Anglo American is one of the world’s largest mining and natural resource groups. With its subsidiaries, joint ventures and associates, it is a world leader in gold, platinum group metals, diamonds, and has significant interests in coal, base and ferrous metals, industrial minerals, forest products, industries and financial services. Anglo American’s operations are geographically diverse, with operations in southern Africa, Europe, South and North America and Australia.

Contents Financial Highlights 2 Exploration 47 Chairman’s Statement 4 Safety, Health and the Environment 49 Worldwide Mining & Natural Resource Interests 8 Community Relations 51 Directorate 10 Financial Review 53 Gold 12 Directors’ Report 57 Platinum 16 Statement of Directors’ Responsibilities 60 Diamonds 20 Remuneration Report 61 Coal 22 Corporate Governance 69 Base Metals 26 Production Statistics 73 Industrial Minerals 30 Reserves and Resources 76 Ferrous Metals 34 Notice of Annual General Meeting 78 Forest Products 38 Shareholder Information 80 Industries 42 Auditors’ Report 82 Financial Services 46 Financial Statements 83 Financial highlights

• Headline profit increased by 13% to US$1,308 million;

• Profit for the financial year of US$1,552 million (1998 pro forma: US$1,252 million);

•Total operating profit before exceptional items increased by 14% to US$2,142 million;

• Significant progress in strategic initiatives: – Acquisitions: Skorpion/Reunion Mining (US$82 million), Amcor Fibre Packaging (US$240 million), 23% of Anaconda Nickel (US$170 million), 40% of Australian Manganese (US$159 million), Acacia Resources (US$443 million);

– Acquisition of Tarmac plc for US$1.9 billion, completed in March 2000;

– Increase of interest in Anglo American Platinum to 50.3% (US$270 million), purchase of 1.9 million AngloGold shares (US$100 million; current stake 50.4%);

– Significant disposals of non-core assets: Terra’s distribution business (US$452 million), AECI’s interest in Polifin (US$345 million), part of stake in SA Breweries (US$159 million) as well as the reduction early in 2000 of interests in McCarthy and Samcor;

• Final dividend of 108 US cents per ordinary share recommended – giving a total dividend for the year of 150 US cents per ordinary share – an increase of 21% over 1998 pro forma estimate.

2 Anglo American plc Annual Report 1999 US$ million pro forma (unaudited) 1999 1998 Turnover 19,245 19,381 Total operating profit before exceptional items 2,142 1,879 Profit for the financial year 1,552 1,252 Headline profit for the financial year 1,308 1,159 Net operating assets 12,534 11,200 Operating cash flow 1,850 1,859 Capital expenditure 1,251 1,441 Earnings per share US$ 4.03 3.32 Headline profit per share US$ 3.40 3.07 Total dividend for the year US cents per share 150 124

Earnings and dividends

Headline profit Dividends per share

1999 US$1,308 million 1999 150 US cents

1998 US$1,159 million 1998 124 US cents

Investments

Net operating assets Capital expenditure

1999 US$12,534 million 1999 US$1,251 million

1998 US$11,200 million 1998 US$1,441 million

Anglo American plc Annual Report 1999 3 Chairman’s statement

in South Africa as a leading emerging market, a confidence underpinned by favourable developments in government policy and the improved performance of the South African economy. Anglo American will continue to expand and grow its businesses in South Africa and those other parts of the world that are prospective.

The profit for the year at US$1,552 million was US$300 million or 24% higher than in 1998.Headline profit, which excludes the impact of exceptional items and adjusts for the amortisation of goodwill, at US$1,308 million, was US$149 million higher than in 1998. Earnings per share of 403 US cents represented an increase of 71 US cents over 1998. Group operating profit increased from US$1,879 million to US$2,142 million. Reflecting these pleasing results and the board’s confidence in the further evolution of the Group, the directors have recommended a final dividend of 108 US cents per ordinary share which brings the total for the year to 150 US cents per ordinary share. This represents an increase Julian Ogilvie Thompson, chairman and chief executive of 21% over the estimated 124 US cents per ordinary share included in the prospectus issued in April 1999. This is the first annual report of Anglo American plc (Anglo American), created by the combination in May 1999 The board has confir med the strategy set out in the pros p e c t u s of Anglo American Corporation of South Africa Limited and significant progress was made with regard to strategic (A A C) and Minorco Société An o n yme and fol l o ws a period of in i t i at i v es across the Group and disposals of non-core bus i n e s s e s . significant restructuring of both AAC and Minorco.The Group Expansionary growth and acquisitions totalled US$1.8 billion consists of nine business sectors focused on product lines for the year and disposals, pri n c i p a l l y in the Industries division, achieving greater simplicity, transparency and management amounted to US$1.2 billion.The key acquisitions and expansions accountability and an important investment in financial are summarised below: services. On the basis of this firm foundation,Anglo American has embarked on a challenging programme of expanding and – AngloGold acquired Acacia Resources for US$443 million; strengthening key businesses and of continuing to dispose – Expansions of US$420 million at Anglo Platinum; of non-core businesses as soon as we can do so for value. – Some US$500 million of zinc and nickel expansion projects announced; The new company, which joined the FTSE 100 index in June –Forest Products significantly expanded its packaging 1999, has been well received by the investment community interests in Europe and South Africa. both in the UK and abroad and the share price rose steadily after listing, reaching a peak in January 2000, since when Since the end of the year the US$1.9 billion acquisition it has declined in line with other mining shares. Demand for of Tarmac, the largest by Anglo American to date, has been the stock has significantly broadened the shareholder base completed. In addition, by the end of March this year the with UK, US and European public shareholders now holding purchase of key Zambian copper assets is expected to be around 36% of total equity. completed,opening the way for the US$523 million Konkola Deep Mining Pro j e c t .F i n a l ly,the decision on the US$850 million The support of the South African government in establishing Gamsberg zinc project will be taken by the end of this year. Anglo American as a global natural resources company was invaluable and its far-sighted understanding of the imperatives The Group has continued to focus on cost reduction and of globalisation has been rewarded by a growing confidence co n t a i n m e n t . Mining cost increa s e s , pri n c i p a l l y in South Africa,

4 Anglo American plc Annual Report 1999 were partly offset by efficiency gains in Industries, Ferrous to purchase the interests of Anglovaal Mining in the Venetia Metals and Forest Products.The overall increase in costs of and Finsch mines. US$75 million represents less than 1% of total operating costs, which is significantly below inflation rates in our countries Coal of operation.This increase, together with reductions in sales Anglo Coal experienced a difficult year but this has not prices of US$109 million and margins of US$98 million, precluded it from pursuing new opportunities in several was more than compensated by benefits of US$400 million markets, including Australia.Anglo Coal, together with in exchange rates. its partner Billiton, are currently evaluating bids for disposal of certain of their coal assets in South Africa to black While the activities of each business sector are fully covered empowerment groups under the “Newcoal” initiative. in the operational review, set out on pages 12 to 46, certain In January this year, the division, along with Glencore of these represent major developments and are therefore International,acquired equally the one-third share held discussed below. by Rio Tinto in the Carbones del Cerrejón operation in Colombia. Discussions are currently taking place with a Gold vi e w to introducing a third party into this ven t u r e. Anglo Coal AngloGold, the Group’s 50.4% owned and independently continues to evaluate a possible participation in the proposed managed subsidiary, is the world’s leading gold producer. South Dunes Coal Terminal at Richards Bay in South Africa. While AngloGold will continue to seek new opportunities in South Africa, the gold mining industry in that country is Base Metals both relatively mature and has comparatively high cash costs Anglo Base Metals enjoyed an active year, in which the by international standards because of the depth underground programme to become a significant producer of zinc, copper of the majority of reserves. AngloGold is therefore also seeking and nickel was further advanced. With regard to zinc, the additional new international opportunities, both by acquisition US$280 million Lisheen project in Ireland began commissioning and through explorati o n . An important step was the acquisition in the fourth quarter.With the Skorpion project in Namibia, in December 1999 of Acacia Resources, an Australian gold the Black Mountain mine and the Gamsberg project in South producer of some 500,000 ounces per annum. Africa and the US$240 million 777 project at Hudson Bay in Canada,the division has the potential to produce over Platinum 600,000 tonnes of zinc per annum. Anglo Platinum, in which Anglo American increased its shareholding in 1999 from 45% to just over 50%,plans to Regarding copper, the strategic objective is to increase output increase production from its substantial reserves to meet the substantially by a combination of acquisition, discovery and steady growth in demand.An increase in production in excess de velopment of new mines. An important milestone in achi ev i n g of 400,000 ounces of platinum will be achieved by around this goal was reached during the year when Collahuasi, the 2002 at a cost of US$420 million. 44% owned mine in Chile, successfully completed its first full year of production. In March this year, 51% owned subsidiary Diamonds Zambia Copper Investments and Anglo American announced Anglo American’s diamond interests are represented by its the formation of a consortium to purchase certain assets 32.2% shareholding in the independently managed De Beers from Zambia Consolidated Copper Mines. This was a new group, the world’s largest producer and marketer of gem and smaller package of assets than had previously been under di a m o n d s . Central Selling Orga n i s at i o n ’ s sales of rough diamonds negotiation and the consortium includes as partners the in 1999 increased strongly on the back of continued strength International Finance Corporation and CDC Capital Partners. in the US market and returning confidence in south east Asian The consortium will commit to a series of capital expenditure markets as well as millennium related sales. De Beers’strategic projects totalling US$208 million and will further commit to review has resulted in improved organisational efficiency and the implementati o n of the important Konkola Deep Mining it is seeking to drive further demand for diamonds, including Project at a cost of US$523 million, subject to the raising capitalising on the strength of the De Beers name. De Beers of acceptable limited recourse finance.With our knowledge continued to invest in its core diamond business by agreeing of these assets and after recent careful due diligence, we are

Anglo American plc Annual Report 1999 5 Chairman’s statement

co n f ident that the successful completion of this important its corrugated packaging interests both in Europe and in South transaction will lead to attractive returns for shareholders. Af ri c a . In Janu a r y 1999, Mondi Europe acquired the corrug at e d packaging interests of Amcor for US$240 million.This brought In the nickel market, the division is actively seeking to expand 15 plants in the UK and six in France into the business and its presence. In August 1999 it purchased, for US$170 million, positioned Mondi Packaging Europe to be one of Europe’s a 23% interest in Anaconda Nickel, the 60% owner of the key corrugated packaging producers. In South Africa, Mondi Murrin Murrin dry laterite nickel project and other extensive further consolidated its already important position in the dry laterite reserves in Western Australia.This holding will southern African corrugated packaging sector through an provide Anglo American with a direct interest in one of the exchange of businesses with Malbak and a US$100 million leading companies developing high pressure acid leach upgrade of its PM2 linerboard machine at the Richards Bay mill. technology for the production of nic kel, a technology which should enable nickel to be produced at comparatively low Industries cost.The project has experienced commissioning problems Anglo Industries’drive to dispose of non natural resource- but we are confident that production will now start to build related industrial interests in the context of maximising up, yielding satisfactory returns.The 85.5% owned Loma de shareholder returns continued apace in 1999, bringing Níquel mine in Venezuela will begin commissioning from the total to some 45 transactions over the past three years, the middle of this year. representing US$2.5 billion.During 1999,major disposals included the sale by Terra of its distribution business for Industrial Minerals US$452 million, the sale by AECI of its 40% interest in Polifin Anglo Industrial Minerals has grown steadily in Europe for US$345 million, the sale by AAC of part of its holding in over the past decade. It was clear, however, that in the UK South African Breweries, and in early 2000 a reduction of its in particular the industry was likely to consolidate and the holdings in McCarthy Retail from 28% to 11% and in Samcor division had been actively seeking a major acquisition for from 45% to 10%. In the case of Samcor, the purchaser, some time.This culminated in November 1999 with the Ford Motor Company, has undertaken to buy the remaining announcement by Anglo American of a recommended cash 10% within two years. In line with the overall strategy of offer of £1.2 billion (US$1.9 billion) for Tarmac plc, one the Industries division,AECI has continued to pursue its of the UK’s major producers of aggregates, coated stone and broadly based transformation programme, focusing on niche ready mixed concrete. In addition to providing critical mass in explosives, fibres and specialty chemicals.Tongaat Hulett the UK, Tarmac gave the division an important further opening announced a US$145 million agreed bid for Transvaal Sugar into continental European markets.The acquisition, completed Limited, which, if approved by the regulatory authorities, in March this year, will provide significant synergies and will enhance its value. economies of scale. Financial Services Ferrous Metals Anglo American’s principal investment in financial services Anglo Ferrous Metals, in partnership with Billiton, acquired is its interest in FirstRand, a leading financial services company Australian Manganese in 1999 following the purchase of in South Africa. Market conditions for the banking group’s these assets from BHP. Over the last three years,divisional operations were stable, with a steady decline in South African companies’ restructuring has totalled around US$150 million in t e r est rate s .Th e r e was a substantial increase in the contribu t i o n in some 15 transactions. Demand for both carbon and stainless to profit in 1999 and restructuring of FirstRand’s insurance steel has improved , with the majority of steel products showi n g and retail banking activities is expected to lead to increased commensurate price increases.The more positive outlook for efficiencies and enhanced profit margins going forward. the division is expected to translate into improved operating profits in 2000. Exploration Anglo American believes that a carefully monitored and Forest Products focused grass roots exploration programme remains an Anglo Forest Products enjoyed an active year as it continued to important tool in the effort to maximise returns to mining implement its strategic objective of expanding and consolidati n g companies and should be able to ensure a low entry price

6 Anglo American plc Annual Report 1999 for resource acquisition.Activity centres on some 25 countries had been on the boards of Anglo American or Minorco, we with a focus on base metals. welcomed Sir Alick Rankin, then deputy chairman of CGU plc as a deputy cha i r man and the senior independent non-executive Safety, Health and the Environment (SHE) director, and also Dr Chris Fay, the immediate past chairman In the important area of safety, health and the environment, of Shell UK and Rob Margetts, then vice-chairman of ICI PLC Anglo American operates as a responsible international mining and now chairman of Legal & General Group PLC. In the and natural resources company. It has established a Safety, interim statement I paid tribute with great sadness to Sir Alick Health and Environment (SHE) committee of the board under Rankin who died in August last year. In December the board the chairmanship of non-executive director Dr Chris Fay, the announced the appointment of Sir David Scholey as a deputy chairman of the British Government’s Advisory Committee chairman and the senior independent non-executive director. on Business and the Environment.The SHE Committee has Sir David, a former chairman of S.G.Warburg Group, is a developed new Policy and Management Principles on safety, senior adviser to the International Finance Corporation in health and the environment.The immediate focus of the Washington and a former director of the Bank of England. committee is to achieve a substantial improvement in safety The new board is working well together and has played performance and occupational health throughout the Group. a significant role in helping meld together the various parts In articulating its SHE vision and policy, Anglo American has of the Group. committed itself to the principles of sustainable development and has recently been invited to join the World Business Tim Wadeson retired as group technical director in December Council on Sustainable Development (WBCSD). In this latter 1999 and I would like to thank him for his enormous context,Anglo American, together with more than 20 other contribution to the Group over many years. I am pleased that mining multinationals, is actively engaged under the auspices he has agreed to take on the role of chief executive of Konkola of the WBCSD in a study, the purpose of which is to examine Copper Mines. On 23 July, Barry Davison, chief executive of the implications of sustainable development for mining, Anglo Platinum and Rupert Pardoe, finance director of AAC, metals and minerals production through an open dialogue joined the executive committee of AAC in South Africa, as did with all stakeholders. Bill Nairn, on his appointment as group technical director, on 1 January. Outlook The start to the current financial year has been generally The combination of AAC and Minorco, the listing of Anglo encouraging. While pulp, paper and base metals prices American in London and the ongoing restructuring of the have largely maintained their gains from the end of 1999, Group has called for special efforts from all our staff. platinum, palladium and, to a lesser extent nickel,have seen The board and I are particularly grateful to them for their further significant increases, albeit partly related to technical commitment throughout this process. I know we can count and probably transient factors impeding Russian exports.The on their continued support in creating further shareholder gold price is above its 1999 low as a result of announcements value under the new structure. by certain significant producers, including AngloGold, that they had ended or reduced their hedging programmes. Provided the favourable economic trends for the US and Europe continue, and there are no significant price declines in our key commodities, the outlook for Anglo American in 2000 looks positive. Julian Ogilvie Thompson Chairman and Chief Executive Directorate and Staff In forming Anglo American, we were fortunate to be able to attract as non-executive directors a broad range of distinguished individuals with experience in different fields. In addition to Viscount Davignon,Bobby Godsell, Sir Chips Keswick, Nicky Oppenheimer and Peter Wilmot-Sitwell who

Anglo American plc Annual Report 1999 7 Worldwide mining & natural resource interests

Canada

United States

Mexico

Venezuela

Colombia

Peru Brazil

Chile

Argentina

(1) Operations of AngloGold, the Company’s independently managed subsidiary (other than in relation to Zimbabwe) (2) Operations of De Beers, the Company’s independently managed associate.

