report 2009 Report Annual Coal 2009 December 31 estimates as at Anglo American plc American Anglo 0ROJECTS AND ,EASE ,EASES -INE 0ROJECTS -INE Ð Ð Ð !TTRIBUTABLE !TTRIBUTABLE !TTRIBUTABLE 2ESOURCES 2ESOURCES 2ESOURCES #OAL #OAL #OAL -ETALLURGICAL !USTRALIA 4OTAL -ETALLURGICAL !USTRALIA $ARTBROOK -ETALLURGICAL !USTRALIA #ALLIDE Ore Reserves and Mineral Resources Mineral and Reserves Ore $AWSON -EASURED !USTRALIA Ð 0ROJECTS 4AROOM -EASURED 4HEODORE -EASURED -ORANBAH 3OUTH -EASURED &OXLEIGH -EASURED #APCOAL -EASURED $RAYTON -EASURED !USTRALIA Ð -INE ,EASES 'ROSVENOR -EASURED -ORANBAH .ORTH 3ADDLERS #REEK -EASURED -EASURED Ore Reserves and Mineral Resources Coal estimates as at 31 December 2009
Brown Coal
"ROWN #OAL 2ESOURCES 4ONNES #OAL 1UALITY !USTRALIA !TTRIBUTABLE #LASSIäCATION -ONASH %NERGY -4)3 -4)3 KCALKG KCALKG -EASURED )NDICATED -EASURED AND )NDICATED !USTRALIA "ROWN #OAL 2ESOURCES KCALKG KCALKG -EASURED )NDICATED -EASURED AND )NDICATED
Coal Bed Methane
#OAL "ED -ETHANE 2ESERVES 3ALEABLE 6OLUME 3ALEABLE %NERGY #ONTENT !USTRALIA !TTRIBUTABLE #LASSIäCATION $AWSON --CF --CF 0* 0* 0ROVED 0 0ROBABLE 0 0 4OTAL 0 (ARCOURT 0ROVED 0 Ð Ð Ð Ð 0ROBABLE 0 0 4OTAL 0 !USTRALIA #"- 2ESERVES 0* 0* 0ROVED 0 0ROBABLE 0 0 4OTAL 0
#OAL "ED -ETHANE #"- ESTIMATES WERE COMPILED BY AN EXTERNAL INDEPENDENT CONSULTANT IN ACCORDANCE WITH THE GUIDELINES AND RECOMMENDATIONS CONTAINED IN THE 0ETROLEUM 2ESOURCES -ANAGEMENT 3YSTEM SPONSORED BY THE 3OCIETY OF 0ETROLEUM %NGINEERS 30% AND THE 7ORLD 0ETROLEUM #OUNCIL 70#
#OAL 2ESERVES ARE QUOTED ON A 2UN /F -INE 2/- RESERVE TONNAGE BASIS WHICH REPRESENTS THE TONNES DELIVERED TO THE PLANT 3ALEABLE RESERVE TONNAGE REPRESENTS THE PRODUCT TONNES PRODUCED #OAL 2ESERVES 2/- AND 3ALEABLE ARE ON THE APPLICABLE MOISTURE BASIS !TTRIBUTABLE REFERS TO ONLY &OR THE 2EPORTED AND !TTRIBUTABLE äGURES PLEASE REFER TO THE !NNUAL 2EPORT 4HE TONNAGE IS QUOTED AS METRIC TONNES 2/- TONNAGES ON AN !S $ELIVERED MOISTURE BASIS AND 3ALEABLE TONNAGES ON A 0RODUCT MOISTURE BASIS 9IELD REPRESENTS THE RATIO OF 3ALEABLE RESERVE TONNES TO 2/- RESERVE TONNES AND IS QUOTED ON A CONSTANT MOISTURE BASIS OR ON AN AIR DRIED TO AIR DRIED BASIS 4HE PRODUCT YIELDS FOR 0ROVED 0ROBABLE AND 4OTAL ARE CALCULATED BY DIVIDING THE INDIVIDUAL 3ALEABLE RESERVES BY THE TOTAL 2/- RESERVES PER CLASSIäCATION 4HE COAL QUALITY FOR THE #OAL 2ESERVES IS QUOTED AS EITHER #ALORIäC 6ALUE #6 USING KILO CALORIES PER KILOGRAM KCALKG UNITS ON A 'ROSS !S 2ECEIVED '!2 BASIS OR #RUCIBLE 3WELL .UMBER #3. #OAL QUALITY PARAMETERS FOR THE #OAL 2ESERVES FOR #OKING /THER -ETALLURGICAL AND %XPORT 4HERMAL COLLIERIES MEET THE CONTRACTUAL SPECIäCATIONS FOR COKING COAL 0#) METALLURGICAL COAL STEAM COAL AND DOMESTIC COAL #OAL QUALITY PARAMETERS FOR THE #OAL 2ESERVES FOR $OMESTIC 0OWER AND $OMESTIC 3YNFUELS COLLIERIES MEET THE SPECIäCATIONS OF THE INDIVIDUAL SUPPLY CONTRACTS #6 IS ROUNDED TO THE NEAREST KCALKG AND #3. TO THE NEAREST INDEX #OAL 2ESOURCES ARE QUOTED ON A -INEABLE 4ONNAGE )N 3ITU -4)3 BASIS IN MILLION TONNES WHICH ARE IN ADDITION TO THOSE RESOURCES WHICH HAVE BEEN MODIäED TO PRODUCE THE REPORTED #OAL 2ESERVES #OAL 2ESOURCES ARE ON AN IN SITU MOISTURE BASIS 4HE COAL QUALITY FOR THE #OAL 2ESOURCES IS QUOTED ON AN IN SITU HEAT CONTENT AS #ALORIäC 6ALUE #6 USING KILO CALORIES PER KILOGRAM KCALKG UNITS ON A 'ROSS !S 2ECEIVED '!2 BASIS #6 IS ROUNDED TO THE NEAREST KCALKG )NFERRED IN ,/- REFERS TO )NFERRED #OAL 2ESOURCES THAT ARE INCLUDED IN THE LIFE OF MINE EXTRACTION SCHEDULE OF THE RESPECTIVE COLLIERIES AND ARE NOT REPORTED AS #OAL 2ESERVES )NFERRED #OAL 2ESOURCES OUTSIDE THE ,/- PLAN BUT WITHIN THE MINE LEASE AREA ARE NOT REPORTED DUE TO A THE UNCERTAINTY ATTACHED TO SUCH RESOURCES IN THAT IT CANNOT BE ASSUMED THAT ALL OR PART OF THE )NFERRED 2ESOURCE WILL NECESSARILY BE UPGRADED TO )NDICATED OR -EASURED CATEGORIES THROUGH CONTINUED EXPLORATION B SUCH )NFERRED 2ESOURCES DO NOT NECESSARILY MEET THE REQUIREMENTS OF REASONABLE PROSPECTS FOR EVENTUAL ECONOMIC EXTRACTION PARTICULARLY IN RESPECT OF FUTURE MINING AND PROCESSING ECONOMICS #"- 2ESERVES ARE REPORTED IN TERMS OF 3ALEABLE VOLUME MILLION CUBIC FEET Ð --CF AND 3ALEABLE ENERGY 0ETAJOULES Ð 0* OR ONE THOUSAND TRILLION *OULES 3UMMARY OF MATERIAL CHANGES m AT REPORTING LEVEL !USTRALIA #ALLIDE 4HE SUBMISSION HAS BEEN BASED ON DEPLETION OF THE RESOURCE AND RESERVE ESTIMATES BY THE ACTUAL PRODUCTION 7ORK IS CURRENTLY UNDERWAY TO GENERATE A NEW LIFE OF MINE PLAN FOR #ALLIDE FOR SUPPLY TO DOMESTIC AND OTHER CUSTOMERS 4HIS WORK IS EXPECTED TO BE COMPLETE BY END AT WHICH TIME A FULL ECONOMIC RE ASSESSMENT OF THE RESOURCE AND RESERVE POSITION WILL BE AVAILABLE #APCOAL 2ESOURCES IN AREAS DOWN DIP OF #ENTRAL AND TO THE EAST OF 'RASSTREE HAVE BEEN REALLOCATED -T #LOSURE OF THE !QUILA BORD AND PILLAR OPERATION HAS REDUCED 2/- RESERVES -T $AWSON -INING AT $AWSON .ORTH CEASED IN EARLY -T 2/- 2ESOU RCE CLASSIäCATIONS HAVE BEEN REVISED RESULTING IN A DECREASE IN AREAS OF RESERVES -T AND AN INCREASE IN )NFERRED 2ESOURCES WITHIN THE MINE PLAN -T %XPLORATION COMMENCING IN IS EXPECTED TO BRING )NFERRED 2ESOURCES WITHIN THE MINE PLAN PROGRESSIVELY TO RESERVE STATUS DURING $RAYTON 2ESERVES Ð 2EVISION OF MINE PLAN AND EXCLUSION HIGH COST AREAS IN SOUTH SOUTH WEST OF LEASE -T 2/- 2ESOURCES Ð 2ESOURCES REALLOCATED DUE TO GEOLOGICAL COMPLEXITY -T &OXLEIGH 2ESERVES REPORTED FOR THE äRST TIME REPRESENTING RESERVES IN THE IMMEDIATE MINING AREAS -T 2/- 'ROSVENOR !PPROVAL OBTAINED FOR THE COMMENCEMENT OF A DETAILED FEASIBILITY STUDY FOR AN UNDERGROUND LONGWALL OPERATION IN *ELLINBAH .OT REPORTED IN DUE TO ATTRIBUTABLE INTEREST -ORANBAH .ORTH 2ESOURCE INCREASE ATTRIBUTABLE TO CHANGES IN MINE DESIGN AND ADDITIONAL EXPLORATION -T -ORANBAH 3OUTH 2ESOURCES ARE REPORTED FOR UNDERGROUND MINING AREAS WHICH HAVE REASONABLE POTENTIAL FOR EVENTUAL ECONOMIC EXTRACTION BASED ON EXPLORATION AND STUDIES COMPLETED IN -T
"ROWN #OAL -ONASH %NERGY 2ESOURCE ESTIMATES HAVE NOT CHANGED FROM BECAUSE NO ADDITIONAL DATA WAS ADDED IN 4HE BROWN COAL IS A SUBSTANTIAL RESOURCE SUITABLE AS A FEEDSTOCK TO MANY CHEMICAL PROCESSES BUT REQUIRES TECHNOLOGICAL BREAKTHROUGHS TO ALLOW THE ECONOMIC DEVELOPMENT OF CLEAN COAL PLANTS #OAL "ED -ETHANE $AWSON )NITIAL RESERVES CALCULATED IN WERE DEPLETED FOR GAS PRODUCTION CONSUMPTION AND VENTING FOR THE ESTIMATES
!SSUMPTION WITH RESPECT TO -INERAL 4ENURE #ALLIDE !N EXPECTATION THAT A -INING ,EASE !PPLICATION WHICH HAS BEEN LODGED WILL BE GRANTED FOR THE NORTHERN PART OF THE +ILBURNIE AREA ! -INING ,EASE !PPLICATION WILL BE LODGED AND IS EXPECTED TO BE GRANTED FOR THE !MYÓS &IND AREA AS AN EXTENSION TO THE EXISTING MINING AREA AT 4HE (UT &OXLEIGH ! -INING ,EASE !PPLICATION WILL BE LODGED AND IS EXPECTED TO BE GRANTED FOR THE 0LAINS AREA 2EVIEWS BY INDEPENDENT THIRD PARTIES WERE CARRIED OUT IN ON THE FOLLOWING /PERATIONS AND 0ROJECT AREAS #APCOAL -INE #OMPLEX $AWSON 3OUTH $RAYTON &OXLEIGH 4HEODORE 4AROOM
164 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 - WorldReginfo
Ore Reserves & Mineral Resources Ð Ð Ð 165 KCALKG KCALKG KCALKG 3ALEABLE 1UALITY 3ALEABLE 1UALITY Ð Ð Ð Ð Ð KCALKG KCALKG KCALKG Ð Ð Ð -T -T $ !3 !$$)4)/.!, 4/ 4(% #/!, 3ALEABLE 4ONNES 3ALEABLE 4ONNES Ð Ð Ð Ð Ð -T -T TS EG 4HE 3!-2%# #ODE 4HE STATED SEPARATELY 2OUNDING OF äGURES MAY ESOURCES AND /RE 2ESERVES 4HE */2# #ODE -ETALLURGICAL #OAL REPRESENTING THE DOMINANTLY MESTIC THERMAL COAL BUSINESS LOCATED IN 3OUTH Ð Ð Ð 9IELD 9IELD Ð Ð Ð Ð Ð Ð -T -T 2/- 4ONNES 2/- 4ONNES Annual Report 2009 Report Annual Ð -T -T ALSO PREPARED IN COMPLIANCE WITH REGIONAL CODES AND REQUIREMEN RESTRUCTURED INTO THREE DISCRETE BUSINESS UNITS !NGLO !MERICAN 2ESOURCES THE PERCENTAGE ATTRIBUTABLE TO !NGLO !MERICAN PLC IS CCORDANCE WITH THE !USTRALASIAN #ODE FOR 2EPORTING OF -INERAL 2 LOCATED IN #ANADA AND 6ENEZUELA 4(% #/!, 2%3/52#%3 !2% 2%0/24% !MERICAN 4HERMAL #OAL REPRESENTING THE DOMINANTLY EXPORT AND DO 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL Coal 2009 December 31 estimates as at Anglo American plc American Anglo 0ROVED 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE ,/- #LASSIäCATION ,/- #LASSIäCATION !TTRIBUTABLE !TTRIBUTABLE 2ESERVES 2ESERVES #OAL #OAL !FRICA %XPORT 4HERMAL 0ROVED %XPORT 4HERMAL 0ROVED $OMESTIC 0OWER 0ROVED /THER -ETALLURGICAL 0ROVED $OMESTIC 0OWER 0ROVED %XPORT 4HERMAL 0ROVED $OMESTIC 0OWER 0ROVED %XPORT 4HERMAL 0ROVED %XPORT 4HERMAL 0ROVED $OMESTIC 0OWER 0ROVED $OMESTIC 0OWER 0ROVED 3YNFUEL 0ROVED %XPORT 4HERMAL 0ROVED 4HERMAL 'OEDEHOOP 5'/# #ERR¤JON /# 4HERMAL Ore Reserves and Mineral Resources Mineral and Reserves Ore 3OUTH #OLOMBIA AS A MINIMUM STANDARD 7HERE RELEVANT THE ESTIMATES WEREäGURES REPORTED REPRESENT OF THE /RE 2ESERVES AND -INERAL CAUSE COMPUTATIONAL DISCREPANCIES $URING !NGLO #OAL WAS EXPORT METALLURGICAL COAL BUSINESS LOCATED IN !USTRALIA !NGLO !FRICA AND #OLOMBIA AND THE 2EMAINING #OAL MINES AND PROJECTS 2%3%26%3 +LEINKOPJE /# -AFUBE /# ,ANDAU /# +RIEL 5'/# .EW $ENMARK 5' )SIBONELO /# 'REENSIDE 5' #OLOMBIA %XPORT 4HERMAL 4HE #OAL 2ESERVE AND #OAL 2ESOURCE ESTIMATES WERE COMPILED IN A Ore Reserves and Mineral Resources Coal estimates as at 31 December 2009
4HERMAL #OAL 2ESERVES 2/- 4ONNES 9IELD 3ALEABLE 4ONNES 3ALEABLE 1UALITY 3OUTH !FRICA CONTINUED !TTRIBUTABLE ,/- #LASSIäCATION .EW 6AAL /# -T -T -T -T KCALKG KCALKG $OMESTIC 0OWER 0ROVED 0ROBABLE Ð Ð Ð Ð Ð Ð Ð Ð 4OTAL .OOITGEDACHT 3EAM 5' %XPORT 4HERMAL 0ROVED 0ROBABLE Ð Ð Ð Ð Ð Ð Ð Ð 4OTAL /THER -ETALLURGICAL 0ROVED 0ROBABLE Ð Ð Ð Ð Ð Ð 4OTAL :IBULO 5'/# %XPORT 4HERMAL 0ROVED Ð Ð Ð Ð Ð Ð Ð Ð 0ROBABLE 4OTAL $OMESTIC 0OWER 0ROVED Ð Ð Ð Ð Ð Ð 0ROBABLE 4OTAL 3OUTH !FRICA %XPORT 4HERMAL KCALKG KCALKG 0ROVED 0ROBABLE 4OTAL 3OUTH !FRICA /THER -ETALLURGICAL KCALKG KCALKG 0ROVED 0ROBABLE Ð Ð Ð Ð Ð Ð 4OTAL 3OUTH !FRICA $OMESTIC 0OWER KCALKG KCALKG 0ROVED 0ROBABLE 4OTAL 3OUTH !FRICA 3YNFUEL KCALKG KCALKG 0ROVED 0ROBABLE Ð Ð Ð Ð Ð Ð 4OTAL
4HERMAL #OAL 2ESERVES 2/- 4ONNES 9IELD 3ALEABLE 4ONNES 3ALEABLE 1UALITY 4OTAL !TTRIBUTABLE #LASSIäCATION %XPORT 4HERMAL -T -T -T -T KCALKG KCALKG 0ROVED 0ROBABLE 4OTAL /THER -ETALLURGICAL KCALKG KCALKG 0ROVED 0ROBABLE Ð Ð Ð Ð Ð Ð 4OTAL $OMESTIC 0OWER KCALKG KCALKG 0ROVED 0ROBABLE 4OTAL 3YNFUEL KCALKG KCALKG 0ROVED 0ROBABLE Ð Ð Ð Ð Ð Ð 4OTAL
-INING METHOD /# /PEN #AST 5' 5NDERGROUND ,/- ,IFE OF -INE IN YEARS BASED ON SCHEDULED /RE 2ESERVES &OR THE MULTI PRODUCT OPERATIONS THE 2/- TONNAGE äGURES APPLY TO EACH PRODUCT 4HE 3ALEABLE TONNAGE CANNOT BE CALCULATED DIRECTLY FROM THE 2/- RESERVE TONNAGE USING THE AIR DRIED YIELDS AS PRESENTED SINCE THE DIFFERENCE IN MOISTURE CONTENT IS NOT TAKEN INTO ACCOUNT !TTRIBUTABLE PERCENTAGES FOR COUNTRY TOTALS ARE WEIGHTED BY 3ALEABLE TONNES AND SHOULD NOT BE DIRECTLY APPLIED TO THE 2/- TONNAGE !DDITIONAL FOOTNOTES APPEAR AT THE END OF THE SECTION %XPORT 4HERMAL REFERS TO LOW TO HIGH VOLATILE THERMAL COAL PRIMARILY FOR EXPORT IN THE USE OF POWER GENERATION QUALITY MEASURED BY CALORIäC VALUE #6 /THER -ETALLURGICAL REFERS TO SEMI SOFT SOFT HARD SEMI HARD OR ANTHRACITE COAL OTHER THAN #OKING #OAL SUCH AS PULVERIZED COAL INJECTION 0#) OR OTHER GENERAL METALLURGICAL COAL FOR THE EXPORT OR DOMESTIC MARKET WITH A WIDER RANGE OF PROPERTIES THAN #OKING #OAL $OMESTIC 0OWER REFERS TO LOW TO HIGH VOLATILE THERMAL OR SEMI SOFT COAL PRIMARILY FOR DOMESTIC CONSUMPTION FOR POWER GENERATION QUALITY MEASURED BY CALORIäC VALUE #6 3YNFUEL REFERS TO A COAL SPECIäCALLY FOR THE DOMESTIC PRODUCTION OF SYNTHETIC FUEL AND CHEMICALS QUALITY MEASURED BY CALORIäC VALUE #6
166 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 - WorldReginfo
Ore Reserves & Mineral Resources Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð 167 KCALKG KCALKG KCALKG KCALKG KCALKG Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð KCALKG KCALKG KCALKG KCALKG KCALKG Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð -4)3 -4)3 -4)3 4ONNES #OAL 1UALITY 4ONNES #OAL 1UALITY 4ONNES #OAL 1UALITY Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð -4)3 -4)3 -4)3 )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED )NDICATED -EASURED -EASURED -EASURED -EASURED -EASURED #LASSIäCATION #LASSIäCATION #LASSIäCATION )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED Annual Report 2009 Report Annual Coal 2009 December 31 estimates as at Anglo American plc American Anglo ,EASES ,EASES !TTRIBUTABLE !TTRIBUTABLE !TTRIBUTABLE -INE -INE Ð Ð 2ESOURCES 2ESOURCES 2ESOURCES #OAL #OAL #OAL !FRICA ,EASES 4OTAL 4HERMAL -INE 4HERMAL 3OUTH 'OEDEHOOP 4HERMAL #OLOMBIA #ERR¤JON Ore Reserves and Mineral Resources Mineral and Reserves Ore .EW $ENMARK -EASURED )SIBONELO -EASURED .EW 6AAL -EASURED .OOITGEDACHT 3EAM:IBULO 3OUTH !FRICA Ð -INE ,EASES -EASURED -EASURED #OLOMBIA Ð -INE ,EASES 'REENSIDE+LEINKOPJE +RIEL,ANDAU -AFUBE -EASURED -EASURED -EASURED -EASURED -EASURED Ore Reserves and Mineral Resources Coal estimates as at 31 December 2009
4HERMAL #OAL 2ESOURCES Ð 0ROJECTS 4ONNES #OAL 1UALITY 3OUTH !FRICA !TTRIBUTABLE #LASSIäCATION %LDERS -4)3 -4)3 KCALKG KCALKG -EASURED )NDICATED -EASURED AND )NDICATED +RIEL %AST -EASURED )NDICATED -EASURED AND )NDICATED .EW ,ARGO -EASURED )NDICATED -EASURED AND )NDICATED .OOITGEDACHT 3EAM -EASURED Ð Ð )NDICATED -EASURED AND )NDICATED 3OUTH 2AND -EASURED )NDICATED -EASURED AND )NDICATED 6AALBANK -EASURED )NDICATED -EASURED AND )NDICATED 3OUTH !FRICA Ð 0ROJECTS KCALKG KCALKG -EASURED )NDICATED -EASURED AND )NDICATED
4HERMAL #OAL 2ESOURCES 4ONNES #OAL 1UALITY 0ROJECTS !TTRIBUTABLE #LASSIäCATION 4OTAL -4)3 -4)3 KCALKG KCALKG -EASURED )NDICATED -EASURED AND )NDICATED
4HERMAL #OAL 2ESOURCES 4ONNES #OAL 1UALITY -INE ,EASES AND 0ROJECTS !TTRIBUTABLE #LASSIäCATION 4OTAL -4)3 -4)3 KCALKG KCALKG -EASURED )NDICATED -EASURED AND )NDICATED )NFERRED IN ,/-
!TTRIBUTABLE PERCENTAGES FOR COUNTRY TOTALS ARE WEIGHTED BY -EASURED AND )NDICATED -4)3