8 Anglo American plc Annual Report 1999 AngloGold (1) Coal Ferrous Metals De Beers (2) Base Metals Forest Products Platinum Industrial Minerals Exploration

Sweden

Republic Poland of Ireland United The Netherlands Kingdom Belgium Czech Germany Republic France Hungary Austria Switzerland

Italy Greece

Spain

Turkey

Morocco

China United Arab India Mali Emirates Oman Hong Kong

Burkina Faso

Togo Côte Ghana Philippines d’Ivoire Democratic Kenya Republic of Congo Indonesia Tanzania

Zambia Mozambique

Zimbabwe Namibia Botswana Australia Swaziland

South Africa

Anglo American plc Annual Report 1999 9 From left to right Standing: Rob Margetts Seated: Nicky Oppenheimer Tony Trahar Bobby Godsell Viscount Davignon Mike King James Campbell Tony Lea Leslie Boyd Sir Chips Keswick Dr Chris Fay Nicholas Jordan Sir David Scholey Peter Wilmot-Sitwell (Company Secretary) Julian Ogilvie Thompson

10 Anglo American plc Annual Report 1999 Directorate

Executive directors Tony Trahar, 50,began his career Dr Chris Fay, CBE, 55,is the immediate Julian Ogilvie Thompson, 66, is with the Group in 1974. He is executive past chairman of Shell UK. Dr Fay chairman and chief executive and chairman of the Mondi Group and is chairs the SHE Committee and is a has been with the Group since 1957. the Exco member with responsibility for member of the Remun e r a tion Committee. He is also non-executive deputy forest products and industrial minerals He is a non-exec u t i v e director of BAA plc chairman, and a former chairman, and has joint responsibility for industrie s . and Stena Interna tional and non-exec u t i v e of De Beers Consolidated/Centenary. Ton y Tra h a r ’ s directorships include An g l o chairman of Expro International Julian Ogilvie Thompson chairs the Platinum and Nedcor banking group. Group. In May 1999 he was app o i n t e d Nomination and Executive (Exco) cha i r man of the British Government’s committees and is a member of the Non-executive directors Advisory Committee on Business and Safety, Health and Environment (SHE) Sir David Scholey, CBE, 64, is a the Environment. Committee. He is a go ver nor of the deputy chairman and is the senior South Af r ica Fou n d at i o n . independent non-executive director. Bobby Godsell, 47, is a member of He chairs the Remuneration Committee the SHE Committee. Bobby Godsell Leslie Boyd, 63, is an executive and is a member of the Nomination is chief executive officer of AngloGold, vice-chairman.He joined the Group Committee. Sir David is a former a position he has held since its as Highveld Steel’s general manager chairman of S.G.Warburg Group and formation in 1998. He is the past in 1970. Leslie Boyd is chairman of is a senior adviser to Warburg Dillon president of South Africa’s Chamber Anglo Platinum and Highveld Steel. Read and to the Interna tional Finance of Mines and a director of Standard He is a deputy chairman of Exco with Corporation in Washington and a Bank Investment Corporation. responsibility for platinum and ferrous for mer director of the Bank of England. metals and has joint responsibility Sir Chips Keswick, 60,is a member for industries. Leslie Boyd is the past Nicky Oppenheimer, 54,is a deputy of the Audit Committee. Sir Chips was president of the board of go ver nors chairman and a member of the cha i r man of Hambros Bank Limited and in of the South Af r ica Fou n d at i o n , a board Nomination Committee. He joined 1997 became cha i r man of Hambros PL C . member of the Interna tional Iron and the Group in 1968 and subsequently Sir Chips is a non-exec u t i v e direc t o r Steel Institute and a director of AB S A , became an exec u t i v e director and a of De Beers Consolidated/Centenary. a South African financial services group. deputy chairman. He became deputy His other directorships include the chairman of De Beers Consolidated Bank of England, Investec Bank (UK) Mike King, 63, is an executive in 1985 and has been cha i r man of Limited, Persimmon PLC, and IMI PLC. vice-chairman and has been with De Beers Consolidate d / C e n t e n a r y since the Group since 1974. He is a deputy 19 9 8 . He is also cha i r man of An g l o G o l d . Rob Margetts, CBE, 53, is a member of chairman of Exco and a member of the the Remun e r a tion and Audit co m m i t t e e s . Investment Committee. Mike King has Viscount Davignon, 67,is president Following his recent appointment as responsibility for the Group’s financial of Société Générale de Belgique. He chairs cha i r man of Legal & General Group PLC, se r vices interests and is deputy ch a i rm a n the Audit Committee. His career includes he announced his retirement as vice of FirstRand, FirstRand Bank and South being president of the International chairman of ICI PLC, where he had African Eagle Insurance. Energy Agency and vice-president of the spent more than 30 years. Rob Margetts EEC and chairman of the Association for is a governor at Imperial College of James Campbell, 50, joined the the Monetary Union of Europ e .Vis c o u n t Science,Technology and Medicine. Group in 1975 and is a non-executive Da vignon is cha i r man of the Paul-Henri director of De Beers Co n s o l i d at e d / Spaak Foundation and of the Royal Peter Wilmot-Sitwell, 65, is a member Ce n t e n a r y. He is the Exco member with Institute for International Relations. of the Remuneration,Nomination responsibility for coal and base metals. He is on the boards of several major and SHE committees. He was formerly European companies. chairman of S.G.Warburg Securities. Tony Lea, 51,is finance director He has been cha i r man of Mercury Wor l d and has been with the Group since Mining Trust since 1993 and is a 1972. He became a director of Minorco non-executive director of Close Brothers in 1985. Tony Lea is a member of Exco Group plc and Foreign & Colonial and chairs the Investment Committee. Income Growth Investment Trust plc.

Anglo American plc Annual Report 1999 11 Contribution to headline profit % Turnover US$ million

1999 2,235

1998 2,650

Gold US$ million pro forma (unaudited) 1999 1998 Turnover 2,235 2,650 Total operating profit before exceptional items 452 489 Headline profit 210 261 Net operating assets (excludes joint ventures and associates) 2,990 2,634 Capital expenditure 223 235 Share of headline profit 16% 23% Share of group net oper ating assets 24% 24% Gold

Anglo American’s gold interests are represented predominantly by its 50.4% ownership of independently managed subsidiary AngloGold, the world’s leading gold producer. In 1999, AngloGold’s output totalled 6.9 million ounces of gold from its operations in Africa and North and South America.

Financial Overview positions of certain gold mining companies with large Total operating profit before exceptional items for 1999 fell gold price hedges in proportion to their actual production by 8% to US$452 million and gold production decreased of gold, as well as by a degree of disorder in the gold by 6% to 6.9 million ounces. Both cash costs and total costs lending market.While stability has returned to the gold were reduced by 5% and 9% to US$212 and US$244 per lending market, concerns remain about gold mining ounce respectively. companies with credit difficulties brought about by the nature or size of their hedge positions. These difficulties Market have provided important lessons for participants in the The gold market in 1999 turned centrally on developments gold forward markets, and have caused many gold mining amongst official sector holders of the metal.The announcement companies to reconsider the nature and appropriateness in May 1999 of the UK’s intention to sell 415 out of 715 tonnes of their gold price hedge positions. of official reserves by public auction caused widespread selling. This drove the price to 20 year lows of around US$250 per Gold Marketing Developments ounce during the third quarter of 1999. During 1999,AngloGold broke new ground with its market development programme aimed at improving the state of The gold price rallied in reaction to the announcement on the gold market.The company’s activities in this area are 26 September 1999 by members of the European Central Bank, based on a long term commitment to the metal and a concern supported by the UK and Switzerland, of a ceiling of 2,000 that the majority of the gold mining industry has neglected tonnes of gold sales over the next five years and limits on gold its product in the consumer marketplace. Outside the support lending by the group.The rally lifted the price to a year’s high given by the World Gold Council (WGC), whose resources of US$338 per ounce during the final quarter of 1999.This have been materially depleted by the lack of support from peak was some 30% above the price at which the metal traded gold producers in recent years, there has been little effort in mid-September. Inevitably, the market corrected for this from gold producers in terms of marketing the metal to sharp rise, and closed the year at around US$290 per ounce. consumers. In 1999, some US$15 million was provided by The average spot price for the year was US$279 per ounce, AngloGold for market development activities. Of this, some US$15 per ounce down on the average for 1998. US$10 million went to WGC membership and US$5 million was used by AngloGold for its own market development The announcement in September by the European Central Bank initiatives. During 1999, these activities contributed to me m b e r s and the International Monetary Fund provided the constructive engagement between individual holders of gold market with an important level of assurance over negative gold in the official sector and AngloGold (by itself and speculation co n c e r ning official sales. Ne w sales of gold by the in collaboration with other producers and the WGC). Du t c h Central Bank announced late in 1999 were accepted In addition, there was continued dialogue with banks and by the market and absorbed without adverse effect. government agencies in those Asian countries with heavily regulated gold markets,particularly China.Liberalisation The volatility in the gold price during the final quarter of these markets would present positive consequences was increased by uncertainty in the market as to the credit for the metal.

Concrete structures in the foreground for shaft lining at the Moab Khotsong gold mine in South Africa Anglo American plc Annual Report 1999 13 Gold

AngloGold also sponsored a num b e r of gold jewellery design South Africa competitions in various markets, including A s i a ,I n d i a ,Tur k ey Gold production decreased by 10% in 1999 to 5.7 million and South Af ri c a , to stimul a te gold design excellence an d ounces (178.7 tonnes) against a planned reduction of 6%, in n o vati o n . The launch of a global gold design competition, notwithstanding marginal improvements in both value and the Gold Virtuosi, jointly sponsored by AngloGold, the WGC volume efficiencies. Though there was an 8% increase in rand and Vicenza Gold Jewellery Fair, was also announced recently. cash costs per ounce, dollar cash costs decreased by 3% to US$226 per ounce as a result of the depreciation of the rand. Operations AngloGold’s Kopanang,Tau Lekoa,Tshepong and Mponeng Overview mines posted improved performances over both planned level s Du r ing 1999, AngloGold intensified its effor ts to achi e ve and the previous yea r ’ s res u l t s .The Ergo operation maintained muc h safer working conditions at all operations, and in a steady performance despite a mid-year problem with a fire particular at its South African operations. While AngloGold in the elution bui l d i n g .The Grea t Noligwa mine intersected the has stated that it fu l l y app re c i a tes that muc h remains to be Jer s e y fault earlier than planned, ex p e r iencing a drop in grade do n e , a 25% red u c t i o n in fatalities and an 11% reduction and gold produced. It has nevertheless exceeded targeted gold in lost time accidents was achieved, with rates reducing production and operating profit levels. respectively by 17% and 5%. Events at a number of operations hampered production and The acquisition in December 1999 of Acacia Resources, operating performance, year on year: Matjhabeng’s earthquake an Australian gold producer, will add approximately 500,000 (2.3 tonnes), fires at Bambanani (0.7 tonnes), the Klippan ounces to annual production, increasing production of gold washout at Joel (0.5 tonnes) and the tertiary shaft failure from open-pit and shallow mining to 1.7 million ounces at Savuka (1.2 tonnes).The TauTona and Deelkraal operations (approximately 23% of total production). During the year reported disappointing results, following increased seismicity AngloGold sold its 21.5% share in Driefontein, a listed and infrastructural problems. South African gold company, for US$219 million, realising an exceptional prof it of US$89 million. Other Africa operations The Sadiola mine in Mali increased production by 7% over 1998 to 206,000 attributable ounces.This,together with a marginal decrease in cash costs to US$102 per ounce, resulted in a small increase in operating profit for the year.

Production at the Navachab mine in Namibia increased by 33% over 1998 to 56,000 ounces. Cash costs decreased by 11% to US$240 per ounce, although muc h of this improvem e n t was attributable to the depreciation of the Namibian dollar.

North America AngloGold’s operations in North America comprise the Jerritt Canyon and Pikes Peak mining operations located in Nevada and Colorado res p e c t i ve l y.The combined production from these op e r a tions totalled 485,000 ounces with a cash cost of US$182 per ounce. In the last quarter, surface mining at Jerritt Canyon came to an end with the depletion of reserves at the DASH open pit. Mining is now concentrated at the two un d e rg ro u n d mi n e s , SSX and Murra y,with two new undergro u n d mines, MCE Tau Lekoa gold mine in South Africa and Smith, under development. The safety record for the two

14 Anglo American plc Annual Report 1999 op e r a tions was signific a n t l y better than the Ontario standard with one lost time injury at each of the mines per million man hours.

South America These operations significantly exceeded expectations by pr oducing 426,000 ounces at a cash cost of US$124 per ou n c e . At the Morro Velho mine, lo c a ted in Brazil, the extended life of the Espirito Santo open pit operation with its higher tonnage and grades, together with improved grades from the Cuiabá op e r a tion more than offset the lower tonnages fr om An g l o G o l d ’ s other Brazilian mine, Se r ra Grande. At the Ce r ro Vanguardia mine in Argentina, tonnage and grades were temporarily increased by drawing down from stockpiles until initial operational difficulties at the cyanide recovery plant were resolved. From a safety perspective, a relatively good year was negatively impacted by the high number of accidents at Cerro Vanguardia.

Major Projects Gold jewellery which won a Grand Award in the AngloGold- South Africa sponsored Asian-wide co m p e t i t i o n Shaft sinking at the Joel mine has reached the 129 level (1,293 metres below surface) and station development is South America in progress. The Mponeng deepening project and the Moab In December 1999,modifications to the milling circuit at Khotsong project are prog r essing wel l . The sub shaft deepening the Serra Grande plant were completed, which will increase at Elandsrand has been completed.The major remaining throughput by 17% to 700,000 tonnes per annum. Capital components are access development at a number of levels. expenditure for the year amounted to US$15 million and Capital expenditure for 2000 in South Africa is expected is expected to increase to US$20 million in 2000. to increase by 24% to US$184 million compared with 1999, with Joel (US$29 million), Mp o n e n g (US$48 million), Moab Outlook Khotsong (US$56 million) and Elandsrand (US$23 million) Overall production in 2000 is expected to increase by 8% to co m p r ising the bulk of expenditure. 7.5 million ounces. Ho wever , the recent decline in South Af ri c a n gold prod u c t i o n , particularly in the last quarter of 1999,is an Other Africa issue of concern and one that is being addressed by manage m e n t The Yatela project in Mali was app r oved by AngloGold in early at AngloGold. Cash costs are expected to increase marginally 2000. Construction is expected to commence in May 2000 to US$213 per ounce. with first production in May 2001.Yatela is expected to prod u c e 1.2 million ounces of gold over five years at a cash cost of The outlook for the gold market in 2000 is more positive approximately US$175 per ounce. Capital expenditure for the than in the recent past. On the back of generally more pr oject is expected to total US$76 million. positive ma r k et fundamentals it is anticipated that there will be ren e wed investor interest in the metal in the year ahead. North America AngloGold will continue to look for innovative ways to Capital expenditure of US$39 million in 1999 was focused on expand markets for gold in 2000. A further US$16 million expansion of the leach pad at Pikes Peak and the development will be dedicated towar d s AngloGold’s worldwide marketing of underground mines at Jerritt Canyon. Capital expenditure campaign aimed at a growi n g , ef fe c t i v e and val u e - g e n e r at i n g is expected to be the same in 2000. role for the company.

Anglo American plc Annual Report 1999 15 Contribution to headline profit % Turnover US$ million

1999 1,428

1998 1,250

Platinum US$ million pro forma (unaudited) 1999 1998 Turnover 1,428 1,250 Total operating profit before exceptional items 480 331 Headline profit 200 133 Net operating assets 1,519 1,159 Capital expenditure 239 252 Share of headline profit 15% 11% Share of group net oper ating assets 12% 10% Platinum

Anglo American’s platinum group metals interests are held through a 50.3% holding in Anglo American Platinum, the world’s leading primary producer of platinum, which accounts for some 35% of global supply of the metal.

Financial Overview US$435-US$445 per ounce for much of the rest of the year. In 1999, the Anglo Platinum division reported total operating The aver a ge price realised by Anglo Plati n um during the year pro f it befor e exceptional items of US$480 million, 45% higher was US$377 per ounce. than in 1998, mainly because of higher palladium,rhodium and nickel prices and greater platinum and palladium sales Palladium price volumes. Increases in rand costs were largely offset by the Uncertainty regarding the availability of Russian metal once weakening of the South African currency against the US dollar. again resulted in extreme volatility in the palladium market in In 1999 Anglo Platinum reduced both the operating costs 1999.The dumping of palladium before the end of April 1999 and cash costs per platinum equivalent unit by 11%. In occurred in anticipation of a deadline for a 5% tax levied on December 1999 Anglo Platinum announced the development Russian exports, driving the price down to a low for the year of a 162,000 ounce per year mine in Maandagshoek at of US$284 per ounce. Russia did not recommence significant a capital cost of some US$200 million. palladium shipments until September. Despite the resumption of Russian metal supply, extremely strong consumer demand Market reduced liquidity and the palladium price continued its ascent. Platinum price At the end of the year, palladium reached an all-time high In early 1999, despite rumours that the Russian government of US$454 per ounce on a flurry of buying from automotive had set the export quota for plati n um at 20 tonnes, the plati nu m manufacturers concerned about Russian supplies early in 2000. price reached a peak of US$384 per ounce after it became The average price realised by Anglo Platinum during the year apparent that exports would again be delayed.The price then was US$358 per ounce. declined following liquidation of speculative long positions by hedge funds. Reports of substantial shipments of palladium Platinum supply and demand depressed both the palladium and platinum prices and Demand for platinum in 1999 grew by 200,000 ounces, or platinum traded at a three-month low of US$346 per ounce 3.7%, to 5.6 million ounces as a result of robust consumption at the end of Ap ri l . Fr om May to September, hedge fund activity by the jewellery sector and firm industrial offtake. Despite in the platinum market, partly in response to news of the in c r eased production by South Af r ican prod u c e r s , total supplies Hartley platinum mine closure in Zimbabwe, dominated of plati n um to the market declined from 5.4 million ounces in prices,which traded in a range of US$345 to US$365 per 1998 to 4.8 million ounces, resulting in a shortf all of 830,000 ou n c e . Pl at i n um posted a series of gains in September, rea ch i n g ounces. Shipments of platinum from Russia were curtailed US$429 per ounce towards the end of the month. Buoyed by from April owing to legislative problems that prevented scarcity of metal, the rally continued through October while organisations previously responsible for exports of platinum conflicting reports from Russia resulted in extreme price group metals (PGMs) from selling platinum and rhodium. volatility.The price attained a level of US$437 per ounce and one-month lease rates were quoted at 50% per annum.Against Total demand for PGMs by the autocatalyst sector grew on a background of tight market conditions, platinum surged to account of increased sales of catalyst equipped vehicles in the a high for the year of US$457 per ounce during November major markets. However, net platinum consumption by this but slipped thereafter before consolidating in a range of sector declined by 6.7% because of the continued preference

Flotation tank cells at Anglo Platinum’s Bafokeng Rasimone mine in South Africa Anglo American plc Annual Report 1999 17 Platinum

to 2,023,000 ounces. Improved metal prices were the main factor behind the higher operating margins recorded by the group’s operations.

Rustenburg section Platinum refined ounces increased year on year by 3.3%.The cost per platinum refined ounce, net of other metal revenue, declined by 34.3% to US$126.Head grade and concentrator recoveries declined as higher proportions of ore from the UG2 reef, the chromite reef in the Bushveld Complex, and secondary development tonnages were processed. The operating margin rose by 31.9% compared with 1998.

Union section Platinum refined ounces rose by 7.7% during 1999,while the cost per platinum refined ounce, net of other metal revenue, fell by 65.1% to US$80.The head grade declined owing to an increase in the rate of UG2 ore mined, but a The ‘man-rider’, a conveyor system used to transport miners slight improvement in concentrator recoveries was recorded. and ore overground Operating margins improved by 91.7%.

for palladium-based technology by automobile manufacturers Amandelbult section in North America and Europe. Demand for platinum in Platinum refined ounces were 15% higher in 1999 than autocatalysts rose in Europe on account of the metal’s relative in 1998, with the cost per platinum refined ounce, net efficiency in controlling emissions from diesel vehicles, and of other metal revenue, declining by 100%. Head grade also rose in Japan in response to the increase in car sales. improved by 1.2%, while the operating margin was 28.3% higher. At the No. 2 shaft complex, commissioned Sales of platinum to the jewellery industry in 1999 increased in December 1998,a 60,000 tonnes per month expansion by 13.3% to 2.7 million ounces. Sales of platinum jewellery on the UG2 reef horizon was approved. Full production is in Japan remained firm despite the weakness of its economy, expected to be achieved,on schedule, by mid-2000. During while demand for platinum for jewellery fabrication in China the year, Amandelbult received the prestigious South African and North America continued to grow strongly, reaching National Productivity Institute Award. 850,000 ounces and 300,000 ounces respectively. Ma r ke t gr owth in plati n um app l i c a tions such as process cata ly s t s and Potgietersrust Platinums hard disks resulted in industrial demand for platinum in 1999 Compared with 1998,total refined ounces of platinum for increasing by some 90,000 ounces or 7%.Investment demand 1999 rose by 18.2% and the cost per platinum refined ounce, for the year fell by 36.5% compared with the previous yea r ’ s net of other metal revenue, was 148.1% lower. Head grade le vel owing to declining demand for plati n um coins. declined by 4.4% because of the milling of lower grade ore retrieved from the stockpile. The operating margin declined Operations by 1.1%.The change from contractor mining to an owner- Overview operator mine in 1998 resulted in improved operating cost Tonnes milled rose by 3.8% to 22,853,000 tonnes in 1999, efficiencies in 1999.The 425,000 tonnes per month expansion with Pot g i e t e r s r ust Plati n ums accounting for the largest increa s e was commissioned during the year, though mill throughput following a plant expansion completed in the first half of rates had to be reduced to 370,000 tonnes per month owing the year. Refined platinum production increased by 8.7% to water shortages brought on by drought. To ensure that

18 Anglo American plc Annual Report 1999 future production can be sustained, a pipeline will be installed Process division by mid-2001. The division performed well during 1999,with record production of both refined platinum, at 2,023,000 ounces, Lebowa Platinum Mines and refined palladium which totalled 1,017,000 ounces. During the year, Lebowa Platinum Mines’ production of The division’s operations, which comprise the Waterval platinum refined ounces decreased by 6.2%, while the cost per Smelter, the Base Metals Refinery and the Precious Metals platinum refined ounce, net of other metal revenue, increased Refinery, proceeded smoothly, with notable efficiency by 8.2% to US$216.The head grade decreased slightly as lower improvements.The commissioning of a ceramic filter grade ore was mined in one section.The operating margin was plant at Waterval was successful and furnace dust emissions 0.6% higher. Output at the UG2 Middelpunt Hill mine is being via the main stack were virtually eliminated. expanded from 30,000 tonnes of UG2 ore per month to 50,000 tonnes.The ore is to be processed in a UG2 concentrato r Outlook that will be ready by July 2000. Upgrading of the existing Provided favourable global economic conditions continue Merensky ore plant to treat 105,000 tonnes per month was and price volatility of PGMs is not excessive, the fundamentals completed early in 2000.The deepening of an incline shaft for demand for 2000 look firm. Platinum jewellery de m a n d that will make an additional level available for the mining co n t i n ues to increase as a result of effec t i v e prom o t i o n and of Merensky reef was finalised in the first quarter of 2000. the growing popularity of white metal jewellery. Industrial usage of platinum is likely to benefit from strong growth in Bafokeng Rasimone the electrical and chemical sectors and it is expected that net In 1999, the developing Bafokeng Rasimone mine, budgeted pl at i n um offtake in autocata l yst applications will be maintained. at some US$200 million, was the major capital expenditure Palladium and rhodium demand will be governed by their item, accounting for US$121 million.The mine is expected to gr owing use in the autocata l yst sector. Pr ices of PGMs, pa rt i c u l a r l y produce some 250,000 ounces of refined platinum a year over platinum and palladium, have been driven higher in recent a minimum 25-year life. Full production is expected in 2002. months by interruptions of Russian shipments. A resumption of normal volumes from Russia is likely to depress prices in the short term. In spite of th i s , the prospects for higher US dollar prices than those achi e ved in 1999 appear favourable. Provided there is no significant firming of the rand/US dollar exchange rate, the likelihood of higher US dollar prices and a planned increase in refined production should yield higher profits in 2000.

Demand for platinum reached a record 5.6 million ounces in 1999 boosted by strong jewellery demand

Anglo American plc Annual Report 1999 19 Contribution to headline profit % Turnover US$ million

1999 1,809

1998 1,543

Diamonds US$ million pro forma (unaudited) 1999 1998 Turnover 1,809 1,543 Total operating profit before exceptional items 245 148 Headline profit 162 87 Share of headline profit 12% 8% Diamonds

Anglo American’s diamond interests are represented by its 32.2% shareholding in the independently managed De Beers group which, with its partners, is the largest producer by value of gem diamonds in the world. De Beers sorts, values and markets nearly 60% of the world’s rough diamonds.

Financial Overview CSO have come from any area controlled by forces rebelling For the year to 31 December 1999, Anglo Am e ri c a n ’ s share against legitimate, internationally recognised governments. of De Beers’ total operating prof it befor e exceptional items in c r eased by 66% to US$245 million from US$148 million Investments in 1998. Headline profit, at US$162 mi l l i o n , in c r eased by De Beers has continued the strategy of investing in its core 86 % . De Beers announced a dividend of 105 US cents per diamond business by acquiring the outstanding minority share for the year, an increase of 31% over the previous year. interests in the diamond trading companies and by agreeing to purchase the interests of Anglovaal Mining in the Venetia Diamond Sales and Finsch mines. De Beers has also made an offer to The Central Selling Organisation (CSO) increased its sales Industrial & Commercial Holdings Limited, which holds of rough diamonds by 57% from US$3.3 billion in 1998 an effective 6.25% share of Venetia’s profits. During the year, to a record US$5.2 billion.This, in turn, facilitated a decrease agreement was reached with BHP for De Beers to purchase of US$859 million in diamond stocks to US$3.9 billion, the 35% of the run-of-mine production from the Ekati mine first time in several years it has dipped below the US$4 billion in Canada’s Northwest Territories. mark. Long and medium term liabilities decreased by US$751 million to US$615 million, and net current assets increased Mining Operations by US$193 million to US$265 million. In 1999, the combined production of De Beers’ and its partn e r s totalled 32.3 million carats , an increase of some 1 million carats A number of factors contributed to the recovery in sales, over 1998. In Botswana, the Orapa 2000 project, which will including the continued strength of the US market, some double production capacity at the mine, was commissioned returning confidence in south-east Asian markets,the at the end of the first quarter of 2000. anticipation of millennium related sales, and the consequent re-stocking of the trade pipeline following severe depletion. Outlook The strategic review, embarked upon in 1999, is now The retail markets performed strongly in 1999, achieving the in the process of implementation and has given new focus highest growth of the decade, reflecting both the improved to De Beers as it seeks to move from ‘custodian of the market’ economic envi r onment and the success of De Beers’ mi l l e n n i u m to being the ‘leader of the diamond industry’. De Beers marketing programmes. All markets, with the exception of has targets in place for further significant improvements in Japan, experienced impressive growth, with the United States, operational efficiencies,implementing plans to drive further which now accounts for almost half of total global sales, demand for diamonds and is investigating mechanisms showing growth of 12%. to capitalise on the strength of the De Beers name.