#OAL 2ESERVES ARE QUOTED ON A 2UN /F -INE 2/- RESERVE TONNAGE BASIS WHICH REPRESENTS THE TONNES DELIVERED TO THE PLANT 3ALEABLE RESERVE TONNAGE REPRESENTS THE PRODUCT TONNES PRODUCED #OAL 2ESERVES 2/- AND 3ALEABLE ARE ON THE APPLICABLE MOISTURE BASIS !TTRIBUTABLE REFERS TO ONLY &OR THE 2EPORTED AND !TTRIBUTABLE äGURES PLEASE REFER TO THE !NNUAL 2EPORT 4HE TONNAGE IS QUOTED AS METRIC TONNES 2/- TONNAGES ON AN !S $ELIVERED MOISTURE BASIS AND 3ALEABLE TONNAGES ON A 0RODUCT MOISTURE BASIS 9IELD REPRESENTS THE RATIO OF 3ALEABLE RESERVE TONNES TO 2/- RESERVE TONNES AND IS QUOTED ON A CONSTANT MOISTURE BASIS OR ON AN AIR DRIED TO AIR DRIED BASIS 4HE PRODUCT YIELDS FOR 0ROVED 0ROBABLE AND 4OTAL ARE CALCULATED BY DIVIDING THE INDIVIDUAL 3ALEABLE RESERVES BY THE TOTAL 2/- RESERVES PER CLASSIäCATION 4HE COAL QUALITY FOR THE #OAL 2ESERVES IS QUOTED AS EITHER #ALORIäC 6ALUE #6 USING KILO CALORIES PER KILOGRAM KCALKG UNITS ON A 'ROSS !S 2ECEIVED '!2 BASIS OR #RUCIBLE 3WELL .UMBER #3. #OAL QUALITY PARAMETERS FOR THE #OAL 2ESERVES FOR #OKING /THER -ETALLURGICAL AND %XPORT 4HERMAL COLLIERIES MEET THE CONTRACTUAL SPECIäCATIONS FOR COKING COAL 0#) METALLURGICAL COAL STEAM COAL AND DOMESTIC COAL #OAL QUALITY PARAMETERS FOR THE #OAL 2ESERVES FOR $OMESTIC 0OWER AND $OMESTIC 3YNFUELS COLLIERIES MEET THE SPECIäCATIONS OF THE INDIVIDUAL SUPPLY CONTRACTS #6 IS ROUNDED TO THE NEAREST KCALKG AND #3. TO THE NEAREST INDEX #OAL 2ESOURCES ARE QUOTED ON A -INEABLE 4ONNAGE )N 3ITU -4)3 BASIS IN MILLION TONNES WHICH ARE IN ADDITION TO THOSE RESOURCES WHICH HAVE BEEN MODIäED TO PRODUCE THE REPORTED #OAL 2ESERVES #OAL 2ESOURCES ARE ON AN IN SITU MOISTURE BASIS 4HE COAL QUALITY FOR THE #OAL 2ESOURCES IS QUOTED ON AN IN SITU HEAT CONTENT AS #ALORIäC 6ALUE #6 USING KILO CALORIES PER KILOGRAM KCALKG UNITS ON A 'ROSS !S 2ECEIVED '!2 BASIS #6 IS ROUNDED TO THE NEAREST KCALKG )NFERRED IN ,/- REFERS TO )NFERRED #OAL 2ESOURCES THAT ARE INCLUDED IN THE LIFE OF MINE EXTRACTION SCHEDULE OF THE RESPECTIVE COLLIERIES AND ARE NOT REPORTED AS #OAL 2ESERVES )NFERRED #OAL 2ESOURCES OUTSIDE THE ,/- PLAN BUT WITHIN THE MINE LEASE AREA ARE NOT REPORTED DUE TO A THE UNCERTAINTY ATTACHED TO SUCH RESOURCES IN THAT IT CANNOT BE ASSUMED THAT ALL OR PART OF THE )NFERRED 2ESOURCE WILL NECESSARILY BE UPGRADED TO )NDICATED OR -EASURED CATEGORIES THROUGH CONTINUED EXPLORATION B SUCH )NFERRED 2ESOURCES DO NOT NECESSARILY MEET THE REQUIREMENTS OF REASONABLE PROSPECTS FOR EVENTUAL ECONOMIC EXTRACTION PARTICULARLY IN RESPECT OF FUTURE MINING AND PROCESSING ECONOMICS 3UMMARY OF MATERIAL CHANGES m AT REPORTING LEVEL #OLOMBIA #ERR¤JON 2ESOURCES A GAIN OF -T )NFERRED 2ESOURCES IN -INE 0LAN DUE TO CHANGES IN METHODOLOGY 3OUTH !FRICA 'OEDEHOOP 2ESERVES A GAIN OF -T DUE TO INCLUSION OF 6LAKLAAGTE RESOURCES IN MINE PLAN A LOSS OF -T RESULTING FROM CHANGES IN MODIFYING FACTORS 'REENSIDE 2ESERVES A GAIN OF -T DUE TO CHANGES IN MINE PLAN INCREASED DRILLING DENSITY AND CORRECTION FOR UNDER REPORTING IN 2ESOURCES A LOSS OF -T DUE TO EXCLUSION OF RESOURCES UNDERLYING PAN PENDING ENVIRONMENTAL APPROVAL FOR MINING +LEINKOPJE 2ESOURCES A LOSS OF -T DUE TO CHANGES IN PIT SHELL LAYOUT ,ANDAU 2ESERVES A GAIN OF -T DUE TO CONVERSION OF .AVIGATION 7EST AND 3CHOONIE OPENCAST RESOURCES 2ESOURCES A LOSS OF -T DUE TO INFRASTRUCTURE STERILISATION .EW $ENMARK 2ESERVES RECLASSIäCATION OF -T 2ESOURCES TO -T 2ESERVES DUE TO ADDITIONAL INFORMATION .EW 6AAL 2ESERVES A LOSS OF -T DUE TO THE EXCLUSION OF LOW VOLATILE MATERIAL AND -T DUE TO OPERATIONAL MINING LOSSES :IBULO :IBULO COMPRISES THE :IBULO -INE FORMERLY :ONDAGSFONTEIN THE :ONDAGSFONTEIN 7EST PROJECT AREA AND THE /OGIESFONTEIN -INE 0ROVED 2ESERVES HAVE BEEN RECLASSIäED AS 0ROBABLE 2ESERVES PENDING THE GRANTING OF A MINING RIGHT 2ESERVES A LOSS OF -T AT :IBULO DUE TO CHANGE IN MINING EXTRACTION PERCENTAGE AND -T AT /OGIESFONTEIN DUE TO RECLASSIäCATION OF RESERVES FOLLOWING CHANGES IN MINE PLANNING 2ESOURCES A GAIN OF -T OF 3- 3EAM AT :IBULO DUE TO INCLUSION OF )NFERRED 2ESOURCES IN THE MINE PLAN AND A GAIN OF -T -EASURED 2ESOURCES AT /OGIESFONTEIN DUE TO RECLASSIäCATION OF RESERVES ! LOSS OF -T OF 3 3EAM AT :IBULO DUE TO RECLASSIäCATION AND CHANGE TO MINIMUM CUT OFF THICKNESS AND RE MODELLING OF A TRANSGRESSIVE SILL %LDERS ! GAIN OF -T DUE TO ADDITIONAL INFORMATION A GAIN OF -T DUE TO CHANGE FROM RAW TO WASHED PRODUCT +RIEL %AST ! GAIN OF -T DUE TO ADDITIONAL EXPLORATION INFORMATION .EW ,ARGO ! GAIN OF -T DUE TO ADDITIONAL EXPLORATION INFORMATION .OOITGEDACHT ! LOSS OF -T DUE TO REDUCED INTERPRETATION CONäDENCE IN DATA COMBINED WITH A CHANGE OF CUT OFF PARAMETERS
!SSUMPTION WITH RESPECT TO -INERAL 4ENURE 3OUTH !FRICA 'RANTING OF REMAINING 0ROSPECTING 2IGHTS TO !NGLO !MERICAN 4HERMAL #OAL FOR THE 6AALBANK PROJECT IS PENDING !NGLO !MERICAN 4HERMAL #OAL HAS REASONABLE EXPECTATION THAT THESE RIGHTS WILL BE GRANTED IN DUE COURSE AND THE RELEVANT 0ROJECT #OAL RESOURCES HAVE BEEN INCLUDED IN THE STATEMENT 'RANTING OF THE MINING RIGHTS FOR :IBULO #OLLIERY FORMERLY :ONDAGSFONTEIN AND /OGIESFONTEIN ARE CURRENTLY PENDING !NGLO )NYOSI #OAL 0TY ,IMITED HAS REASONABLE EXPECTATION THAT THESE RIGHTS WILL BE GRANTED IN DUE COURSE !NGLO !MERICAN 4HERMAL #OAL HAS BEEN GRANTED 3ECTION CESSION OF THE +RIEL MINING RIGHT TO !NGLO )NYOSI #OAL 0TY ,IMITED BUT HAS NOT CONCLUDED THE äNAL AGREEMENT 4HE ATTRIBUTABLE PERCENTAGE REåECTS THEREFORE THE ANTICIPATED OWNERSHIP FOLLOWING CONCLUSION OF THIS AGREEMENT 2OYALTY 0AYMENT 3OUTH !FRICA 2OYALTY PAYMENTS ARE SCHEDULED TO COMMENCE IN !PRIL AND HAVE BEEN TAKEN INTO CONSIDERATION IN ECONOMIC ASSESSMENT OF THE RESERVES
2EVIEWS BY INDEPENDENT THIRD PARTIES WERE CARRIED OUT IN ON THE FOLLOWING /PERATIONS AND 0ROJECT AREAS 'OEDEHOOP 3OUTH )SIBONELO :IBULO %LDERS
168 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 - WorldReginfo
Ore Reserves & Mineral Resources Ð Ð Ð Ð Ð 169 #3. #3. KCALKG KCALKG KCALKG KCALKG KCALKG KCALKG 3ALEABLE 1UALITY 3ALEABLE 1UALITY 3ALEABLE 1UALITY Ð Ð Ð Ð #3. #3. KCALKG KCALKG KCALKG KCALKG KCALKG KCALKG Ð Ð Ð Ð Ð -T -T -T -4)3 -4)3 -4)3 4ONNES #OAL 1UALITY 4ONNES #OAL 1UALITY 4ONNES #OAL 1UALITY $ !3 !$$)4)/.!, 4/ 4(% #/!, 3ALEABLE 4ONNES 3ALEABLE 4ONNES 3ALEABLE 4ONNES Ð Ð Ð Ð -T -T -T TS EG 4HE 3!