De Beers has been actively engaged in discussion with the UN, various governments and NGOs on the subject of diamonds as a source of funding rebel movements in Africa and has taken steps to ensure that no diamonds sold by the

Debswana’s new diamond processing plant at its Orapa mine in Botswana Anglo American plc Annual Report 1999 21 Contribution to headline profit % Turnover US$ million

1999 787

1998 912

Coal US$ million pro forma (unaudited) 1999 1998 Turnover 787 912 Total operating profit before exceptional items 114 166 Headline profit 79 102 Net operating assets (excludes joint ventures and associates) 708 773 Capital expenditure 26 32 Share of headline profit 6% 9% Share of group net oper ating assets 6% 7% Coal

Anglo American’s coal interests are held through wholly owned Anglo Coal, one of the world’s largest private sector coal producers and exporters. In 1999, Anglo Coal’s combined domestic and international coal sales totalled 61.8 million tonnes.

Financial Overview Demand for export steam coal continued to be weak during Anglo Coal’s total operating profit before exceptional items for the first nine months of the year, resulting in a more severe the year decreased by 31% from US$166 million to US$114 than anticipated drop in spot prices from around US$25 per million. Earnings from collieries supplying Eskom, the South tonne at the beginning of the year to some US$20 per tonne African power utility, were 5% lower and earnings from the towards the end of 1999. Factors which influenced demand South African trade collieries decreased by 38% owing mainly and which contributed to the lower spot prices, particularly to lower prices in export markets. in Europe, were high levels of hydroelectric power, low industrial growth,inexpensively priced gas during the Market northern hemisphere summer months and larger than forecast 1999 was a difficult year for the South African coal industry volumes of low priced Polish coal. Similarly in Asia, generally and in particular for its export collieries. Excess supply capacity weak demand kept prices at low levels. relative to demand levels and resulting low prices characterised the export market. Operations Power generation collieries Saleable coal produced by the South African coal mining Anglo Coal has five dedicated Eskom supplying collieries: in d u s t r y in 1999 amounted to 218.5 million tonnes, 6.3 million A rn o t ,K ri e l , Ne w Denmark, Ne w Vaal and Matl a . All are wholly tonnes less than the previous yea r . Es k om increased electricity owned except Matla, acquired with effect from 1 July 1998, sales by 1.7% in 1999, compared with a decrease of 0.6 % in in which the Group has a 50% joint venture interest with 1998. During 1999,Eskom purchased 92.0 million tonnes of Ingwe Coal Corporation Limited (a member of the Billiton co a l , Anglo Coal’s share being 41.7 million tonnes, 5.3% higher gro u p ) , with Ingwe being res p o n s i bl e for mine management. than the 39.6 million tonnes sold to the utility in 1998. In 1999, attributable sales from Matla colliery for the full In line with prevailing economic conditions in South Africa, 12 months amounted to 7.5 million tonnes, 3.4 million demand from the general industrial sector remained weak tonnes more than the 4.1 million tonnes reflected for the throughout the year. The steel and cement sectors consumed second half of 1998.New Denmark failed to achieve revised less coal than originally expected owing to lower levels of production targets and sales dropped sharply by 1.5 million economic activity. In addition, Eskom increased electricity tonnes to 7.0 million tonnes. The longwall operating at New supplies to local municipalities, which resulted in reduced Denmark colliery’s central shaft reached the end of its safe and demand for coal from that sector. economic life span at the end of 1999 and, by agreement with Eskom,is not expected to be replaced. Numerous problems Coal exports from South Africa marginally exceeded 66 million were experienced with this longwall’s face equipment and the tonnes, slightly lower than in 1998. Exports through the resulting poor avai l a bility was large l y res p o n s i b le for the shortfa l l Richards Bay Coal Terminal (RBCT) were 63.4 million tonnes, in the colliery’s overall production. Eskom also requested closely matching 1998 exports. Anglo Coal’s own shipments a cutback in the supply from Kriel colliery in the last quarter through RBCT amounted to 16.9 million tonnes, slightly more of the year, which led to that colliery’s overall sales for the than the company’ s entitlement in terms of its 26% shareholding. year declining by 400,000 tonnes to 8.6 million tonnes.

A dragline at the New Vaal power generation colliery in South Africa Anglo American plc Annual Report 1999 23 Coal

Unit costs at collieries supplying Eskom decreased by 3.1%, op e r a ting prof it per tonne fell by 39% as a result of the decrea s e notwithstanding employee ret re n c hment costs at New Denmark in export prices. and Matla collieries which accounted for almost 10 US cents per tonne. The decrease in costs was assisted by the higher In the South Af r ican domestic marke t ,e a rnings wer e signific a n t l y tonnages from Matla colliery where production costs were reduced owing to lower demand for metallurgical coal from be l o w the aver a ge of the Eskom collierie s . Aver a ge operati n g the South African steel industry. profit per tonne from Eskom collieries decreased by 7.7% mainly as a result of the South African rand weakening against Productivity decreased at Kleinkopje and Bank collieries, the US dollar, impacting the rand denominated income stream. owing primarily to a cutback in production arising from over-supply and to a wage-related strike that lasted almost Productivity increases (measured in sales tonnes per employee a wee k . Ho wever , Goedehoop and Greenside collieries rec o r d e d per annum) were recorded at Matla,Arnot, Kriel and New improvements in productivity, the latter increasing by 38% Vaal collieries. following the rationalisation of production that was completed earlier in the year. Trade collieries In South Africa,Anglo Coal operates six wholly owned trade Carbones del Cerrejón or export collieries:Bank, Goedehoop, Kleinkopje, Landau, At 31 December 1999,Anglo Coal had a one-third interest Greenside and New Clydesdale. All are among the lowest cost in Carbones del Cerrejón (CdelC) in northern Colombia.This coal producers in the world. shareholding was increased in January 2000 when Anglo Coal and its partner in CdelC, Glencore International, each increased In 1999, the trade collieries’total sales for the year increased their shareholding to 50% by the purchase from Rio Tinto by 2.1% over 1998 to 19.6 million tonnes, owing mainly of its one-third participation in the operation. Discussions to a full 12 months’ sales recorded for both Greenside and are currently taking place with a view to introducing a third New Clydesdale collieries which were acquired on 1 July party into this venture which could be expanded to include 1998. Unit costs per tonne decreased by 5%. However, Carbocoal’s share of Cerrejón Norte.

Production at CdelC was reduced from the 3 million tonnes per annum level in 1998 to 1 million tonnes in 1999, owing to the high cost of haulage by road to the port of Santa Marta. The reduced production at CdelC resulted in a significant increase in unit costs,although an overall saving in cash requirements for the year was achieved. Cost effective access to the rail and port facilities at the Caribbean port of Puerto Bolivar was negotiated in 1999.A throughput entitlement of 3 million tonnes per annum at the port has been agreed until the end of 2003, with a further 7 to 10 million tonnes thereafter, subject to various access fees and the funding of capital expenditure.

The feasibility study for the integration and expansion of Cerrejón Centrale and the neighbouring Oreganal deposit is expected to be completed in May 2000.The first phase of the exploration programme for Cerrejón Sur has been completed and the initial results were well received by the Colombian A rope shovel loading coal mining authorities. The second phase of the exploration

24 Anglo American plc Annual Report 1999 Discussions between Anglo Coal and Sasol, aimed at gaining entry to this market, are continuing in a positive manner and it is expected that these will reach finality during 2001 upon completion of a pending feasibility study.

Anglo Coal has continued to evaluate a possible participation in the proposed South Dunes Coal Terminal (SDCT) at Richards Ba y.The Group is curren t l y revi e wing whether or not it should pa rt i c i p a te in this development to the level of 3.5 million tonnes per annum. However, an important potential participant in the project has given notice to the SDCT that it no longer wishes to participate.

Du r ing the fou r th quarter of 1999, spot prices for internat i o n a l l y traded seaborne coal began to improve, supported by modest increases in monthly shipment volumes. During 2000, market conditions generally are forecast to continue their slow improvement from the low levels reached in 1999. However, A bucket wheel excavator, in action at the New Vaal colliery continued emphasis by customers on spot pricing, and the resultant increase in volumes of tonnage priced on a spot basis, programme is now continuing, with the objective of proving in a market which is expected to remain intensely competitive, a mineable res e r ve with at least 300 million sales tonnes of coal. have led to forecasts of lower average US dollar prices for 2000 compared with 1999. In addition,sales tonnes from Outlook Anglo Coal’s trade collieries are forecast to be some 8% lower It is expected that Arnot underground colliery, the 50% joint than in 1999, owing to the expected sale of New Clydesdale venture interest in Matla colliery, and New Clydesdale colliery colliery and to lower domestic sales.With the firming of will be sold to a black empowerment group during the year. export prices, a cash profit is forecast at CdelC. Overall,Anglo These interests collectively contributed some US$9 million Coal’s operating profit for 2000 is forecast to be lower than to Anglo Coal’s operating profit in 1999. Coal supplied to in 1999. Es k om amounted to 11.8 million tonnes, while New Clyd e s d a l e provided 850,000 tonnes for the export market.

Eskom estimates that it will increase electricity sales by 1.6% during 2000. Earnings from Anglo Coal’s collieries supplying Eskom are forecast to decrease however, largely as a result of the expected disposal of Arnot and Matla collieries. In the light of Eskom’s modest growth expectations, and the ongoing success of its campaign to increase the availability of its existing generating plant,prospects for the development of the planned Lekwe power station and its supplying colliery, for which Anglo Coal holds the contract, remain distant. The absence of meaningful growth in power generation is mirrored in the steel and cement sectors; therefore the coal requirements for Sasol’s chemical and synthetic fuel plants represent the only market for growth in South Africa.

Anglo American plc Annual Report 1999 25 Contribution to headline profit % Turnover US$ million

1999 1,163

1998 760

Base Metals US$ million pro forma (unaudited) 1999 1998 Turnover 1,163 760 Total operating profit before exceptional items 174 86 – Collahuasi 96 (1) – Mantos Blancos 27 30 – Hudson Bay 6 13 – Other 45 44 Headline profit 97 62 Net operating assets (excluding joint ventures and associates) 1,606 1,292 Capital expenditure 257 329 Share of headline profit 7% 5% Share of group net oper ating assets 13% 12% Base metals

Anglo Base Metals’ main interests are in copper, nickel, zinc and mineral sands. With several projects recently commissioned, under construction or at feasibility study stage, the division’s strategy is to become a significant industry player in each of its major areas of focus within the next few years.

Financial Overview the price increase to an aver a ge for the year of 49 US cents/lb, Anglo Base Metals’ total operating profit before exceptional a 7% increase on 1998. Firm demand should offset continuing items of US$174 million more than doubled from 1998, high exports from China and greater refined metal production mainly because of the full year’s contribution from Collahuasi arising from increased concentrate supply. The price outlook and Black Mountain. for the year remains positive.

Markets Operations In 1999, world refined copper consumption grew by nearly Copper 2.5% over 1998.A rebound in demand in Asia compensated In 1999, combined output from the two operations of for slightly lower, though still strong, demand in the United 77% owned Mantos Blancos in Chile – the Mantos Blancos States. However, the structural surplus that had depressed and Mantoverde mines – was a record 151,600 tonnes of the copper market from mid-1997 continue d , with the London copper, of which 106,700 tonnes was in cathode copper and Metal Exchange (LME) stocks rising to their highest levels ever . the balance high-grade concentrates. Production in 2000 will Initially, prices were weak but sentiment improved following be slightly lower and upward pressure on costs is expected mine closures in North America, improving economic news, as a result of falling oxide grades at both operations. Further a slowdown in the rate of increase in stocks, and renewed optimisations are being considered so as to limit the impact investment activity. By the year end,prices had recovered of cost increases. st ro n g l y to exceed 83 US cents/lb, with the cash price aver ag i n g 71 US cents/lb over the year compared with 75 US cents/lb in The 44% held Collahuasi open-pit copper mine, at 4,500 19 9 8 . In 2000, the copper market should be more balanced, metres above sea level in the Chilean Andes, began commercial although a sustained price improvement requires a significant production on 1 January 1999. In 1999,Collahuasi produced reduction in metal exchange stocks. 383,300 tonnes of copper contained in concentrates and 51,300 tonnes of copper in cathodes. In 2000,copper The nickel market was in deficit in 1999, with LME stocks production is expected to be slightly lower than in 1999, reducing by nearly 30% over the year. The nickel price rose owing primarily to the mining of lower sulphide grades. strongly for most of 1999 in response to producer cutbacks, ongoing commissioning problems at the three Australian Anglo Am e r ican owns a 29% interest in Pal a bora Mining which nickel-laterite projects and a surge in stainless steel demand. is located in South Africa. In 1999, attributable production The year end price of US$3.82/lb was the highest for over of copper fell from 40,300 tonnes to 31,000 tonnes owing th re e years, and the price averaged US$2.73/lb in 1999, well to a decrease in grades.The underground mining project at above the US$2.10/lb figure for 1998.Demand growth is Palabora has experienced some minor delays but is still expected to remain strong in 2000 and the market to continue for ecast to come into production in 2002 at a cost to completion in deficit. of US$400 million.

In 1999, robust demand growth led to a sizeable deficit in the Nickel zinc market . Sound fundamentals and improving sentiment saw Codemin is a 90% owned operation in the Goiás state

A cargo ship at Punta Patache in Chile loading copper concentrate, pipelined from the Collahuasi mine Anglo American plc Annual Report 1999 27 Base metals

Zinc In 1999, the wholly owned Black Mountain mine in South Af ri c a produced 73,800 tonnes of lead, 31,200 tonnes of zinc and 10,100 tonnes of copper. Si l v er grades wer e slightly higher than forecast, while lead, zinc and copper were somewhat lower. A feasibility study, anticipated to be finalised by mid-2000, is curren t l y being underta k en on the devel o p m e n t of a new shaft, to access a down-plunge extension of the Broken Hill orebody which,if viable, could extend the mine’s life to at least 2010.

Wholly owned Hudson Bay Mining and Smelting in Canada p ro d u c e d ,f rom its own mines, 82,800 tonnes of zinc metal and 50,300 tonnes of copper cathode, broadly in line with the previous year. In September 1999, the 777 Project, which will extend the mine life to 2016, was approved at a projected ca pital cost of US$240 million.The project includes completion of the de velopment of the Chisel North mine, the devel o p m e n t of the 777 orebo d y and expansion of the existing Flin Flon mill Preparing for drilling at the Lisheen zinc/lead mine in Ireland and zinc pres s u r e leach plant, as well as replacement of the zinc ta n k h o u s e . Sinking of the new 777 shaft will commence in the of Brazil. In 1999, production was 6,500 tonnes of nickel second quarter of 2000, with full production planned for 2004. contained in ferro-nickel, down 6% from 1998 due to unscheduled plant maintenance disruptions. Operating The Lisheen zinc/lead mine in Ireland is a 50/50 joint costs fell significantly during the year, benefiting from the ven t u r e between Anglo Am e r ican and Iver nia West plc.The devaluation of the Brazilian real. mi n e began commissioning in the fou r th quarter of 1999 and was commissioned during the year with the first concentrate At Bindura Nickel, a 53% owned mine in Zimbabwe, nickel shipment taking place in December. Final capital expenditure in concentrate production in 1999 fell by 8% to 9,600 tonnes for the project is estimated to be US$280 million.The mine compared with 1998, with cathode output of 12,800 tonnes. is expected to build up to full production during the course Of this total, domestic production accounted for 9,000 tonnes, of 2000, reaching an annualised production rate of 141,500 a rise of 4%, while output of copper in sulphide was 33% tonnes of zinc and 29,800 tonnes of lead in concentrate by higher at 4,400 tonnes. the end of 2000.

Tati is a 43% owned associate which produces nickel , copper Mineral sands and PGMs in concentrate from two orebodies in Botswan a . The wholly owned Namakwa Sands operation in South Africa In 1999,Tati produced 8,700 tonnes of nickel , up 6% compared mines heavy mineral sands to produce zircon and rutile, as with 1998, and 3,000 tonnes of copper, which represented well as titanium dioxide slags and pig iron derived from the a 3% increase on 1998 production. Improved tre a tment cha rg e s smelting of ilmenite.The Phase 2 expansion was completed will benefit costs in 2000 and the US$65 million wet concentrator early in 1999. Despite a slower than anticipated start-up, project set to come on stream in 2002 is expected to result production of most end-products rose by 80%-100% as in annual production increasing to 12,800 tonnes of nickel compared with 1998.Start-up problems and a weak market and 9,000 tonnes of copper in concentrate as well as furth e r adversely affected results, but the programme of ramping up reductions in costs. As rep o r ted el s ew h e r e in this rep o rt , pr oduction and improving metallurgical rec o ver ies and operati n g Anglo Plati n um produced 19,600 tonnes of nickel in 2000, efficiencies,together with a firming in market conditions, as a by- p ro d u c t . is expected to lead to an improved performance in 2000.

28 Anglo American plc Annual Report 1999 Developments The first phase of the drilling programme at the wholly Copper owned Barro Alto project in Brazil’s Goiás State ended Anglo American owns 51% of Zambia Copper Investments in September 1999, and completion of the feasibility study (Z C I ) . In October 1999 it was announced that ZCI and partn e r s is scheduled for mid-2001.The project has the potential to intended to purchase from Zambia Consolidated Copper Mines produce 40,000 tonnes of nickel in ferro-nickel per annum. (ZCCM) an 80% interest in the assets of the Kon k ola Division (including the Konkola Deep Mining Project),the Nchanga Anglo Am e r ican has a 23% holding in Anaconda Nickel Limited, Division and the Nampundwe pyrite mine. Completion of a listed Australian company with interests in nickel/cobalt the transaction is currently scheduled for the first half of 2000. operations in Western Australia.Anaconda has completed The assets being acquired will have the capacity to produce construction of a high pressure acid-leach plant with a design around 225,000 tonnes per year of copper at very competitive capacity of 45,000 tonnes of nickel and 3,000 tonnes of cobalt operating costs. per year. First production from the plant took place in May 19 9 9 . Fol l o wing a number of start-up pro bl e m s ,c o m m i s s i o n i n g Anglo American holds a 50% interest in Congo Mineral and ramping-up of operations are underway. Developments Limited,which has a 60% joint venture interest in the Kolwezi Tailings project in the Democratic Republic of Zinc Congo.The feasibility study contemplates a project with annual The wholly owned Gamsberg zinc deposit lies some 20 kilometres pr oduction of 75,000 tonnes of copper, with initial cobalt output from the Black Mountain mine in the Northern Cape, South at 7,000 tonnes annually over a projected life of approximately Af ri c a . The feasibility study, due for completion in 2000, is based 20 years. Development is dependent on the finalisation of on a low cost integrated mine, co n c e n t r a tor and refi n e r y prod u c i n g negotiations with government and the availability of limited 300,000 tonnes of zinc per year over a 27-year mine life. recourse finance. The wholly owned Skor pion zinc deposit is located in southern Anglo Am e r ican has an effec t i v e 62% interest in the Quellavec o N a m i b i a .F u rther drilling to delineate the res e r ves is being carrie d porphyry copper project in southern Peru.The feasibility out and a pilot plant has been built at the Anglo American study is in the process of being completed and contemplates Research Laboratories to test the process. These studies are a production rate of 175,000 tonnes of contained copper expected to be finalised during 2000 and a decision taken on per annum over the first eight years of operation, declining the implementation of a project to produce around 150,000 thereafter as grades fall. Mine life is expected to be in excess tonnes of zinc metal per annum with at least a 15-year life. of 25 yea r s .The Salobo copper/gold deposit in north e r n Brazil, in which Anglo American has a 50% interest, has the potential Outlook to produce 240,000 tonnes of copper and 10 tonnes of gold The strength of the US economy and the steady recovery in per annum during an expected mine life of over 20 years. the economies of Western Europe and some areas in south east Project development remains on hold pending discussions Asia are expected to underpin commodity prices in the year between the project’s partners. ahead. With a number of projects under construction or at feasibility study stage, the division is poised to become Nickel an important player in its major areas of focus. The 86% owned Loma de Níquel mine in Venezuela is expected to commence production from July 2000 with an annual production rate of 16,000 tonnes of nickel in ferro-nickel.The project’s estimated final cost has increased from US$489 million to US$528 million as a result of the strength of the Venezuelan bolivar , ac c e n t u a ted by equipment de l i ve r y delays . Op t i m i s a tion studies aimed at higher prod u c t i o n levels and lower operating costs are underway.

Anglo American plc Annual Report 1999 29 Contribution to headline profit % Turnover US$ million

1999 1,008

1998 1,073

Industrial Minerals US$ million pro forma (unaudited) 1999 1998 Turnover 1,008 1,073 Total operating profit before exceptional items 118 95 – United Kingdom 84 93 – Europe (excluding UK) 9 (22) – Brazil 25 24 Headline profit 116 106 Net operating assets (excluding investments in joint ventures and associates) 1,184 1,243 Capital expenditure 70 85 Share of headline profit 9% 9% Share of group net oper ating assets 9% 11% Industrial minerals

Anglo Industrial Minerals (AIM) produces construction materials in the UK, Germany and Spain, potash and salt in the UK and phosphates in Brazil. The US$1.9 billion acquisition of Tarmac plc has made AIM the UK’s largest aggregates and coated stone producer.

Financial Overview Anglo American’s Industrial Minerals division, making it the Anglo Industrial Minerals’ total operating prof it befor e ex c e p t i o n a l market leader in the UK in aggregates, asphalt, concrete blocks items was US$118 million in 1999, an increase of US$23 million and lime as well as giving it substantial presence in ready-mix over the prior yea r . 1998 included non-rec u r ring cha rg e s of co n c r ete and concrete prod u c t s . It also adds a significant bus i n e s s US$41 million.The underlying contribution of the division in France as well as growing businesses in Poland and the Czech fell by US$18 million principally as a result of a fall of US$12 Republic.The acquisition fits into AIM’s strategic focus of million in the European construction materials operations and expanding the business in existing and neighbouring geograph i c a fall of US$7 million at Cleveland Potash, which suffered from areas of operation.The UK and France are mature economies flooding during the first half of the yea r .The decrease in the profi t with steady prospects, while Spain and central Europe, in the from the European operations resulted mainly from exchange form of eastern Germany, the Czech Republic and Poland,offer rate differences and a change in accounting policy in respect su p e r ior growth potential over the medium term. The continental of the depletion of mineral res e r ves in order to comply fully with markets are currently fragmented and further consolidation UK accounting policy. The cost of reserves is now written off opportunities should arise. In addition,the acquisition offers over the full life of the operation rather than over the last 20 significant potential to derive synergies from combining the years,which was the previous policy. An increased co n t ri bu t i o n UK businesses through overhead savings and economies of scale. fr om the STPP and fer tiliser operations of Copebr á s offset the Furthermore, the acquisition more than trebles AIM’s res e r ve loss of income from the sale of the carbon bla c k operations in base in the UK. Outside Europ e ,Ta rm a c ’s major bus i n e s s is in 19 9 8 . The deprec i at i o n of the Brazilian real in Janu a r y 1999 gave the United State s . It was announced at the time of the bid that Copebrás a very competitive position compared with imported this business would be sold as it does not fit into AI M ’ s strate g y products and enabled it to increase sales volumes. Copebrás’ and there are no synergistic benefits. A great deal of interest operating profit was further boosted by productivity gains has been expressed in these assets and the sale process is under leading to reduced fix ed costs and lower usage of raw mat e ri a l s. way.All of AI M ’ s construction mate ri a l s interests will be held within the new Tarmac group and most products sold under Purchase of Tarmac plc the Tarmac name. On a pro forma basis in 1999, and net of In November 1999,Anglo American announced a £1.2 billion anticipated disposals the new Tarmac group’s turnover would (US$1.9 billion) recommended cash offer for Tarmac plc, have been US$2,249 million, compared with AIM construction a leading multinational producer of aggregates, asphalt, ready- materials turnover of US$746 million. mixed concrete and concrete products. On 1 March 2000, the offer was approved by the UK regulatory authorities Market subject to a number of operations being sold to overcome Ov erall in 1999, the markets served by the construction mate ri a l s concerns about the impact on competition in specific areas. operations remained difficult, particularly in eastern Germany These disposals have been estimated to amount to 8% of where the downturn in construction spending continued. Tarmac’s UK turnover. Numerous expressions of interest in In the UK, the continued lack of spending on infrastructure these assets have been received from competitors. de velopment resulted in weak demand, pa rt i c u l a r l y in the north of the country where AIM’s UK businesses are largely based, The Tarmac acquisition dramatically transforms the size of although prices have remained relatively resilient. In contrast,

Ov erview of Tilcon South’s Tunstead quarry plant in Derbys h i r e with a train batch loader in the foreground Anglo American plc Annual Report 1999 31 Industrial minerals

the improving economy in Spain has resulted in a substantial possible upgrade and expansion of the Buxton cement plant. increase in demand for construction materials. The Planning Application and Environmental Statement for a new plant have been submitted to the local authority and Operations are awaiting determination. United Kingdom The UK operations produce aggregates, asphalt, concrete and It was announced in the Budget that an aggregates tax will m o rt a r, lime and cement, and account for around 90% of AI M ’ s commence in 2002 at £1.60 per tonne. The cost increase operating profit.In 1999, the UK businesses faced difficult will be passed on in full to the end-user and is not expected trading conditions with weak demand, particularly in the to result in a lowering of demand for construction materials. north of England and Scotland. However, price improvements were experienced by all product areas which,in most cases, Cleveland Potash mitigated the effect of lower volumes.The profit contribution Cl e veland Potash is the UK’s sole potash mine and one of only from the aggregates business was in line with the prior year. four in Europ e , pr oducing potash and road salt. In 1999, However, higher prices were not sufficient to offset increa s e d pr oduction of 825,000 tonnes of potash was some 19% below ra w mate r ial costs in the concrete and asphalt businesses. Profit 1998 fol l o wing water inflow rep o r ted at the interim stage . As fr om the lime bus i n e s s , despite adverse exchange rate conditions a re s u l t ,o p e r ating profi t , although still positive, was well down and higher interest rates which affected demand from industria l on the previous yea r . Access to the southern part of the mine was customers, was only slightly lower than the previous year. This res t o r ed in September and, as anticipat e d ,p ro d u c t i o n has now achievement was mainly the result of tight cost control and ret u r ned to normal level s . Sales of road salt wer e stron g , al t h o u g h increased contribution from new products which have been ex p o r ts of potash wer e affected by the weakness of the Euro. well received by the market. Germany Faced with tough market conditions, management focused on A sluggish German economy and further reductions in co n t r olling costs through further rati o n a l i s a tion of the bus i n e s s . construction spending, particularly in the east, resulted In July 1999, the operations of Tilcon North and Tilcon Scotland wer e merged to for m Tilcon North e rn , a move that has generate d substantial cost savings. The US$15 million replacement of the primary crusher at the Buxton superquarry is now complete and has led to significant operating efficiencies. In addition, a new national contracting organisation, which combines the contracting operations of the individual businesses, was set up. Capital expenditure was tightly controlled, resulting in strong operating cash flow.

Tilcon South made several small ‘bolt-on’acquisitions during the year, including the acquisition of the Stansfield Group, a road surfacing and recycling contractor. Opportunities to develop these further together with other recycling activities within the UK business will be pursued.Tilcon Northern ac q u i r ed the minority interest in its Caledonian Quarry Prod u c t s joint venture and disposed of two small quarries in Tayside.

At Tilcon North e rn , the project to rel o c a te the plant in Swinden Quarry continues and is expected to be completed by October AIM’s operations in the UK account for around 90% of its 2000.At Tilcon South, a feasibility study was initiated on the operating profit

32 Anglo American plc Annual Report 1999 for ready-mixed concrete and aggregates respectively, and operating profit increased by 70%.Operating cash flow was strong as a result of operational improvements and tight control over working capital and capital expenditure.

Copebrás In Brazil,Anglo American has a 73% interest in Copebrás, wh i c h operates a phosphate mine in Goiás State and a proc e s s i n g plant at Cubatão, near Santos. Copebrás produces sodium tripolyphosphate (STPP), a key ingredient in detergents and phosphate based fertilisers. Copebrás’performance in 1999 was boosted materially by the Brazilian real’s devaluation in January, which gave Copebrás a very competitive edge in the STPP and fertilisers market vis-à-vis imported products. Although STPP prices worldwide decreased in 1999, mainly owing to excess capacity in Europe, margins were higher than in 1998. Copebrás’ sales of fertilisers increased by 8% in 1999, despite local fer tiliser consumption decreasing by 7% compared Tilcon’s products were used in the recent resurfacing of with 1998, which arose from a reduction in agricultural The Mall in Lon d o n commodities prices and a long drought in many parts of Brazil. With the recovery of Brazil’s main agricultural commodities, in a 2% fall in sales volumes to 6.7 million tonnes and continue d the consumption of fertilisers is growing, which augurs well pressure on prices. Government spending cuts also affected for the absorption of increased production from expansion of progress on major projects in Berlin. However, planned ca pacity at the Catalão plant, set to come on stream in the second cost-reduction initiatives in anticipation of very weak markets, half of 2000. Overall, the STPP market should continue to together with new product developments, helped the German expand as a result of increasing competition in the detergent op e r a tions to record positive res u l t s .The crushed roc k operati o n s market and a robust recovery of the Brazilian economy. enjoyed a good year resulting from strong regional demand and significant expenditure on major infrastructure projects. Outlook Faced with weak demand, the sand and gravel businesses The UK construction materials market is showing signs of concentrated on achieving further efficiencies.The foundations improvement, although new roadbuilding activity remains have also been laid for serving new markets by exploiting subdued.The German market continues to be flat but is not their connections to rail and water. In the face of slow regional expected to deteriorate further. In Spain, expectations for markets, the small sand and gravel business in west Germany 2000 are favourable, as civil engineering works in the Madrid reported good results owing to reduced costs and new area are forecast to continue to grow, counteracting the slightly crushed gravel products. less favourable growth of private building in the area.