-2%# #ODE 4HE -4)3 -4)3 -4)3 STATED SEPARATELY 2OUNDING OF äGURES MAY ESOURCES AND /RE 2ESERVES 4HE */2# #ODE -ETALLURGICAL #OAL REPRESENTING THE DOMINANTLY MESTIC THERMAL COAL BUSINESS LOCATED IN 3OUTH Ð 9IELD 9IELD 9IELD )NDICATED )NDICATED )NDICATED -EASURED -EASURED -EASURED #LASSIäCATION #LASSIäCATION #LASSIäCATION C VALUE #6 )NFERRED IN ,/- )NFERRED IN ,/- )NFERRED IN ,/- RY QUALITY MEASURED AS CRUCIBLE SWELL NUMBER #3. AGE THE DIFFERENCE IN MOISTURE CONTENT IS NOT TAKEN INTO ACCOUNT -EASURED AND )NDICATED -EASURED AND )NDICATED -EASURED AND )NDICATED Ð -T -T -T 2/- 4ONNES 2/- 4ONNES 2/- 4ONNES Annual Report 2009 Report Annual -T -T -T ALSO PREPARED IN COMPLIANCE WITH REGIONAL CODES AND REQUIREMEN RESTRUCTURED INTO THREE DISCRETE BUSINESS UNITS !NGLO !MERICAN 2ESOURCES THE PERCENTAGE ATTRIBUTABLE TO !NGLO !MERICAN PLC IS CCORDANCE WITH THE !USTRALASIAN #ODE FOR 2EPORTING OF -INERAL 2 LOCATED IN #ANADA AND 6ENEZUELA 4(% #/!, 2%3/52#%3 !2% 2%0/24% !MERICAN 4HERMAL #OAL REPRESENTING THE DOMINANTLY EXPORT AND DO 4OTAL 4OTAL 4OTAL 4OTAL 4OTAL Coal 2009 December 31 estimates as at Anglo American plc American Anglo ORT IN THE USE OF POWER GENERATION QUALITY MEASURED BY CALORIä 0ROVED 0ROVED 0ROVED 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE 0ROBABLE #LASSIäCATION HARD COKING COAL PRIMARILY FOR BLENDING AND USE IN STEEL INDUST D ON SCHEDULED /RE 2ESERVES RESERVE TONNAGE USING THE AIR DRIED YIELDS AS PRESENTED SINCE TO EACH PRODUCT EABLE TONNES AND SHOULD NOT BE DIRECTLY APPLIED TO THE 2/- TONN ,/- #LASSIäCATION ,/- #LASSIäCATION ,EASES ,EASES ,EASES !TTRIBUTABLE !TTRIBUTABLE !TTRIBUTABLE !TTRIBUTABLE !TTRIBUTABLE !TTRIBUTABLE -INE -INE -INE Ð Ð Ð 2ESOURCES 2ESOURCES 2ESOURCES 2ESERVES 2ESERVES 2ESERVES 6ENEZUELA 6ENEZUELA REFERS TO LOW TO HIGH VOLATILE THERMAL COAL PRIMARILY FOR EXP #OAL #OAL #OAL #OAL #OAL #OAL AND AND REFERS TO A HIGH MEDIUM OR LOW VOLATILE SEMI SOFT SOFT OR %XPORT 4HERMAL #OKING 0ROVED %XPORT 4HERMAL 0ROVED &OR THE MULTI PRODUCT OPERATIONS THE 2/- TONNAGE äGURES APPLY 4HE 3ALEABLE TONNAGE CANNOT BE CALCULATED DIRECTLY FROM THE 2/- -INING METHOD /# /PEN #AST ,/- ,IFE OF -INE IN YEARS BASE #ANADA 4OTAL 2EMAINING !TTRIBUTABLE PERCENTAGES FOR COUNTRY TOTALS ARE WEIGHTED BY 3AL %XPORT 4HERMAL #OKING 6ENEZUELA 'UASARE /# 2EMAINING #ANADA 4REND /# 2EMAINING 2EMAINING %XPORT 4HERMAL 2EMAINING 'UASARE /# 4REND /# 2EMAINING Ore Reserves and Mineral Resources Mineral and Reserves Ore #ANADA 6ENEZUELA #ANADA AS A MINIMUM STANDARD 7HERE RELEVANT THE ESTIMATES WEREäGURES REPORTED REPRESENT OF THE /RE 2ESERVES AND -INERAL CAUSE COMPUTATIONAL DISCREPANCIES $URING !NGLO #OAL WAS EXPORT METALLURGICAL COAL BUSINESS LOCATED IN !USTRALIA !NGLO !FRICA AND #OLOMBIA AND THE 2EMAINING #OAL MINES AND PROJECTS 2%3%26%3 #OKING 4HE #OAL 2ESERVE AND #OAL 2ESOURCE ESTIMATES WERE COMPILED IN A Ore Reserves and Mineral Resources Coal estimates as at 31 December 2009
2EMAINING #OAL 2ESOURCES Ð 0ROJECTS 4ONNES #OAL 1UALITY #ANADA !TTRIBUTABLE #LASSIäCATION "ELCOURT 3AXON -4)3 -4)3 KCALKG KCALKG -EASURED Ð Ð )NDICATED Ð Ð -EASURED AND )NDICATED Ð Ð 2OMAN -OUNTAIN -EASURED )NDICATED -EASURED AND )NDICATED #ANADA Ð 0ROJECTS KCALKG KCALKG -EASURED )NDICATED -EASURED AND )NDICATED
2EMAINING #OAL 2ESOURCES Ð 0ROJECTS 4ONNES #OAL 1UALITY #ANADA AND 6ENEZUELA !TTRIBUTABLE #LASSIäCATION 4OTAL -4)3 -4)3 KCALKG KCALKG -EASURED )NDICATED -EASURED AND )NDICATED
2EMAINING #OAL 2ESOURCES Ð -INE ,EASE AND 0ROJECTS 4ONNES #OAL 1UALITY #ANADA AND 6ENEZUELA !TTRIBUTABLE #LASSIäCATION 4OTAL -4)3 -4)3 KCALKG KCALKG -EASURED )NDICATED -EASURED AND )NDICATED )NFERRED IN ,/-
!TTRIBUTABLE PERCENTAGES FOR COUNTRY TOTALS ARE WEIGHTED BY -EASURED AND )NDICATED -4)3 #OAL 2ESERVES ARE QUOTED ON A 2UN /F -INE 2/- RESERVE TONNAGE BASIS WHICH REPRESENTS THE TONNES DELIVERED TO THE PLANT 3ALEABLE RESERVE TONNAGE REPRESENTS THE PRODUCT TONNES PRODUCED #OAL 2ESERVES 2/- AND 3ALEABLE ARE ON THE APPLICABLE MOISTURE BASIS !TTRIBUTABLE REFERS TO ONLY &OR THE 2EPORTED AND !TTRIBUTABLE äGURES PLEASE REFER TO THE !NNUAL 2EPORT 4HE TONNAGE IS QUOTED AS METRIC TONNES 2/- TONNAGES ON AN !S $ELIVERED MOISTURE BASIS AND 3ALEABLE TONNAGES ON A 0RODUCT MOISTURE BASIS 9IELD REPRESENTS THE RATIO OF 3ALEABLE RESERVE TONNES TO 2/- RESERVE TONNES AND IS QUOTED ON A CONSTANT MOISTURE BASIS OR ON AN AIR DRIED TO AIR DRIED BASIS 4HE PRODUCT YIELDS FOR 0ROVED 0ROBABLE AND 4OTAL ARE CALCULATED BY DIVIDING THE INDIVIDUAL 3ALEABLE RESERVES BY THE TOTAL 2/- RESERVES PER CLASSIäCATION 4HE COAL QUALITY FOR THE #OAL 2ESERVES IS QUOTED AS EITHER #ALORIäC 6ALUE #6 USING KILO CALORIES PER KILOGRAM KCALKG UNITS ON A 'ROSS !S 2ECEIVED '!2 BASIS OR #RUCIBLE 3WELL .UMBER #3. #OAL QUALITY PARAMETERS FOR THE #OAL 2ESERVES FOR #OKING /THER -ETALLURGICAL AND %XPORT 4HERMAL COLLIERIES MEET THE CONTRACTUAL SPECIäCATIONS FOR COKING COAL 0#) METALLURGICAL COAL STEAM COAL AND DOMESTIC COAL #OAL QUALITY PARAMETERS FOR THE #OAL 2ESERVES FOR $OMESTIC 0OWER AND $OMESTIC 3YNFUELS COLLIERIES MEET THE SPECIäCATIONS OF THE INDIVIDUAL SUPPLY CONTRACTS #6 IS ROUNDED TO THE NEAREST KCALKG AND #3. TO THE NEAREST INDEX #OAL 2ESOURCES ARE QUOTED ON A -INEABLE 4ONNAGE )N 3ITU -4)3 BASIS IN MILLION TONNES WHICH ARE IN ADDITION TO THOSE RESOURCES WHICH HAVE BEEN MODIäED TO PRODUCE THE REPORTED #OAL 2ESERVES #OAL 2ESOURCES ARE ON AN IN SITU MOISTURE BASIS 4HE COAL QUALITY FOR THE #OAL 2ESOURCES IS QUOTED ON AN IN SITU HEAT CONTENT AS #ALORIäC 6ALUE #6 USING KILO CALORIES PER KILOGRAM KCALKG UNITS ON A 'ROSS !S 2ECEIVED '!2 BASIS #6 IS ROUNDED TO THE NEAREST KCALKG )NFERRED IN ,/- REFERS TO )NFERRED #OAL 2ESOURCES THAT ARE INCLUDED IN THE LIFE OF MINE EXTRACTION SCHEDULE OF THE RESPECTIVE COLLIERIES AND ARE NOT REPORTED AS #OAL 2ESERVES )NFERRED #OAL 2ESOURCES OUTSIDE THE ,/- PLAN BUT WITHIN THE MINE LEASE AREA ARE NOT REPORTED DUE TO A THE UNCERTAINTY ATTACHED TO SUCH RESOURCES IN THAT IT CANNOT BE ASSUMED THAT ALL OR PART OF THE )NFERRED 2ESOURCE WILL NECESSARILY BE UPGRADED TO )NDICATED OR -EASURED CATEGORIES THROUGH CONTINUED EXPLORATION B SUCH )NFERRED 2ESOURCES DO NOT NECESSARILY MEET THE REQUIREMENTS OF REASONABLE PROSPECTS FOR EVENTUAL ECONOMIC EXTRACTION PARTICULARLY IN RESPECT OF FUTURE MINING AND PROCESSING ECONOMICS 3UMMARY OF MATERIAL CHANGES m AT REPORTING LEVEL #ANADA 4REND 2ESERVES A GAIN OF -T DUE TO A CHANGE IN STRIPPING RATIO RESULTING FROM ECONOMIC ASSUMPTIONS 2ESOURCES A GAIN OF -T DUE TO CHANGES IN CLASSIäCATION METHODOLOGY AND CUT OFF PARAMETERS "ELCOURT 3AXON 2ESOURCES A GAIN OF -T DUE TO THE PROJECT BEING REPORTED FOR THE äRST TIME IN 2OMAN -OUNTAIN 2ESOURCES A GAIN OF -T DUE TO ADDITIONAL DRILLING INFORMATION #HINA 8IWAN 4HE 8IWAN 0ROJECT REPORTED IN IS CURRENTLY SUBJECT TO äNALISATION OF DISPOSAL TO A THIRD PARTY 2ESOURCES ARE THEREFORE EXCLUDED FROM THE ESTIMATES 6ENEZUELA 'UASARE 4HE RESOURCE AND RESERVE STATEMENT SUPPLIED BY #ARBONES DEL 'UASARE HAS NOT BEEN VALIDATED BY !NGLO !MERICAN 4HERMAL #OAL 2ESERVES A GAIN OF -T DUE TO CHANGES IN MINE PLAN INCREASED DRILLING DENSITY AND CORRECTION FOR UNDER REPORTING IN 2ESOURCES A LOSS OF -T DUE TO CONVERSION TO RESERVES AND A RECLASSIäCATION OF -EASURED AND )NDICATED TO )NFERRED RESOURCES !SSUMPTION WITH RESPECT TO -INERAL 4ENURE 6ENEZUELA !LTHOUGH THE #ARBONES DEL 'UASARE MINING CONCESSION TERMINATES IN #OAL 2ESERVES AND 2ESOURCES IN THE -INE ,EASE THAT MAY BE INCLUDED IN A MINE PLAN BEYOND THIS DATE ARE INCLUDED IN THE STATEMENT 2EVIEWS BY INDEPENDENT THIRD PARTIES WERE CARRIED OUT IN ON THE FOLLOWING /PERATIONS AND 0ROJECT AREAS 4REND 2OMAN -OUNTAIN
170 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Production statistics