Spain The year will present considerable challenges in merging the The economic environment in Spain was very positive existing construction materials businesses with those of Tarmac throughout the year, with a growth rate of 3.6%. Investment and putting in place the measures necessary to achieve the and domestic consumption played a key role in this,with the synergies and cost reductions which the merger offers. Anglo construction sector experiencing an improvement of nearly Am e ri c a n ’ s existing industrial minerals businesses are fore c a s t i n g 8% over the previous year. In Madrid, where the Spanish a modest increase in earnings for 2000.The inclusion of Tarm a c ’ s operations of AIM are centred, the construction and civil results from 1 March 2000 will result in a significant increase works sectors were also buoyant. Prices rose by 7% and 6% in Anglo American’s operating earnings from the division.

Anglo American plc Annual Report 1999 33 Contribution to headline profit % Turnover US$ million

1999 1,457

1998 1,665

Ferrous Metals US$ million pro forma (unaudited) 1999 1998 Turnover 1,457 1,665 Total operating profit before exceptional items 75 164 – Highveld Steel (13) 64 – Scaw Metals 31 38 – Samancor 33 55 – Other 24 7 Headline profit 67 100 Net operating assets (excludes investments in joint ventures and associates) 470 500 Capital expenditure 47 52 Share of headline profit 5% 9% Share of group net operating assets 4% 4% Ferrous metals

Anglo Ferrous Metals comprises principally chrome, manganese, carbon steel, stainless steel and vanadium operations in South Africa, manganese interests in Australia, a niobium mine and processing facility in Brazil, and chrome operations in Zimbabwe.

Financial Overview world production growth of 5%, drove prices down to 30-year The past year was a particularly difficult one for Anglo Ferrous low s . Stainless steel consumption in South Af r ica was down , wi t h Metals, with historically low prices recorded for a number of the exception of the fab ri c ated exports sector. Ni c kel , a prim a r y the division’s prod u c t s . Total operating prof it befor e exceptional input of stainless steel, saw a recovery in the average price for items decreased substantially by 54% to US$75 million mainly the year to US$2.73/lb and a year-end price of US$3.82/lb, owing to the poor results of Highveld Steel, a consequence which put pressure on the stainless steel conversion margin. of low vanadium prices and weak steel demand. However, the margin did display a modest recovery by year Market end in the cold rolled and selected coil market s .The prod u c t i o n The primary driver of the division, steel demand, showed growth in stainless steel provided the base for relative strength continued weakness for most of the year, with virtually all in the ferro-chrome market,with benchmark prices recovering markets for the division’s products only beginning to recover from their annual lows to post a 6 US cents/lb recovery by from the Asian crisis towards the end of the year.The result year end. was reduced offtake, increased imports into South Africa because of weak international demand, and reduced prices. Operations This led to iron and steel production cutbacks during the year. Highveld Steel and Vanadium Demand for vanadium and niobium, which are respectively Anglo Ferrous Metals has a 74% interest in Highveld Steel, 95% and 80% dependent on steel production, showed similar located in South Africa, which is the world’s largest vanadium declines and reduced prices, with vanadium production pro d u c e r . It also produces carbon steel, fer ro- a l l oy s ,c a r b o n a c e o u s decreasing as a result of Highveld’s steel production cutbacks. products and metal containers and closures.

Demand in South Af r ica for cast and rolled steel products and Mainly as a result of the poor market conditions prevailing steel wi r e, wi r e rope and chain was equally weak during throughout most of 1999, a 25% reduction in output in the the yea r . Reduced gold mining activity impacted adver s e l y on iron and steel works became necessary. Steel production in demand for grinding media and rop e . Cast product demand South Africa declined by 8% and the continuing lack of major weakness was of particular concern and Scaw’ s cast wheel plant near ca pital projects remains a serious negati v e factor for the country’ s Joh a n n e s bu r g ma y have to be closed during the course of 2000. steel industry. Ho wever , world crude steel production improved su b s t a n t i a l l y during the second half of the year following Li k ewi s e , manganese demand was affected by poor steel market s a decline of over 5% during the first six months. and weakened during the year, leading to an oversupply of manganese alloys. This resulted in production cutbacks of With improving world consumption,export prices achieved manganese alloys in the second half of the year, which should for Highveld’s steel products climbed sharply in the final improve supply/demand fundamentals. quarter and idle iron-making capacity was returned to production during November. The No. 1 kiln at the Vanchem Stainless steel demand was also plagued by the Asian crisis division was offline for modernisation for all of 1999 and hangover which, coupled with continued over-capacity and will only be recommissioned when market conditions allow.

Coils of steel at Highveld Steel in South Africa Anglo American plc Annual Report 1999 35 Ferrous metals

Notwithstanding market difficulties, Scaw performed well during 1999. Significant events during the year included: the successful commissioning of a new high-speed, three- strand, continuous casting machine in Scaw’s meltshop; approval for the supply of large single piece, cast-steel locomotive frame castings to a US locomotive builder, and the initiation of a project to install a large-diameter strander and associated wire-drawing equipment modernisation in the wire ropery.

Samancor South African based Samancor, in which Anglo Ferrous Metals holds a 40% interest, is the world’s largest integrated producer of chrome and manganese alloys. Chrome ore production reduced by 6% year-on-year.The unit cost of production continued to decrease, reflecting ongoing productivity improvements, the closure of high-cost/low- productivity sections, the outsourcing of non-core activities Highveld Steel is the world’s largest vanadium producer and the expansion of mechanised operations.

Columbus Ch r ome Al l oy s ’ ongoing programme of cost-reduction initiati ve s Columbus is a joint venture between Highveld, Samancor and resulted in a significant increase in operating margins which the Industrial Development Corporation of South Africa, each made it possible to offset the reduction in turnover resulting with a 33% interest. It is one of the world’s largest single-site from lower prices. Saleable alloy output for the year increased stainless steel works. by 7% and a pelletising and pre-heating project reached planned capacity during the first half of the year. Difficult market conditions in 1999 resulted in a larger loss at Columbus than in the previous year. In 1999, the average Samancor’s South African manganese alloy production realised export price was US$1,040 per tonne (1998: US $ 1 , 1 6 2 was mixed. Ferromanganese production was 4% higher per tonne), against a significantly higher average nickel price. than the prior year in spite of one furnace being taken out of production. In rand terms,however, production costs Good progress was made in all the operational areas with were higher, mainly as a result of inefficiencies after the regard to equipment performance, quality and reliability. res t a r t of the furnace during the second half of the yea r . Si l i c o Sl a b production rea c hed 481,000 tonnes for the yea r , a 13% manganese production was 5% lower mainly owing to furnace increase over 1998. Cold mill operations showed solid rebuilds that resulted in higher production costs. Manganese improvement considering that there was a more onerous ore production costs improved on average despite unchanged product mix, and total saleable production increased by output.At Australian Manganese, a joint venture with Billiton 13% to 376,750 tonnes. in which Anglo Ferrous Metals holds a 40% interest, ore and manganese alloy production costs were at planned levels and Scaw a cost reduction programme was successfully implemented. Scaw Metals is one of Africa’s largest diversified iron, steel and engineering works. Its principal operations comprise Other steel making, rolling mills, grinding media and foundry Catalão, Anglo Ferrous Metals’ Brazilian niobium producer, facilities and, at its Haggie operations,steel wire product performed well during 1999 with significant cost savings manufacturing plants,all located near Johannesburg. being realised following the depreciation of the Brazilian real.

36 Anglo American plc Annual Report 1999 Steel ingots being cut to length on a continuous slab casting machine at Scaw Metals in South Africa

Zimbabwe Alloys,a chrome alloys producer, felt the pressure of a weak chrome alloy market and maintained production levels below capacity as a result.

Outlook Continuing improvement in demand for the division’s products is expected during 2000. Demand for both carbon and stainless steel has improved,with the majority of steel products showing commensurate price increases. This has meant that full capacity utilisation is planned at Highveld and Columbus during 2000. Efficiency and cost reduction efforts at all operations are expected to continue to show benefits during the coming year. The production cutbacks during 1999 are believed to have redressed some of the oversupply situation and, with the exception of vanadium,modest price increases are being forecast.The more positive outlook for the division is expected to translate into improved operating profits in 2000.

Anglo American plc Annual Report 1999 37 Contribution to headline profit % Turnover US$ million

1999 2,464

1998 2,282

Forest Products US$ million pro forma (unaudited) 1999 1998 Turnover 2,464 2,282 Total operating profit before exceptional items 272 232 – South Africa 136 125 – Europe 124 112 – Brazil 12 (5) Headline profit 199 125 Net operating assets (excludes investments in joint ventures and associates) 1,348 934 Capital expenditure 181 165 Share of headline profit 15% 11% Share of group net operating assets 11% 8% Forest products

Anglo Forest Products, operating under the Mondi name, is an integrated forest products and packaging group with operations and interests in southern Africa, Europe and Brazil.The operations manufacture pulp, graphic papers, packaging papers, board and converted packaging as well as solid wood products.

Financial Overview completion of the US$100 million upgrade at the Richards Bay Total operating profit before exceptional items of US$272 mill and the exchange of packaging businesses with Malbak, million was 17% higher than in 1998, mainly because of which gives Mondi a strong position in the southern African cost savings, higher pulp prices in the second half of the corrugated packaging sector. year and the inclusion of Amcor Fibre Packaging Europe. The Paper division reduced costs in real terms and benefited Markets from improved volumes and prices to post significantly In the early part of the year, the forest products sector improved profits. Paper machine production was particularly experienced difficult trading conditions.The latter part of sat i s fa c t o r y. In c r eased perfor mance was achi e ved in the Kraft the year saw a combination of better demand and improved di v i s i o n in spite of the shutdown for the rebuild of the management of capacity, allowing for healthy price recovery Richards Bay mill PM2 linerboard machine and new recovery in most grades. This was particularly the case for hardwood boiler. Importantly, this machine now has the capability to pulp with prices recovering to US$580 per tonne from a low match the quality of benchmark Scandinavian grades of of US$390 per tonne in 1998.The ongoing consolidation in kraftliner, while benefiting from a low-cost position with the corrugated paper and woodfree paper sectors contributed integrated bleached and unbleached pulp production. to more healthy market balances being achieved. Following the merger of Stone Consolidated and Smurfit in the US, with the The Forests division restructured its operations to reduce unit resultant reduction of surplus prod u c t i o n , US corrug a ted pape r s costs further and improve efficiencies. Its role continues to be ma r k ets have improved . This has led to a reduction in exports from satisfying Mondi South Africa’s current log requirements and the US to Europe, with consequent improvement in European building a larger fibre resource to support future growth. markets. Kraftliner prices increased from US$340 to US$425 per tonne by the end of the year. In the uncoated woodfree By the end of the year, the Mondipak division, following its sector, volume has remained strong but prices continue to transformation into a significant focused corrugated packaging lag the pulp price increa s e s , with a year on year price decline. player, was well positioned to take advantage of the recovery Newsprint prices have remained fairly stable despite the taking place in the South African economy. commissioning of increased capacity in the European market. Th r oughout 1999, the Timber division encountered ver y diffic u l t Operations trading conditions, with the construction industry depressed and Mondi South Africa Asian export markets showing little demand for plywood and Despite significant restructuring costs in some divisions,total laminated products. Although several timber operations wer e operating profit before exceptional items increased by 9% closed and management was res t ru c t u re d , the division incurred to US$136 million.The year had two distinct phases.The a loss for the yea r . Mo n d i ’ s 70% owned subsidiary, Fi n ew ri g h t first half of the year was characterised by internal restructuring Holdings again rep o r ted ver y sat i s fa c t o r y profi t s . Rat i o n a l i s at i o n in a weak market, while the remainder of the year saw the of the Cartonboard division’s prod u c t range was undertaken sat i s fa c t o r y conclusion of some important strategic initiatives su c c e s s f u l l y during the yea r .Trading conditions wer e competitive as well as improved markets for most grades. Notable were the throughout 1999 and profits were lower than in 1998.

Forestry Stewardship Council certified timber from Mondi plantations in South Africa Anglo American plc Annual Report 1999 39 Forest products

Both the Recycling and Paperlink divisions achieved good European corrugated packaging market, MPE achieved results, although their profit contributions were small in satisfactory growth rates in 1999 and returned operating absolute terms.They continue to play important roles for profits in line with pre-acquisition valuation parameters. Mondi in their respective sectors of waste paper collection The purchase provides integration potential for Mondi’s and paper merchanting. corrugated case material production in Poland as well as the Kraft division in South Af r ica and is in line with the strategy to Mondi Europe de velop into one of Europ e ’ s key corrug a ted packa ging prod u c e r s . During 1999,Mondi Europe focused on restructuring business units to improve productivity and reduce production costs. Mondi Europe owns an effec t i v e 48% interest in Frantscha c h Improved prices in the last quarter were not sufficient to Swiecie, the largest pulp, paper and packaging group in compensate for poor selling prices in the first three quarters Poland. In 1999,Frantschach Swiecie reported enhanced of the year.The impact of lower average prices for the year operating profits on the back of a significant improvement was compensated by productivity improvements and signific a n t in productivity combined with a major reduction in the cost reductions, which together with the impact of the underlying cost base. The mill is currently undertaking corrugated acquisition led to an increase in operating profit a US$45 million rebuild of one of its linerboard machines for Mondi Europe of 11% to US$124 million. which will lead to an increase in capacity, quality improvements and cost reductions. In January 1999, Mondi Europe acquired the corrugated packaging interests of Amcor Fibre Packaging Europe – now Frantschach Packaging, in which Mondi Europe has a 50% renamed Mondi Pack a ging Europe (MPE).The US$240 million interest, is the leading paper sack producer within Europe. purchase comprised 15 plants in the UK and six in France. Frantschach Packaging experienced weak sack paper prices Current production is in excess of 550 million square metres for most of the year. Operating profit was maintained at the of corrugated board a year, while annual capacity is some same level as previous years owing to ongoing cost-reduction 750 million square metres. Despite operating in an oversold initiatives. In the sack-converting sector, further productivity improvements facilitated the maintenance of pro f its at previ o u s le vels despite sluggish market s . Some rec o ver y in the markets was experienced towards the end of the year.

In the uncoated paper business,although pulp input costs increased materially in 1999, Neusiedler (75% held by Mondi Europe) reported a marginal increase in operating profit, with higher pulp input costs offset by substantial sav i n g s ach i e ved in energy and other costs, as well as prod u c t i v i t y gains. The profit contribution from Mondi’s interests in Pöls and Europapier (held 95% and 100% respectively by Frantschach) remained in line with prior yea r s . Pö l s ’ pro f its improved sharpl y towards the end of the year and, based on current pulp prices, should be significantly higher in 2000.