4HE äGURES BELOW INCLUDE THE ENTIRE OUTPUT OF CONSOLIDATED ENTITIES AND THE 'ROUPÓS ATTRIBUTABLE SHARE OF JOINT VENTURES JOINT ARRANGEMENTS AND ASSOCIATES WHERE APPLICABLE EXCEPT FOR #OLLAHUASI IN #OPPER AND $E "EERS WHICH ARE QUOTED ON A BASIS
$UE TO THE PORTFOLIO AND MANAGEMENT STRUCTURE CHANGES ANNOUNCED IN /CTOBER THE SEGMENTS HAVE CHANGED FROM THOSE REPORTED AT $ECEMBER #OMPARATIVES HAVE BEEN RECLASSIäED TO ALIGN WITH CURRENT YEAR PRESENTATION
0LATINUM SEGMENT TROY OUNCES 0LATINUM 0ALLADIUM 2HODIUM .ICKEL TONNES #OPPER TONNES 'OLD
$IAMONDS SEGMENT $E "EERS DIAMONDS RECOVERED Ð CARATS BASIS !NGLO !MERICAN $EBSWANA .AMDEB $E "EERS #ONSOLIDATED -INES 7ILLIAMSON Ð #ANADA
#OPPER SEGMENT #OLLAHUASI BASIS !NGLO !MERICAN /RE MINED TONNES /RE PROCESSED /XIDE TONNES 3ULPHIDE TONNES /RE GRADE PROCESSED /XIDE #U 3ULPHIDE #U 0RODUCTION #OPPER CONCENTRATE DRY METRIC TONNES #OPPER CATHODE TONNES #OPPER IN CONCENTRATE TONNES 4OTAL COPPER PRODUCTION FOR #OLLAHUASI TONNES !NGLO !MERICAN 3UR ,OS "RONCES MINE /RE MINED TONNES -ARGINAL ORE MINED TONNES ,AS 4ORTOLAS CONCENTRATOR /RE PROCESSED TONNES /RE GRADE PROCESSED #U !VERAGE RECOVERY 0RODUCTION #OPPER CONCENTRATE DRY METRIC TONNES #OPPER CATHODE TONNES #OPPER IN CONCENTRATE TONNES 4OTAL TONNES %L 3OLDADO MINE /RE MINED /PEN PIT Ð ORE MINED TONNES /PEN PIT Ð MARGINAL ORE MINED TONNES 5NDERGROUND SULPHIDE TONNES 4OTAL TONNES Other information 3EE THE PUBLISHED RESULTS OF !NGLO 0LATINUM ,IMITED FOR FURTHER ANALYSIS OF PRODUCTION INFORMATION .ORTHAM 0LATINUM ,IMITED WAS TRANSFERRED TO A DISPOSAL GROUP IN 3EPTEMBER 0RODUCTION INFORMATION EXCLUDES .ORTHAM 0LATINUM ,IMITED .ORTHAM 0LATINUM ,IMITED WAS SOLD ON !UGUST !LSO DISCLOSED WITHIN TOTAL ATTRIBUTABLE NICKEL AND COPPER PRODUCTION 7ILLIAMSON WAS DISPOSED OF ON .OVEMBER
Anglo American plc Annual Report 2009 171 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Other information Production statistics continued
#OPPER SEGMENT CONTINUED !NGLO !MERICAN 3UR CONTINUED %L 3OLDADO MINE CONTINUED /RE PROCESSED /XIDE TONNES 3ULPHIDE TONNES /RE GRADE PROCESSED /XIDE #U 3ULPHIDE #U 0RODUCTION #OPPER CONCENTRATE DRY METRIC TONNES #OPPER CATHODE TONNES #OPPER IN CONCENTRATE TONNES 4OTAL TONNES #HAGRES 3MELTER #OPPER CONCENTRATE SMELTED TONNES 0RODUCTION #OPPER BLISTERANODE TONNES #OPPER BLISTERANODE THIRD PARTY TONNES !CID TONNES 4OTAL COPPER PRODUCTION FOR !NGLO !MERICAN 3UR TONNES !NGLO !MERICAN .ORTE -ANTOS "LANCOS MINE /RE PROCESSED /XIDE TONNES 3ULPHIDE TONNES -ARGINAL ORE MINED TONNES /RE GRADE PROCESSED /XIDE #U SOLUBLE 3ULPHIDE #U INSOLUBLE -ARGINAL ORE #U SOLUBLE 0RODUCTION #OPPER CONCENTRATE DRY METRIC TONNES #OPPER CATHODE TONNES #OPPER CATHODE THIRD PARTY TONNES #OPPER IN CONCENTRATE TONNES 4OTAL TONNES -ANTOVERDE MINE /RE PROCESSED /XIDE TONNES -ARGINAL ORE TONNES /RE GRADE PROCESSED /XIDE #U SOLUBLE -ARGINAL ORE #U SOLUBLE 0RODUCTION #OPPER CATHODE TONNES 4OTAL COPPER PRODUCTION FOR !NGLO !MERICAN .ORTE TONNES 4OTAL #OPPER SEGMENT COPPER PRODUCTION TONNES 0LATINUM COPPER PRODUCTION TONNES "LACK -OUNTAIN COPPER PRODUCTION TONNES 4OTAL ATTRIBUTABLE COPPER PRODUCTION TONNES
)NCLUDES TOTAL CONCENTRATE AND CATHODE PRODUCTION AND BLISTERANODE PRODUCED FROM THIRD PARTY PURCHASED MATERIAL .ORTHAM 0LATINUM ,IMITED WAS TRANSFERRED TO A DISPOSAL GROUP IN 3EPTEMBER 0RODUCTION INFORMATION EXCLUDES .ORTHAM 0LATINUM ,IMITED .ORTHAM 0LATINUM ,IMITED WAS SOLD ON !UGUST
172 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909
.ICKEL SEGMENT #ODEMIN /RE MINED TONNES /RE PROCESSED TONNES /RE GRADE PROCESSED .I 0RODUCTION TONNES ,OMA DE .¨QUEL /RE MINED TONNES /RE PROCESSED TONNES /RE GRADE PROCESSED .I 0RODUCTION TONNES 4OTAL .ICKEL SEGMENT NICKEL PRODUCTION TONNES 0LATINUM NICKEL PRODUCTION TONNES 4OTAL ATTRIBUTABLE NICKEL PRODUCTION TONNES
)RON /RE AND -ANGANESE SEGMENT +UMBA )RON /RE ,UMP TONNES &INES TONNES !MAP 3INTER FEED TONNES 0ELLET FEED TONNES 4OTAL IRON ORE PRODUCTION TONNES 3AMANCOR -ANGANESE ORE TONNES -ANGANESE ALLOYS TONNES
.ORTHAM 0LATINUM ,IMITED WAS TRANSFERRED TO A DISPOSAL GROUP IN 3EPTEMBER 0RODUCTION INFORMATION EXCLUDES .ORTHAM 0LATINUM ,IMITED .ORTHAM 0LATINUM ,IMITED WAS SOLD ON !UGUST 0RODUCTION FROM !MAP IS INCLUDED FROM !UGUST !MAP PRODUCTION FOR FULL YEAR WAS -T !T $ECEMBER !MAP WAS NOT IN COMMERCIAL PRODUCTION AND THEREFORE TO THIS DATE ALL REVENUE AND RELATED COSTS WERE CAPITALISED #OMMERCIAL PRODUCTION COMMENCED ON *ANUARY 3ALEABLE PRODUCTION 0RODUCTION INCLUDES -EDIUM #ARBON &ERRO -ANGANESE Other information
Anglo American plc Annual Report 2009 173 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Other information Production statistics continued
#OAL TONNES -ETALLURGICAL #OAL SEGMENT !USTRALIA -ETALLURGICAL 4HERMAL 4OTAL -ETALLURGICAL #OAL SEGMENT COAL PRODUCTION 4HERMAL #OAL SEGMENT 3OUTH !FRICA 4RADE Ð -ETALLURGICAL 4RADE Ð 4HERMAL %SKOM 3OUTH !MERICA 4HERMAL 4OTAL 4HERMAL #OAL SEGMENT COAL PRODUCTION /THER -INING AND )NDUSTRIAL SEGMENT 3OUTH !MERICA 4HERMAL #ANADA -ETALLURGICAL 4HERMAL 4OTAL /THER -INING AND )NDUSTRIAL SEGMENT COAL PRODUCTION 4OTAL COAL PRODUCTION #OAL TONNES -ETALLURGICAL #OAL SEGMENT !USTRALIA #ALLIDE $RAYTON #APCOAL *ELLINBAH %AST -ORANBAH $AWSON #OMPLEX &OXLEIGH 4OTAL -ETALLURGICAL #OAL SEGMENT COAL PRODUCTION 4HERMAL #OAL SEGMENT 3OUTH !FRICA 'REENSIDE 'OEDEHOOP )SIBONELO +RIEL +LEINKOPJE ,ANDAU .EW $ENMARK .EW 6AAL .OOITGEDACHT -AFUBE :IBULO Ð 3OUTH !MERICA #ARBONES DEL #ERREJ®N 4OTAL 4HERMAL #OAL SEGMENT COAL PRODUCTION
:IBULO PREVIOUSLY :ONDAGSFONTEIN IS CURRENTLY NOT IN COMMERCIAL PRODUCTION AND THEREFORE ALL REVENUE AND RELATED COSTS ASSOCIATED WITH TONNES OF PRODUCTION HAVE BEEN CAPITALISED
174 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 #OAL TONNES CONTINUED /THER -INING AND )NDUSTRIAL SEGMENT 3OUTH !MERICA #ARBONES DEL 'UASARE #ANADA 0EACE 2IVER #OAL 4OTAL /THER -INING AND )NDUSTRIAL SEGMENT COAL PRODUCTION 4OTAL COAL PRODUCTION 4OTAL COAL PRODUCTION BY COMMODITY TONNES -ETALLURGICAL 3OUTH !FRICA !USTRALIA #ANADA 4OTAL METALLURGICAL COAL PRODUCTION 4HERMAL 3OUTH !FRICA Ð 4HERMAL 3OUTH !FRICA Ð %SKOM !USTRALIA 3OUTH !MERICA #ANADA 4OTAL THERMAL COAL PRODUCTION 4OTAL COAL PRODUCTION
:IBULO PREVIOUSLY :ONDAGSFONTEIN IS CURRENTLY NOT IN COMMERCIAL PRODUCTION AND THEREFORE ALL REVENUE AND RELATED COSTS ASSOCIATED WITH TONNES OF PRODUCTION HAVE BEEN CAPITALISED Other information
Anglo American plc Annual Report 2009 175 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Other information Production statistics continued
/THER -INING AND )NDUSTRIAL SEGMENT 4ARMAC !GGREGATES TONNES ,IME PRODUCTS TONNES #ONCRETE M
:INC AND ,EAD 3KORPION /RE MINED TONNES /RE PROCESSED TONNES /RE GRADE PROCESSED :INC :N 0RODUCTION :INC TONNES ,ISHEEN /RE MINED TONNES /RE PROCESSED TONNES /RE GRADE PROCESSED :INC :N ,EAD 0B 0RODUCTION :INC IN CONCENTRATE TONNES ,EAD IN CONCENTRATE TONNES "LACK -OUNTAIN /RE MINED TONNES /RE PROCESSED TONNES /RE GRADE PROCESSED :INC :N ,EAD 0B #OPPER #U 0RODUCTION :INC IN CONCENTRATE TONNES ,EAD IN CONCENTRATE TONNES #OPPER IN CONCENTRATE TONNES 4OTAL ATTRIBUTABLE ZINC PRODUCTION TONNES 4OTAL ATTRIBUTABLE LEAD PRODUCTION TONNES
3CAW -ETALS 3OUTH !FRICA 3TEEL 0RODUCTS TONNES )NTERNATIONAL 3TEEL 0RODUCTS TONNES
.IOBIUM #ATALO /RE MINED TONNES /RE PROCESSED TONNES /RE GRADE PROCESSED +G .BTONNE 0RODUCTION TONNES
0HOSPHATES #OPEBRS 3ODIUM TRIPOLYPHOSPHATE TONNES Ð 0HOSPHATES TONNES
-INERAL 3ANDS .AMAKWA 3ANDS /RE MINED TONNES Ð 0RODUCTION )LMENITE TONNES Ð 2UTILE TONNES Ð :IRCON TONNES Ð 3MELTER PRODUCTION 3LAG TAPPED TONNES Ð )RON TAPPED TONNES Ð
0RODUCTION FOR #OAL !MERICAS IS INCLUDED IN #OAL PRODUCTION SECTION 0RODUCTION INFORMATION INCLUDED UNTIL DATE OF DISPOSAL ON /CTOBER
176 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Quarterly production statistics(1)
1UARTER ENDED #HANGE $ECEMBER $ECEMBER $ECEMBER 3EPTEMBER *UNE -ARCH $ECEMBER 1 V 1 V 3EPTEMBER 1 $ECEMBER 1 0LATINUM SEGMENT 0LATINUM TROY OUNCES 0ALLADIUM TROY OUNCES 2HODIUM TROY OUNCES .ICKEL TONNES
$IAMONDS SEGMENT $E "EERS DIAMONDS RECOVERED Ð CARATS BASIS !NGLO !MERICAN $IAMONDS
#OPPER SEGMENT TONNES
.ICKEL SEGMENT TONNES Ð
)RON /RE AND -ANGANESE SEGMENT TONNES )RON ORE -ANGANESE ORE -ANGANESE ALLOYS
-ETALLURGICAL #OAL SEGMENT TONNES -ETALLURGICAL 4HERMAL
4HERMAL #OAL SEGMENT TONNES -ETALLURGICAL 4HERMAL %SKOM
/THER -INING AND )NDUSTRIAL SEGMENT TONNES -ETALLURGICAL COAL 4HERMAL COAL :INC ,EAD 3OUTH !FRICA 3TEEL 0RODUCTS Ð )NTERNATIONAL 3TEEL 0RODUCTS
#OAL PRODUCTION BY COMMODITY TONNES -ETALLURGICAL 4HERMAL %SKOM
%XCLUDES 4ARMAC .ORTHAM 0LATINUM ,IMITED WAS TRANSFERRED TO A DISPOSAL GROUP IN 3EPTEMBER 0RODUCTION INFORMATION EXCLUDES .ORTHAM 0LATINUM ,IMITED .ORTHAM 0LATINUM ,IMITED WAS SOLD ON !UGUST %XCLUDES !NGLO 0LATINUM AND "LACK -OUNTAIN COPPER PRODUCTION %XCLUDES !NGLO 0LATINUM NICKEL PRODUCTION 0RODUCTION FROM !MAP IS INCLUDED FROM !UGUST !MAP PRODUCTION FOR FULL YEAR WAS -T !T $ECEMBER !MAP WAS NOT IN COMMERCIAL PRODUCTION AND THEREFORE TO THIS DATE ALL REVENUE AND RELATED COSTS WERE CAPITALISED #OMMERCIAL PRODUCTION COMMENCED ON *ANUARY 3ALEABLE PRODUCTION 0RODUCTION INCLUDES -EDIUM #ARBON &ERRO -ANGANESE :IBULO PREVIOUSLY :ONDAGSFONTEIN IS CURRENTLY NOT IN COMMERCIAL PRODUCTION AND THEREFORE ALL REVENUE AND RELATED COSTS ASSOCIATED WITH TONNES OF PRODUCTION HAVE BEEN CAPITALISED Other information
Anglo American plc Annual Report 2009 177 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Other information Exchange rates and commodity prices
53 EXCHANGE RATES !VERAGE PRICES FOR THE YEAR 2AND 3TERLING %URO !USTRALIAN DOLLAR #HILEAN PESO "RAZILIAN REAL
#LOSING SPOT PRICES 2AND 3TERLING %URO !USTRALIAN DOLLAR #HILEAN PESO "RAZILIAN REAL
#OMMODITY PRICES !VERAGE MARKET PRICES FOR THE YEAR 0LATINUM 53OZ 0ALLADIUM 53OZ 2HODIUM 53OZ #OPPER 53 CENTSLB .ICKEL 53 CENTSLB :INC 53 CENTSLB ,EAD 53 CENTSLB
$ECEMBER SPOT PRICES 0LATINUM 53OZ 0ALLADIUM 53OZ 2HODIUM 53OZ #OPPER 53 CENTSLB .ICKEL 53 CENTSLB :INC 53 CENTSLB ,EAD 53 CENTSLB
3OURCE *OHNSON -ATTHEY 3OURCE ,-% DAILY PRICES
178 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Key financial data
53 MILLION UNLESS OTHERWISE STATED 'ROUP REVENUE INCLUDING ASSOCIATES ,ESS 3HARE OF ASSOCIATESÓ REVENUE 'ROUP REVENUE /PERATING PROäT INCLUDING ASSOCIATES BEFORE SPECIAL ITEMS AND REMEASUREMENTS 3PECIAL ITEMS AND REMEASUREMENTS EXCLUDING äNANCING AND TAX SPECIAL ITEMS AND REMEASUREMENTS .ET äNANCE COSTS INCLUDING äNANCING SPECIAL ITEMS AND REMEASUREMENTS TAX AND MINORITY INTERESTS OF ASSOCIATES 4OTAL PROäT FROM OPERATIONS AND ASSOCIATES .ET äNANCE COSTS INCLUDING äNANCING SPECIAL ITEMS AND REMEASUREMENTS 0ROäT BEFORE TAX )NCOME TAX EXPENSE INCLUDING SPECIAL ITEMS AND REMEASUREMENTS 0ROäT FOR THE äNANCIAL YEAR Ð CONTINUING OPERATIONS 0ROäT FOR THE äNANCIAL YEAR Ð DISCONTINUED OPERATIONS Ð Ð 0ROäT FOR THE äNANCIAL YEAR Ð TOTAL 'ROUP -INORITY INTERESTS 0ROäT ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY 5NDERLYING EARNINGS Ð CONTINUING OPERATIONS 5NDERLYING EARNINGS Ð DISCONTINUED OPERATIONS Ð Ð 5NDERLYING EARNINGS Ð TOTAL 'ROUP %ARNINGS PER SHARE Ð CONTINUING OPERATIONS %ARNINGS PER SHARE Ð DISCONTINUED OPERATIONS Ð Ð %ARNINGS PER SHARE Ð TOTAL 'ROUP 5NDERLYING EARNINGS PER SHARE Ð CONTINUING OPERATIONS 5NDERLYING EARNINGS PER SHARE Ð DISCONTINUED OPERATIONS Ð Ð 5NDERLYING EARNINGS PER SHARE Ð TOTAL 'ROUP /RDINARY DIVIDEND PER SHARE 53 CENTS Ð 3PECIAL DIVIDEND PER SHARE 53 CENTS Ð Ð Ð Ð 7EIGHTED AVERAGE BASIC NUMBER OF SHARES OUTSTANDING MILLION %")4$! Ð CONTINUING OPERATIONS %")4$! Ð DISCONTINUED OPERATIONS Ð Ð %")4$! Ð TOTAL 'ROUP %")4$! INTEREST COVER Ð TOTAL 'ROUP /PERATING MARGIN BEFORE SPECIAL ITEMS AND REMEASUREMENTS Ð TOTAL 'ROUP /RDINARY DIVIDEND COVER BASED ON UNDERLYING EARNINGS PER SHARE Ð TOTAL 'ROUP Ð
3EE FOLLOWING PAGE FOR FOOTNOTES Other information
Anglo American plc Annual Report 2009 179 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Other information Key financial data continued
53 MILLION UNLESS OTHERWISE STATED "ALANCE SHEET )NTANGIBLE AND TANGIBLE ASSETS /THER NON CURRENT ASSETS AND INVESTMENTS 7ORKING CAPITAL /THER NET CURRENT LIABILITIES /THER NON CURRENT LIABILITIES AND OBLIGATIONS #ASH AND CASH EQUIVALENTS AND BORROWINGS .ET ASSETS CLASSIäED AS HELD FOR SALE Ð Ð .ET ASSETS -INORITY INTERESTS %QUITY ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE #OMPANY 4OTAL CAPITAL #ASH INåOWS FROM OPERATIONS Ð CONTINUING OPERATIONS #ASH INåOWS FROM OPERATIONS Ð DISCONTINUED OPERATIONS Ð Ð #ASH INåOWS FROM OPERATIONS Ð TOTAL 'ROUP $IVIDENDS RECEIVED FROM ASSOCIATES AND äNANCIAL ASSET INVESTMENTS Ð CONTINUING OPERATIONS $IVIDENDS RECEIVED FROM ASSOCIATES AND äNANCIAL ASSET INVESTMENTS Ð DISCONTINUED OPERATIONS Ð Ð $IVIDENDS RECEIVED FROM ASSOCIATES AND äNANCIAL ASSET INVESTMENTS Ð TOTAL 'ROUP 2ETURN ON CAPITAL EMPLOYED Ð TOTAL 'ROUP %")4$!AVERAGE TOTAL CAPITAL Ð TOTAL 'ROUP .ET DEBT TO TOTAL CAPITAL GEARING
#OMPARATIVES FOR AND WERE ADJUSTED IN THE !NNUAL 2EPORT TO RECLASSIFY AMOUNTS RELATING TO DISCONTINUED OPERATIONS WHERE APPLICABLE 5NDERLYING EARNINGS IS NET PROäT ATTRIBUTABLE TO EQUITY SHAREHOLDERS ADJUSTED FOR THE EFFECT OF SPECIAL ITEMS AND REMEASUREMENTS AND ANY RELATED TAX AND MINORITY INTERESTS %")4$! IS OPERATING PROäT BEFORE SPECIAL ITEMS REMEASUREMENTS DEPRECIATION AND AMORTISATION IN SUBSIDIARIES AND JOINT VENTURES AND INCLUDES ATTRIBUTABLE SHARE OF %")4$! OF ASSOCIATES %")4$! INTEREST COVER IS %")4$! DIVIDED BY NET äNANCE COSTS EXCLUDING OTHER NET äNANCIAL INCOME EXCHANGE GAINS AND LOSSES ON MONETARY ASSETS AND LIABILITIES AMORTISATION OF DISCOUNTS ON PROVISIONS äNANCING SPECIAL ITEMS AND REMEASUREMENTS BUT INCLUDING ATTRIBUTABLE SHARE OF ASSOCIATESÓ NET INTEREST EXPENSE #OMPARATIVES FOR AND HAVE BEEN ADJUSTED IN ACCORDANCE WITH )!3 0RESENTATION OF &INANCIAL 3TATEMENTS Ð )MPROVEMENTS AS DESCRIBED IN NOTE !CCOUNTING POLICIES 4HIS DIFFERS FROM THE 'ROUPÓS MEASURE OF NET DEBT AS IT EXCLUDES THE NET DEBT OF DISPOSAL GROUPS MILLION MILLION MILLION MILLION NIL NIL AND EXCLUDES THE IMPACT OF DERIVATIVE INSTRUMENTS THAT PROVIDE AN ECONOMIC HEDGE OF ASSETS AND LIABILITIES IN NET DEBT LIABILITIES OF MILLION LIABILITIES OF MILLION ASSETS OF MILLION ASSETS OF MILLION NIL NIL &OR MORE DETAIL SEE NOTE #ONSOLIDATED CASH åOW ANALYSIS 4OTAL CAPITAL IS NET ASSETS EXCLUDING NET DEBT EXCLUDING THE IMPACT OF DERIVATIVE INSTRUMENTS 2ETURN ON CAPITAL EMPLOYED IS CALCULATED AS TOTAL OPERATING PROäT BEFORE IMPAIRMENTS FOR THE YEAR DIVIDED BY THE AVERAGE OF TOTAL CAPITAL LESS OTHER INVESTMENTS AND ADJUSTED FOR IMPAIRMENTS .ET DEBT TO TOTAL CAPITAL IS CALCULATED AS NET DEBT EXCLUDING THE IMPACT OF DERIVATIVE INSTRUMENTS DIVIDED BY TOTAL CAPITAL LESS INVESTMENTS IN ASSOCIATES