In the UK, Mondi and SCA of Sweden jointly own the high- quality newsprint manufacturer Aylesford Newsprint.As the benefits flowed through from improved recovered-paper yields and cost-management controls implemented during In January 1999, Mondi Europe acquired Amcor Fibre Packag i n g 1999, Aylesford was able to maintain its profit performance, Europe, which comprises fifteen plants in the UK and six in Fran c e offsetting the effect of lower newsprint prices during the year.

40 Anglo American plc Annual Report 1999 Drying cylinders at the PM2 linerboard machine at Richards Bay in South Africa, which was upgraded and expanded in 1999

Mondi Brazil The Mondi group has a 12% shareholding and a 28% voting parti c i p a tion in A r a c ru z ,w h i ch is the wor l d ’ s largest and lo west-cost producer of ble a c hed eucalyptus pulp. After a slow start to 1999, the impact of pulp production curtailments, combined with a resurgence of consumer demand in Asian markets, returned equilibrium to pulp stocks, providing the impetus for an increase in underlying pulp prices.Together with an improvement in trading conditions and be n e f its aris i n g from an ongoing cost reduction programme, there was a significant increase in operating profit before exceptional items for the year to US$12 million from a loss of US$5 million in 1998,enhanced by the depreciation of the Brazilian real.

Outlook The relationship between supply and demand for paper-grade pulp, woodfree papers and corrugated papers has improved, as a result of increased demand and better management of capacity by producers. In other product sectors such as newsprint, solid board and wood products, the markets have remained relatively oversupplied and prices to date have not increased in real terms. Mondi’s focus and competitive cost structure should support earnings growth this year.

Anglo American plc Annual Report 1999 41 Contribution to headline profit % Turnover US$ million

1999 6,894

1998 7,246

Industries US$ million pro forma (unaudited) 1999 1998 Turnover 6,894 7,246 Total operating profit before exceptional items 358 318 – AECI 95 102 – LTA 40 25 – Tongaat 121 46 – Other 102 145 Headline profit 82 98 Net operating assets 2,137 2,157 Capital expenditure 175 256 Share of headline profit 6% 8% Share of group net operating assets 17% 19% Industries

Anglo Industries’ interests include mining services, drilling equipment, construction, mining explosives and chemicals, sugar, and aluminium processing.

Financial Overview also active in the building materials, textiles and prop e rt y The Industries division showed a 13% improvement in total in d u s t ri e s .The activities of the prop e r ties division relate to the operating pro f it befor e exceptional items for 1999 to US$358 management of land surplus to operational needs. The bui l d i n g mi l l i o n , despite a fall in turno ver . This improvement occurred mat e r ials and textiles divisions are not considered core to the despite a disappointing pe r fo r mance from Ter ra Industri e s ,i n future of Tongaat and their sale is being pursued. wh i c h the Group now has a 49.9% interes t , fol l o wing the rec e n t reduction of its holding from 56.5%, and which continued to Markets for starch and glucose were affected negatively by suffer from depressed nitrogen markets.With the results of the the Asian crisis, and this was compounded by weak domestic continued refocusing of investment on mining and natural demand.The world sugar price reached a 20-year low in resources, profits on the sale of businesses lifted the net profit 2000. Processed aluminium prices were helped by the global of the division. consolidation of the aluminium market that occurred during the year. Progress was achieved in further disposals during the year, including Terra selling its distribution business in May, AECI Total operating profit before exceptional items for Tongaat its 40% interest in Polifin in August and the sale of part of the was US$75 million higher at US$121 million.Total sugar division’s holding in South African Breweries plc. Additional production for the group was 1.24 million tonnes, a 4% disposals were made in the first quarter of 2000, including de c r ease compared with 1998.The US$120 million starch a reduction in the division’s holding in McCarthy Retail from and glucose mill at Klipriv i e r , Gauteng, commissioned in 28% to 11%, and its interest in Samcor from 45% to 10%. August 1998, is performing to specification. The purchaser of the Samcor interest, Ford Motor Company, undertook to buy the remaining 10% within two years. Subsequent to the financial year-end, Tongaat announced that Additional rat i o n a l i s a tion transactions occurred at underlyi n g it was negotiating the purchase of Transvaal Sugar Limited co m p a n y level,of which there were approximately 20, as (TSB).TSB has two mills and a refinery and produces about well as other listed investment disposals at divisional level. 450,000 tonnes of raw sugar a year, of which 250,000 tonnes is refined.The acquisition of TSB would enhance the sugar Anglo Industries derives almost 52% of its turnover from division’s strategic objective of being the lowest-cost sugar South Africa and, as a result, felt the continued effects of miller in southern Africa while improving the geographic increased globalisation faced by all emerging markets.This and climatic spread of its sugar production base. Negotiations has resulted in South African companies being forced either are continuing. If successfully concluded, the purchase will to expand aggressively to gain foreign earnings capacity be a cash transaction. or refocus on their core business. Hulett Aluminium (50% held by Tongaat and 20% directly Operations by Anglo Industries and based at Pietermaritzburg in KwaZulu- Tongaat-Hulett Natal) pe r fo r med wel l . The US$400 million rol l e d - p ro d u c t s Tongaat,a 51% South African subsidiary, has three principal ex p a n s i o n pr oject is on schedule and commissioning is ex p e c t e d divisions: sugar, aluminium, starch and glucose.Tongaat is to take place towards the end of 2000. By the end of this year,

Finishing mill control room at Hulett Aluminium in South Africa Anglo American plc Annual Report 1999 43 Industries

some 60% of the scheduled production output of 100,000 Boart Longyear tonnes (annualised) will be exported. Wholly owned Boart Longyear is a leading manufacturer and supplier of tools, equipment and contracting services to the LTA international exploration, mining, construction, geotechnical Anglo Industries has a 68% interest in LTA Limited,which and environmental markets. is engaged in engineering, construction, project management and development projects in all disciplines throughout The company continued to feel the effects of further declines Africa, Australasia and the Pacific Islands, south east Asia in exploration for precious and base metals, as well as the and the Middle East, focusing on mining, petrochemicals ongoing Asian financial crisis and sluggish European construc t i o n and infrastructure. markets. The second half of 1999,however, saw early signs of the end of the downturn and,coupled with results from Negligible growth in Gross Domestic Product was extensive restructuring within Boart Longyear, provided for recorded in South Africa in 1999, thus reducing the a solid fourth quarter. amount of work available and ensuring that opportunities that arose were competed for fiercely. However, LTA’s Total operating prof it befor e exceptional items for 1999 was strategy of expanding outside South Af ri c a , in particular US$9 million, 55% lower than in 1998.The company incurred the acquisition of McConnell Dowel l , a construction substantial restructuring expenses in reducing overheads in co m p a n y in Aus t r a l i a , he l p e d shield the company from line with the lower market de m a n d . Good prog r ess was made the weak South African market. in disposing of non-core bus i n e s s e s .

LTA’s total operating profit before exceptional items of AECI US$40 million for 1999 was 60% higher than the previ o u s Anglo Industries has a 53% stake in AECI, a leading supplier yea r , boosted by its move in recent years into global markets, of chemicals and related products to South African and directly and through McConnell Dowell. international markets. AECI continued to pursue its broadly based transformation programme, which has seen a gradual Recent disposals by Anglo Industries

1999 Komatsu Entire shareholding sold Zimco Entire shareholding sold SAB plc/Bevcon Effective shareholding in SAB reduced from 5% to 2% Terra Distribution Division sold Polifin AECI’s 40% interest sold Zebra Closed

2000 McCarthy Retail Holding reduced from 28% to 10% Samcor Holding reduced from 45% to 10% with the remainder to be sold within two years NF Die Castings Remaining 25% sold

In spite of work shortages in some areas of the LTA group’s South African operations,satisfactory performances were recorded throughout the grou p . Wh e r e app ro p ri at e , dow n s i z i n g to accommodate the lower levels of activity took place; this, coupled with more efficient use of resources, ensured that operations remained competitive in their markets. Loop reactor at AECI’s Chemserve plant

44 Anglo American plc Annual Report 1999 wi t h d r a wal from upstream commodity raw mate r ial prod u c t i o n prices, which are subject to global tariff structures, prices and a focus on explosives, fibres and speciality chemicals. and markets are expected to improve during 2000. Trading conditions among these core businesses were weak, while other businesses within AECI continued to suffer from depressed chemical commodity prices. As a result of extensive re s t ru c t u ri n g, AE C I ’ s total operating prof it befor e exceptional items of US$95 million declined by 7% compared with 1998 but resulted in significant debt reduction and an increase in attributable profit.The main elements of the restructuring included the sale of AECI’s 40% interest in polymer producer Polifin to Sasol for US$345 million and the disposal of a 50% controlling stake in Kynoch Fertilizer to Norsk Hydro, with an option to sell the remaining 50% in the near future. Fu rt h e r re s t ru c t u ring took place in the first quarter of 2000 with the closing of the ammonia/urea complex near Johannesburg and a nitric acid production facility in Cape Town.

Terra Anglo Industries has a reduced 49.9% interest in Ter ra Industrie s , an independently managed US-based company that is engaged in agri b usiness and the manufa c t u r ing and marketing of methanol.

The alrea d y depressed nitrogen products market was furth e r wea k ened by significant natural gas fee d s t o c k price increa s e s . This resulted in further margin erosion,with only small price adjustments possible in the oversupplied nitrogen sector and a total operating prof it befor e exceptional items of US$6 million was recorded for 1999, a decline of 82% over 1998. Sales for 1999 were also lower than in 1998 as a result of the disposal of the distribution business in May 1999. It is anticipated that the de p r essed market conditions will continue in 2000.As previously announced,Anglo Industries plans to dispose of its inves t m e n t in Ter ra when market conditions allow.

Outlook Significant progress was made during 1999 in disposing of non-mining and non natural resources businesses. The division is committed to further rationalisation of its portfolio, a policy which will be pursued within the context of maximising shareholder returns. Owing to ongoing restructuring, operating profits in this division are expected to decline in line with disposals. Markets served by the division’s principal subsidiaries have, in the main, showed signs of recovery.With the exception of the construction industry, which lags economic activity, and world sugar

Anglo American plc Annual Report 1999 45 Financial services

Anglo American’s principal investment in the financial services sector is a 20.6% interest in FirstRand, a leading financial services company in South Africa. These assets are being reviewed and, should opportunities arise that offer higher returns in core businesses, consideration will be given to their realisation.

Financial Overview while lower interest rates prevail.Considerable progress Financial Services contributed US$138 million to Anglo was made in the restructuring of the banking group with American’s operating profit for the year ended 31 December the introduction of new management and strategies into 1999,an increase of 41% on the previous year’s contribution the business units,which has had the desired effect on of US$98 million,while it contributed US$112 million to profitability, with total net profit in rand terms, after adjusting Anglo American’s headline profit, an increase of 42% on the for R2 billion (US$330 million) transfer of capital from previous year’s US$79 million. banking to insurance, increasing by 24% over the 6 months to 31 December 1999.The insurance group, which includes FirstRand life assurance, asset management and health insurance, Anglo American has a 20.6% interest in FirstRand Limited, performed well in the six months to 31 December 1999 a diversified South African financial services group with with increased total profit,before investment income and investments mainly in banking and insurance. FirstRand was exceptional items, in rand terms of 82% over the same period created by the merger in April 1998 of the financial services in 1998, while investment income on free reserves declined interests of RMB Holdings Limited and AAC.The FirstRand by 20% due to a switch in the portfolio to strategic but lower group contributed US$121 million (1998: US$110 million) income yielding growth assets. Good progress continues to to operating profit, an increase of 10%, while it contributed be made in areas where strategies encompass both insurance US$96 million (1998: US$86 million) to headline profit, and banking operations, and e-commerce strategies are an increase of 12%.Although FirstRand’s total net profit in being formulated. rand increased by 36%, the contribution to Anglo American’s total net profit increased by 12% in dollar terms.This lesser South African Eagle Insurance increase resulted, in part, from the average depreciation of the Anglo American’s other financial services investments include rand against the US dollar of 11%. In addition, the comparati v e a 25.3% interest in South African Eagle Insurance Company figures in FirstRand’s published results were adjusted to reflect Limited. During the past year, competitive markets combined a change in accounting policy such that unrealised capital with bad weather resulted in a disappointing underwriting gains were excluded from the profit of the life assurance performance with the company incurring an underwriting company. This adjustment has not been reflected in Anglo loss of US$9.8 million. American’s accounts. Outlook Du r ing the six months to 31 December 1999, ma r k et conditions Restructuring of FirstRand’s insurance and retail banking for the banking group’s operations were comparatively stable activities is expected, over the medium term, to lead to increa s e d relative to the corresponding six months with a steady decline efficiencies and enhanced profit margins. The recent decline in in interest rates and lower market volatility, leading to better interest rates in South Africa and a more positive stock market margins but a lower contribution from trading operations. sentiment are both key drivers of profitability in the financial The past high level of bad debts is not expected to be repeated services interests of Anglo American.

46 Anglo American plc Annual Report 1999 Exploration

The strategy of the Exploration and Acquisitions Division (EAD) is Nickel exploration has continued in the Kabanga/Kagera area to identify and develop high quality new mining businesses by way of western Tanzania, where drilling is in progress to locate of in-house explorati o n , joint ven t u r e and early- s t a ge acquisition. additional nickel sulphide mineralisation.Other base metal exploration in Tanzania is in progress to the east of Lake During 1999, the North and South American, European,Asian Tanganyika. In Kenya, base metal exploration is ongoing.The and Australian exploration operations formerly conducted by Zambia/Democratic Republic of Congo copperbelt is the focus Minorco were merged with the African exploration operations of exploration for copper-cobalt and copper-gold mineralisati o n . previously undertaken by AAC. The commodity focus changed The assessment of large volumes of data has produced a from gold to base metals, principally zinc, copper and nickel, number of encouraging targets which are being evaluated. as well as mineral sands.This realignment has been most marked in Africa, where most of AAC’s gold exploration and mining Ex p l o r a tion in southern Af r ica has focused on nickel in north e r n op e r a tions wer e sold to A n g l o G o l d ,w h i ch has its own dedicate d Namibia, where drill testing is in progress. In the south of the gold exploration programme.Total expenditure on exploration country, an airborne electromagnetic survey was completed activities (including An g l o G o l d ’ s programme) in 1999 amounted over and along the strike of the Skorpion zinc deposit, where to US$138 million. additional resource drilling forms part of the feasibility study.