180 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Summary by business operation(1)
2EVENUE %")4$! /PERATING PROäTLOSS 5NDERLYING EARNINGS 53 MILLION 0LATINUM $IAMONDS #OPPER #OLLAHUASI !NGLO !MERICAN 3UR !NGLO !MERICAN .ORTE 0ROJECTS AND CORPORATE Ð Ð .ICKEL #ODEMIN ,OMA DE .¨QUEL 0ROJECTS AND CORPORATE Ð Ð )RON /RE AND -ANGANESE +UMBA )RON /RE )RON /RE "RAZIL Ð Ð 3AMANCOR -ETALLURGICAL #OAL !USTRALIA 0ROJECTS AND CORPORATE Ð Ð 4HERMAL #OAL 3OUTH !FRICA 3OUTH !MERICA 0ROJECTS AND CORPORATE Ð Ð /THER -INING AND )NDUSTRIAL 4ARMAC 3KORPION ,ISHEEN "LACK -OUNTAIN 3CAW -ETALS #OPEBRS #ATALO #OAL !MERICAS 4ONGAAT (ULETT(ULAMIN .AMAKWA 3ANDS Ð Ð Ð Ð 0ROJECTS AND CORPORATE Ð Ð %XPLORATION Ð Ð #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS
$UE TO THE PORTFOLIO AND MANAGEMENT STRUCTURE CHANGES ANNOUNCED IN /CTOBER THE SEGMENTS HAVE CHANGED FROM THOSE REPORTED AT $ECEMBER #OMPARATIVES HAVE BEEN RECLASSIäED TO ALIGN WITH CURRENT YEAR PRESENTATION 4HE SEGMENT RESULTS INCLUDE AN ALLOCATION OF CORPORATE COSTS ! RECONCILIATION OF OPERATING PROäT AND UNDERLYING EARNINGS BY SEGMENT AS REPORTED IN THE !NNUAL 2EPORT TO THE AMOUNTS REåECTED ABOVE IS SHOWN IN THE Ò2ECONCILIATION OF EARNINGS BY SEGMENTÓ 2EVENUE INCLUDES THE 'ROUPÓS ATTRIBUTABLE SHARE OF REVENUE OF JOINT VENTURES AND ASSOCIATES 2EVENUE FOR COPPER AND ZINC OPERATIONS IS SHOWN AFTER DEDUCTION OF TREATMENT CHARGES AND REäNING CHARGES 4#2#S %")4$! IS OPERATING PROäT BEFORE SPECIAL ITEMS REMEASUREMENTS DEPRECIATION AND AMORTISATION IN SUBSIDIARIES AND JOINT VENTURES AND INCLUDES ATTRIBUTABLE SHARE OF %")4$! OF ASSOCIATES /PERATING PROäT INCLUDES OPERATING PROäT BEFORE SPECIAL ITEMS AND REMEASUREMENTS FROM SUBSIDIARIES AND JOINT VENTURES AND ATTRIBUTABLE SHARE OF OPERATING PROäT BEFORE INTEREST TAX MINORITY INTERESTS SPECIAL ITEMS AND REMEASUREMENTS OF ASSOCIATES 4ARMAC IS MADE UP OF THE FORMER )NDUSTRIAL -INERALS SEGMENT AND 9ANG 1UARRY WHICH WAS PREVIOUSLY INCLUDED IN THE #OAL SEGMENT 4HE 'ROUPÓS INVESTMENTS IN 4ONGAAT (ULETT AND (ULAMIN WERE DISPOSED OF IN !UGUST AND *ULY RESPECTIVELY Other information
Anglo American plc Annual Report 2009 181 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Other information Reconciliation of earnings by segment
4HE FOLLOWING TABLES RECONCILE OPERATING PROäT AND UNDERLYING EARNINGS BY SEGMENT AS REPORTED IN THE !NNUAL 2EPORT TO THE COMPARATIVE AMOUNTS REPORTED IN NOTES AND RESPECTIVELY 4HE ADJUSTMENTS REåECT THE PORTFOLIO AND MANAGEMENT STRUCTURE CHANGES ANNOUNCED IN /CTOBER
/PERATING PROäT
0RE 3TRUCTURAL $IVISIONAL COST #ORPORATE COST !S REPORTED 53 MILLION RESTRUCTURING CHANGES APPORTIONMENT ALLOCATION NOTE 0LATINUM Ð Ð 0LATINUM $IAMONDS Ð Ð Ð $IAMONDS "ASE -ETALS #OPPER #OPPER #ODEMIN ,OMA DE .¨QUEL .ICKEL #ATALO .AMAKWA 3ANDS #OPEBRS :INC Ð Ð Ð /THER Ð Ð &ERROUS -ETALS AND )NDUSTRIES +UMBA )RON /RE )RON /RE "RAZIL 3AMANCOR Ð Ð )RON /RE AND -ANGANESE 3CAW 4ONGAAT (ULETT(ULAMIN Ð Ð Ð /THER Ð Ð #OAL !USTRALIA Ð -ETALLURGICAL #OAL 3OUTH !FRICA 4HERMAL #OAL 3OUTH !MERICA Ð Ð Ð #ANADA Ð Ð Ð 0ROJECTS AND CORPORATE Ð Ð )NDUSTRIAL -INERALS /THER -INING AND )NDUSTRIAL %XPLORATION Ð Ð Ð %XPLORATION #ORPORATE !CTIVITIES AND 5NALLOCATED #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS #OSTS Ð Ð Ð
5NDERLYING EARNINGS
0RE 3TRUCTURAL $IVISIONAL COST #ORPORATE COST !S REPORTED 53 MILLION RESTRUCTURING CHANGES APPORTIONMENT ALLOCATION NOTE 0LATINUM Ð Ð 0LATINUM $IAMONDS Ð Ð Ð $IAMONDS "ASE -ETALS #OPPER #OPPER #ODEMIN ,OMA DE .¨QUEL .ICKEL #ATALO .AMAKWA 3ANDS #OPEBRS :INC Ð Ð Ð /THER Ð Ð &ERROUS -ETALS AND )NDUSTRIES +UMBA )RON /RE )RON /RE "RAZIL 3AMANCOR Ð Ð )RON /RE AND -ANGANESE 3CAW 4ONGAAT (ULETT(ULAMIN Ð Ð Ð /THER Ð Ð #OAL !USTRALIA Ð -ETALLURGICAL #OAL 3OUTH !FRICA 4HERMAL #OAL 3OUTH !MERICA Ð Ð Ð #ANADA Ð Ð Ð 0ROJECTS AND CORPORATE Ð Ð )NDUSTRIAL -INERALS /THER -INING AND )NDUSTRIAL %XPLORATION Ð Ð Ð %XPLORATION #ORPORATE !CTIVITIES AND 5NALLOCATED #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS #OSTS Ð Ð Ð
182 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Reconciliation of subsidiaries’ and associate’s reported earnings to the Underlying earnings included in the consolidated financial statements for the year ended 31 December 2009
.OTE ONLY KEY REPORTED LINES ARE RECONCILED
53 MILLION !NGLO 0LATINUM ,IMITED )&23 HEADLINE EARNINGS 53 EQUIVALENT OF PUBLISHED %XPLORATION %XCHANGE RATE DIFFERENCE Ð /PERATING AND äNANCING REMEASUREMENTS NET OF TAX 2ESTRUCTURING COSTS INCLUDED IN HEADLINE EARNINGS Ð /THER ADJUSTMENTS -INORITY INTERESTS %LIMINATION OF INTERCOMPANY INTEREST $EPRECIATION ON ASSETS FAIR VALUED ON ACQUISITION NET OF TAX #ORPORATE COST ALLOCATION #ONTRIBUTION TO !NGLO !MERICAN PLC UNDERLYING EARNINGS
$" )NVESTMENTS $E "EERS UNDERLYING EARNINGS $IFFERENCE IN )!3 ACCOUNTING POLICY $E "EERS UNDERLYING EARNINGS Ð !NGLO !MERICAN PLC BASIS !NGLO !MERICAN PLCÓS ORDINARY SHARE INTEREST )NCOME FROM PREFERENCE SHARES /THER #ONTRIBUTION TO !NGLO !MERICAN PLC UNDERLYING EARNINGS
+UMBA )RON /RE ,IMITED +UMBA )&23 HEADLINE EARNINGS 53 EQUIVALENT OF PUBLISHED %XPLORATION /THER ADJUSTMENTS -INORITY INTERESTS %LIMINATION OF INTERCOMPANY INTEREST Ð $EPRECIATION ON ASSETS FAIR VALUED ON ACQUISITION NET OF TAX #ORPORATE COST ALLOCATION /THER ADJUSTMENTS Ð #ONTRIBUTION TO !NGLO !MERICAN PLC UNDERLYING EARNINGS
#OMPARATIVES HAVE BEEN UPDATED TO INCLUDE AN ALLOCATION OF CORPORATE COSTS WHERE APPLICABLE +UMBAÓS )&23 HEADLINE EARNINGS FOR THE YEAR ENDED $ECEMBER ASSUME A MINORITY INTEREST OF IN +UMBAÓS UNDERLYING MINING ASSETS Other information
Anglo American plc Annual Report 2009 183 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Other information The business – an overview
0LATINUM /VERALL OWNERSHIP
OWNED /THER INTERESTS 3OUTH !FRICA 3OUTH !FRICA "ATHOPELE -INE 5NION 3ECTION +HOMANANI -INE 4HEMBELANI -INE *OINT VENTURES OR SHARING AGREEMENTS +HUSELEKA -INE -ODIKWA 0LATINUM *OINT 6ENTURE 3IPHUMELELE -INE +ROONDAL 0OOLING AND 3HARING !GREEMENT 4UMELA -INE "AFOKENG 2ASIMONE *OINT 6ENTURE $ISHABA -INE -ARIKANA 0OOLING AND 3HARING !GREEMENT -OGALAKWENA -INE -OTOTOLO *OINT 6ENTURE 7ESTERN ,IMB 4AILINGS 2ETREATMENT -ASA #HROME #OMPANY 7ATERVAL 3MELTER INCLUDING CONVERTING PROCESS 0OLOKWANE 3MELTER !SSOCIATES 2USTENBURG "ASE -ETALS 2EäNERY "OKONI FORMERLY ,EBOWA 0LATINUM -INES 0RECIOUS -ETALS 2EäNERY 0ANDORA 4WICKENHAM -INE !NOORAQ ,ISINFO *OHNSON -ATTHEY &UEL #ELLS
$E "EERS /VERALL OWNERSHIP
OWNED /THER INTERESTS 3OUTH !FRICA 4RADING AND -ARKETING 3OUTH !FRICA .AMIBIA $E "EERS 'ROUP 3ERVICES 4HE $IAMOND 4RADING $E "EERS #ONSOLIDATED .AMDEB -INING %XPLORATION AND 3ERVICES #OMPANY -INES !REA .O $E "EERS -ARINE &INSCH /RANGE 2IVER -INES %LIZABETH "AY +IMBERLEY -INES AND -ARINE #ANADA .AMAQUALAND -INES CONCESSIONS $E "EERS #ANADA 4HE /AKS $E "EERS -ARINE .AMIBIA 3NAP ,AKE 6ENETIA 6ICTOR 3OUTH !FRICAN 3EA !REAS 4RADING AND -ARKETING 3!3! $4# "OTSWANA .AMIBIA $4# "OTSWANA $EBSWANA $AMTSHAA )NDUSTRIAL $IAMONDS *WANENG /RAPA AND %LEMENT 3IX ,ETHLAKANE MINES $IAMOND *EWELLERY 2ETAIL $E "EERS $IAMOND *EWELLERS
#OPPER /VERALL OWNERSHIP
OWNED /THER INTERESTS #HAGRES #HILE #OLLAHUASI #HILE %L 3OLDADO #HILE 0ALABORA 3OUTH !FRICA ,OS "RONCES #HILE 1UELLAVECO 0ERU -ANTOS "LANCOS #HILE 0EBBLE 53 -ANTOVERDE #HILE -ICHIQUILLAY 0ERU
!N INDEPENDENTLY MANAGED ASSOCIATE $E "EERSÓ HOLDINGS INCLUDE A INDIRECT HOLDING VIA THE +EY %MPLOYEE 4RUST
184 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 .ICKEL /VERALL OWNERSHIP
OWNED /THER INTERESTS #ODEMIN "RAZIL ,OMA DE .¨QUEL 6ENEZUELA "ARRO !LTO "RAZIL
)RON /RE AND -ANGANESE
+UMBA )RON /RE 3OUTH !FRICA -INAS 2IO "RAZIL !MAP "RAZIL ,,8 -INAS 2IO "RAZIL 3AMANCOR 3OUTH !FRICA AND !USTRALIA
-ETALLURGICAL #OAL /VERALL OWNERSHIP
OWNED /THER INTERESTS !USTRALIA !USTRALIA #ALLIDE $ARTBROOK $AWSON #OMPLEX !USTRALIA Ð OTHER $RAYTON -ONASH %NERGY (OLDINGS ,TD 'ERMAN #REEK *ELLINBAH %AST -ORANBAH .ORTH &OXLEIGH
!USTRALIA Ð OTHER $ALRYMPLE "AY #OAL 4ERMINAL 0TY ,TD .EWCASTLE #OAL 3HIPPERS 0TY ,TD
4HERMAL #OAL /VERALL OWNERSHIP
OWNED /THER INTERESTS 3OUTH !FRICA 3OUTH !FRICA 'OEDEHOOP -AFUBE 'REENSIDE AND .OOITGEDACHT 0HOLA PLANT )SIBONELO +LEINKOPJE 3OUTH !FRICA Ð OTHER +RIEL 2ICHARDS "AY #OAL 4ERMINAL ,ANDAU .EW $ENMARK #OLOMBIA .EW 6AAL #ARBONES DEL #ERREJ®N :IBULO
+RIEL AND :IBULO FORM PART OF THE !NGLO )NYOSI #OAL """%% #OMPANY OF WHICH !NGLO #OAL WILL OWN 4HE OUTSTANDING CONDITIONS PRECEDENT TO THE TRANSACTIONS ARE EXPECTED TO BE FULäLLED IN THE äRST HALF OF FOLLOWING WHICH THE TRANSACTION WILL COMPLETE Other information
Anglo American plc Annual Report 2009 185 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Other information The business – an overview continued
/THER -INING AND )NDUSTRIAL OWNED /THER INTERESTS !GGREGATES AND "UILDING -ATERIALS :INC,EAD 4ARMAC 'ROUP 5+ "LACK -OUNTAIN 3OUTH !FRICA 4ARMAC &RANCE &RANCE AND "ELGIUM 'AMSBERG 3OUTH !FRICA 4ARMAC 'ERMANY 4ARMAC 0OLAND 3TEEL PRODUCTS 4ARMAC #ZECH 2EPUBLIC 3CAW -ETALS WORLDWIDE 4ARMAC 2OMANIA 4ARMAC 4URKEY 0HOSPHATE PRODUCTS 4ARMAC )NTERNATIONAL (OLDINGS %UROPE AND -IDDLE %AST #OPEBRS "RAZIL 5NITED -ARINE (OLDINGS #OAL !MERICAS :INC,EAD 0EACE 2IVER #OAL #ANADA 3KORPION .AMIBIA #ARBONES DEL 'UASARE 6ENEZUELA ,ISHEEN )RELAND
.IOBIUM #ATALO "RAZIL
/THER
OWNED /THER INTERESTS 6ERGELEGEN 3OUTH !FRICA %XXARO 2ESOURCES SOUTHERN !FRICA AND !USTRALIA
)NCLUDED WITHIN #ORPORATE !CTIVITIES AND 5NALLOCATED #OSTS SEGMENT
186 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Shareholder information
Annual General Meeting 7ILL BE HELD AT AM ON !PRIL AT 4HE 1UEEN %LIZABETH )) #ONFERENCE #ENTRE "ROAD 3ANCTUARY 7ESTMINSTER ,ONDON 370 %%
Shareholders’ diary 2010/11 )NTERIM RESULTS ANNOUNCEMENT !UGUST !NNUAL RESULTS ANNOUNCEMENT &EBRUARY !NNUAL 2EPORT -ARCH !NNUAL 'ENERAL -EETING !PRIL
Shareholding enquiries %NQUIRIES RELATING TO SHAREHOLDINGS SHOULD BE MADE TO THE #OMPANYÓS 5+ 2EGISTRARS %QUINITI OR THE 3OUTH !FRICAN 4RANSFER 3ECRETARIES ,INK -ARKET 3ERVICES 3OUTH !FRICA 0TY ,IMITED AT THE RELEVANT ADDRESS BELOW
UK Registrars %QUINITI !SPECT (OUSE 3PENCER 2OAD ,ANCING 7EST 3USSEX ". $! %NGLAND 4ELEPHONE )N THE 5+ #ALLS CHARGED AT P PER MINUTE FROM A "4 LANDLINE /THER TELEPHONY PROVIDERSÓ COSTS MAY VARY &ROM OUTSIDE THE 5+
Transfer Secretaries in South Africa ,INK -ARKET 3ERVICES 3OUTH !FRICA 0TY ,IMITED $IAGONAL 3TREET *OHANNESBURG 3OUTH !FRICA 0/ "OX *OHANNESBURG 4ELEPHONE
%NQUIRIES ON OTHER MATTERS SHOULD BE ADDRESSED TO THE #OMPANY 3ECRETARY AT THE FOLLOWING ADDRESS
Registered and Head Office !NGLO !MERICAN PLC #ARLTON (OUSE 4ERRACE ,ONDON 379 !. %NGLAND 4ELEPHONE &AX 2EGISTERED NUMBER 7EBSITE WWWANGLOAMERICANCOUK
!DDITIONAL INFORMATION ON A WIDE RANGE OF SHAREHOLDER SERVICES CAN BE FOUND IN THE 3HAREHOLDER )NFORMATION SECTION OF THE .OTICE OF !'- AND ON THE 'ROUPÓS WEBSITE Other information
Anglo American plc Annual Report 2009 187 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Other information Other Anglo American publications
Ú &ACT "OOK Ú .OTICE OF !'- AND 3HAREHOLDER )NFORMATION "OOKLET Ú 2EPORT TO 3OCIETY Ú /PTIMA Ð !NGLO !MERICANÓS CURRENT AFFAIRS JOURNAL Ú 4RANSFORMATION 2EPORT Ú 'OOD #ITIZENSHIP "USINESS 0RINCIPLES Ú !NGLO %NVIRONMENT 7AY Ú !NGLO /CCUPATIONAL (EALTH 7AY Ú !NGLO 3AFETY 7AY Ú !NGLO 3OCIAL 7AY
4HE #OMPANY IMPLEMENTED ELECTRONIC COMMUNICATIONS IN IN ORDER TO REDUCE THE äNANCIAL AND ENVIRONMENTAL COSTS OF PRODUCING THE ANNUAL REPORT -ORE INFORMATION ABOUT THIS CAN BE FOUND IN THE ATTACHED .OTICE OF !'- )N THIS REGARD WE WOULD ENCOURAGE DOWNLOADING OF REPORTS FROM OUR WEBSITE &INANCIAL REPORTS MAY BE FOUND ON WWWANGLOAMERICANCOUKAAINVESTORSREPORTS 3USTAINABLE DEVELOPMENT REPORTS MAY BE FOUND ON WWWANGLOAMERICANCOUKAADEVELOPMENTSDREPORTSGR
(OWEVER THE !NNUAL 2EPORT AND THE BOOKLET CONTAINING THE .OTICE OF !'- AND OTHER SHAREHOLDER INFORMATION ARE AVAILABLE FREE OF CHARGE FROM THE #OMPANY ITS 5+ 2EGISTRARS AND 3OUTH !FRICAN 4RANSFER 3ECRETARIES
)F YOU WOULD LIKE TO RECEIVE PAPER COPIES OF !NGLO !MERICANÓS PUBLICATIONS PLEASE WRITE TO
)NVESTOR 2ELATIONS !NGLO !MERICAN PLC #ARLTON (OUSE 4ERRACE ,ONDON 379 !. %NGLAND
!LTERNATIVELY PUBLICATIONS CAN BE ORDERED ONLINE AT WWWANGLOAMERICANCOUKAASITESERVICESREQUESTREPORT
#HARITABLE PARTNERS 4HIS IS JUST A SELECTION OF THE CHARITIES WHICH !NGLO !MERICAN 4HE #HAIRMANÓS &UND AND THE !NGLO !MERICAN 'ROUP &OUNDATION HAVE WORKED WITH IN
188 Anglo American plc Annual Report 2009 WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 0RINTED ON 2EVIVE 3ILK AND 2EVIVE /FFSET PAPER 2EVIVE 3ILK IS MADE FROM PRE AND POST CONSUMER WASTE AND VIRGIN WOOD äBRE 2EVIVE /FFSET IS MADE FROM DE INKED POST CONSUMER WASTE "OTH HAVE BEEN INDEPENDENTLY CERTIäED IN ACCORDANCE WITH THE &3# &OREST 3TEWARDSHIP #OUNCIL 0RINTED AT 3T )VES 7ESTERHAM 0RESS ,TD )3/ &3# CERTIäED AND #ARBON.EUTRALk $ESIGNED BY !DDISON WWWADDISONCOUK WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909 Anglo American plc #ARLTON (OUSE 4ERRACE ,ONDON 379 !. %NGLAND
4EL &AX 2EGISTERED NUMBER
WWWANGLOAMERICANCOUK WorldReginfo - 0f3c6acb-24dc-47f9-9b35-b799c40bf909