Africa Airborne electromagnetic surveys over the Northern Cape In north Africa, initial drilling of polymetallic copper-zinc- province of South Africa are being undertaken to identify silver-gold mineralisation in the High Atlas mountains of base metal targets similar to those found in the Gamsberg/ Morocco has intersected several copper-rich sulphide zones. Aggeneys area. Surface drilling has identified significant ore Burkina Fas o , Côte d’Ivoi r e, Ghana and Togo in west Af r ica have resources down-dip of the Broken Hill orebody currently been evaluated for their base metal potential and exploration being mined at Black Mountain.A feasibility study will be is under way on several copper, nickel and zinc targets. conducted to evaluate the economics of exploiting these deeper resources. Extensive drilling along the west coast of South Africa has outlined potential additional heavy mineral sand resources, bearing ilmenite and zircon.

South America Anglo American’s exploration programme in South America was focused on Brazil, Chile and Peru.

In Brazil, work continued in Mato Grosso, Amazonas and Pará. Preliminary drilling outlined widespread occurrences of copper mineralisation in the Carajás district of Pará. In Mato Grosso, work continued on the volcanogenic zinc- copper deposit in the Aripuanã district where geochemical surveys have been completed. In Amazonas, preliminary reconnaissance was carried out for sediment-hosted base metals, particularly copper, cobalt and zinc.The results are being evaluated, and a regional airborne geophysical survey is planned.At the Barro Alto nickel project, geological work in support of the feasibility study is in progress.

Core drilling near the Lisheen zinc/lead mine in Ireland, In Chile, ex p l o r a tion was aimed at porphy r y-type copper deposits. where a new orebody was identified

Anglo American plc Annual Report 1999 47 Exploration

su r veys will be flown over the Quevillon area of Quebec and th e Allardville area of New Brunswick in eastern Canada where massive sulphide potential has been identified. In Mexico, a programme was initiated to target massive sulphide and sedimentary exhalative base metal deposits.

Europe, The Middle East and India Ex p l o r a tion activity in Europe was concentrated in Sweden and Ireland. In Sweden, several exploration licences were granted for copper-gold-iron oxide mineralisation and base metal massive sulphides. At the Lisheen mine in Ireland, exploration managed by the Lisheen joint venture with Ivernia West plc identified a new, adjacent, pod-like orebody. Additional drilling is planned in the Rathdowney North area.Three prospecting licences were granted near Mallow in County Cork.

Anglo American maintained its interest in a joint venture zinc oxide project at Jabali in Yemen where one of the partners, Geologists analysing satellite maps near the Mantoverde ZincOx, completed a pre-feasibility study in 1999. copper mine in Chile Exploration commenced in Rajasthan, northwest India, for Pre l i m i n a r y drilling was carried out at several targe t s .The search zinc-lead mineralisation in the Aravalli-Delhi belt, host to the co n t i n ued for deposits of the iron oxi d e - c o p p e r -gold type along world-class Rampura Agucha zinc deposit. Prospecting licences the Atacama fault zone in the coastal distric t . Additional res o u r c e s have been secured over some 10,000 square kilometres of adjacent to the Mantoverde mine were successfully identified. highly prospective ground within the belt.

In Peru , ex p l o r a tion for zinc continued in the central Cordillera Australasia region and several target areas have been identified. Two Exploration activity in Australia expanded considerably, pro p e r ties are being explored in Ancash for high-grade ca r b o n at e benefiting from an increased number of properties submitted replacement-type zinc mineralisation and disseminate d copper- by other parties for acquisition or joint venture, as well as zinc. At the Quellaveco copper project in the south, ge o l o g i c a l Anglo American’s own targeting efforts. work was completed in support of the feasibility study. Ex p l o r a tion in the Philippines, ma i n l y in joint ven t u r e with local In Brazil, Chile and Peru, generation of new targets at the mining group Philex, focused on the search for copper-gold reconnaissance level will continue, incorporating the use of porphyry deposits and evaluation of lateritic nickel deposits. proprietary remote sensing and airborne geophysical systems The search for copper-gold porphyries concentrated on targets developed within the Anglo American group. close to existing mine sites within the Baguio district of northern Luzon and within the under-explored but proven North America and Mexico Surigao gold district of eastern Mindanão. Successful drilling of the 777 orebody at the Hudson Bay mine in Flin Flon, Manitoba outlined a geological resource of 16.2 Gold exploration continued in Indonesia through participation million tonnes grading 5.3% zinc, 2.8% copper, 2.4 parts per in the Norma n d y Anglo-Asian joint ven t u r e. Dr illing by the joint million (ppm) gold and 34 ppm silver and there is potential for ven t u r e at Sibolga tested high-sulphidati o n gold mineralisation fu r ther mineralisati o n . A Spectrem airborne electrom ag n e t i c survey along an 800-metre strike length,with encouraging results, discovered two massive sulphide deposits in Manitoba. Similar and additional drilling is planned.

48 Anglo American plc Annual Report 1999 Safety, Health and the Environment

Anglo American places great emphasis on its commitment management of SHE issues is in place at all operations, to operate as a socially and environmentally responsible as well as the quantitative information to begin relevant international mining and natural resource group by: and transparent public reporting in 2001.

– appointing a dedicated Safety, Health and Environment Anglo American’s policy sets out various aims and the (SHE) Committee of the board, responsible for formulating management principles that are to be met by its divisions and recommending Anglo Am e ri c a n ’ s policies and monitorin g and operating companies in order to achieve these aims. their implementation throughout the Company; – addressing SHE risks and impacts in a systematic, The first aim is to protect the safety and health of our comprehensive and businesslike manner; 113,000 employees. It is with great regret, therefore, that – continuing to work towards compliance with international we have to report that 39 employees died in managed best practice in the management of those risks and impacts, subsidiaries and operations around the world during 1999, and and 14 contractors also lost their lives. This is not acceptable – promoting good relationships with the communities and management is committed to a wide range of actions to in which Anglo American operates. effect rapid and continuing reduction of these a c c i d e n t s ,w i t h the ultimate aim of eliminating them completely. In addition, The board has app r oved a new policy on SHE and manage m e n t 74 fatalities occurred in independently managed subsidiary principles (available on the Anglo American web site AngloGold, where a zero-tolerance campaign was introduced www.angloamerican.co.uk) which reflect the high priority earlier in the year. This approach, along with the use of given to safety, health and environmental issues within Anglo international experts to advise on necessary strategies, and American.Dissemination of the document is now well under a much keener employee awareness, has already resulted in way across the divisions, companies and to our employees a 25% reduction in fatalities for the year when compared in some 40 countries.This process includes the establishment with 1998.There are other encouraging trends for the newly of reporting systems to provide assurance that appropriate combined group as a whole and lost-time injury and fatal accident frequency rates have shown a steady reduction over the past five years. In addition, the lost-time in j u r y freq u e n c y ra te is muc h better than that of the benchm a r k US mining industry performance figures for 1999. Internal benchmarks have also been set and a number of operations, including Greenside Colliery in South Africa and the Mantos Blancos copper mine in Chile, did not incur a single employee lost time injury in 1999.

In respect of occupational health, Anglo Am e r ican is co m m i t t e d to a substantial improvement in the effec t i v eness of its prog r a m m e s to address occupational diseases. Noise- induced hearing loss and occupational lung disease have been identified as priority challenges for the Group, which is seeking a significant and sustained reduction in the incidence of these conditions.

The second policy aim is to contribute to the improvement of community health. In this particular context, the most Water and oxygen levels being monitored in treatment ponds fundamental community health issue that Anglo American at the Lisheen zinc/lead mine in Ireland faces is that of the HIV/AIDS epidemic in sub-Saharan Africa.

Anglo American plc Annual Report 1999 49 Safety, Health and the Environment

and judicious management of our waste mate r ial are issues that ar e considered fundamental.These issues are illustrated by Mondi’s estimated net carbon dioxide sequestration totalling 8.5 million tonnes in 1999,and also by comprehensive programmes for tailing dam audits and mine area reclamation and rehabilitation. Progress towards realising these and other policy aims will be addressed more comprehensively in the 2001 review. Consistent with the commitment to principles of sustainable devel o p m e n t , Anglo Am e r ican recognises the vital importance of good community relations. This is particularly important in respect of exploration activities and in new projects, but it is still an essential element for the established businesses.Following Anglo American’s first company-wide review, it is gratifying to be able to report that the majority of operations already have active community-liaison programmes.

It is recognised that sound corporate governance requires Anglo American,as a global company, to play a leading role with the global institutions that shape the sustainable development debate. In this regard,all of Mondi’s producing Anglo American safety performance indicators: Lost Time plantations in southern Africa have achieved Forestry Injury Frequency Rate (LTIFR) and Fatal Injury Frequency Rate Stewardship Council certification. In the mining businesses, (FIFR) per 200,000 hours worked Minorco was a member of the International Council on Metals and the Environment since its inception in 1991, and Anglo Anglo American has for a long time had an HIV/AIDS policy American has recently been invited to join the World Business which emphasises the need for education and prevention Council for Sustainable Development (WBCSD). In this latter campaigns amongst the workforce and protects the rights context,Anglo American was one of the initiators of the of employees living with HIV or AIDS. Indeed, the work done WBCSD’s Global Mining Initiative, in which over the next in this field by Anglo Coal has recently received international two years, Anglo Am e r ican will explore, with a wide range recognition with the presentation of an award by the UNAIDS of stakeh o l d e r s , how best the mining, minerals and metals Global Business Council on HIV/AI D S . In addition, the divisions industries can contribute to sustainable development. have all been asked to assess the risks that HIV/AIDS pose for their operations and to formulate detailed plans to minimise the impact of the epidemic on their operations, whilst at the same time caring for those who are affected by the disease. Continuous monitoring of the progress of the HIV/AIDS epidemic and the response of companies to this threat is carried out at all levels within Anglo American.

Further policy aims include the conservation of environmental resources, the minimisation of adverse impacts arising from operations and the demonstration of active stewardship of land and biodiversity. The efficient utilisation of energy, with the resulting contribution to mitigating global climate change, and the demonstration of responsible use of land and water

50 Anglo American plc Annual Report 1999 Community relations

where the company has an intensive programme that works to improve the quality of education in 40 schools. In Chile, Collahuasi spent some US$142,000 in 1999 on community endeavours. Overwhelmingly directed towards education, support was concentrated mainly at the tertiary level as well as on research and technical facilities.

Particular mention should also be made of AngloGold’s efforts to improve the health status of the families of migrant mineworkers. This initiative aims to establish programmes that are based on needs prioritised by the families of current mineworkers, for example potable water and sanitation, and will be implemented and maintained by recently retrenched mineworkers. AngloGold also aims to establish primary health care clinics at certain pilot sites to test how a public/ private partnership may work in respect of the delivery of a curative service.

The Chairman’s Fund sponsors Dance – shown here at the Anglo American has an active programme of promoting small Emathafeni Primary School in Soweto and medium-sized enterprises in the communities in which it operates through a deliberate programme of outsourcing The long standing approach of Anglo American to community se r vices and small business prom o t i o n . The Small and Medium investment was captured by its founder, Sir Ernest Enterprise Initiative of AAC su p p o r ts the programme by Oppenheimer in 1954. assessing and implementing business proposals,ongoing maintenance and interaction with the entrepreneurs. “The aim of this group is, and will remain,to make profits for our shareholders, but to do it in such a way as to make a real and lasting La bour Intensive Industries Trust is the investment vehicle used contribution to the communities in which we operate.” by Anglo American to facilitate economic empowerment for previously disadvantaged individuals in South Africa through Anglo Am e ri c a n ’ s operations have historic a l l y been concentrate d the creation of commercially viable enterprises. in South Africa, a developing society with a particular range of political,social and economic challenges. However, the A good example of a community relations programme is the principles underlying the approach to the corporate role in the Anglo Coal HIV/AIDS project. co m m unity and society are shared by operations internat i o n a l l y.

Community relations activities take place both at the level Much of Anglo Coal’s social responsibility outreach, of the specific operation and more broadly in society at large. in partnership with the communities within which it Education, job creation and skills development remain operates, has been concerned with tackling the scourge a core focus of activities, but health, community infrastructure, of HIV/AIDS, which has reached devastating proportions social welfare and arts, heritage and cultural activities also in South Africa. Since 1993,Anglo Coal has had in place enjoy support. a strategy to minimise the impact of the HIV/AIDS epidemic on its employees, its operations and the wider So, for example, the activities of AngloGold around its community.The programme is managed by a multi- operations in Namibia, Mali,Brazil and Argentina focus disciplinary HIV/AIDS committee and is chaired by on education projects,as does Anglo Platinum in South Africa an executive director of the company.

Anglo American plc Annual Report 1999 51 Community relations

A two-pronged strategy, directed at both prevention Education received the lion’s share, reflecting the company’s and management of the epidemic, has been undertaken ongoing view that sustained private sector interventions at increasingly in partnership with local authorities and other all levels are required if education is to be the foundation business organisations. Initially, awareness and prevention stone on which South Africa builds future economic success. activities were targeted to suit the particular requirements Notable Fund activities included the continua tion of the rur a l of individual communities. Employee and community cl a s s ro o m s project where the building of 2,000 classrooms rep re s e n t at i v es wer e trained as peer educators who orga n i s e d at 870 schools over two decades was recognised in late 1998 AIDS awareness campaigns. Flowing from these campaigns, by a prestigious award presented by President Mbeki.A variety the need for HIV/AIDS education was recognised, and of structured programmes promoting improved school this led to the development of small-business initiatives. performance in the key disciplines of maths, science and Partnerships were formed simultaneously with health English were also an ongoing focus of the Fund in 1999. au t h o r ities to provide mobile clinics and to run prog r a m m e s on healthy lifestyles. More systemic intervention in restructuring the education system was channelled through the Business Trust for Having heightened HIV/AIDS awareness,Anglo Coal Employment Creation and Human Capacity Building. This followed up by initiating the Kriel Proj e c t , working with initiative grew out of an 18-month dialogue by key business local authorit i e s and employers to change sexual behavi o u r . people with senior government leaders and officials, in This initiative has had considerable success in reducing the which Anglo American played a strong leadership role. incidence of sexually transmitted diseases. It is now being Led by business but acting in partnership with government, extended through a new project, the Joint Power Belt AIDS the US$164 million contributed by business over and above Initiative, which includes several major shareholders. Early existing social responsibility commitments, will be directed at estimates suggest that this project will build substantially a few selected programmes building effec t i v eness and effic i e n c y on the impact of the Kriel Project, and will help to link in the education system, and stimulating employment creation up with other similar projects being run in the region. through the promotion of tourism.Anglo American has committed US$3.5 million to the Trust over its five year life. On 30 November 1999 Anglo Coal received an award for “Business Excellence in Response to HIV/AIDS” from the In parallel, a consultative body consisting of senior business Global Business Council on HIV/AIDS. Particular mention leaders,President Mbeki and cabinet members has been was made at the award cerem o n y of Anglo Coal’s invol ve m e n t established and acts as a sounding board for issues of mutual with outside communities as a major contributing factor co n c e rn . Messrs Ogilvie Thompson and Boyd are active in this in it being elected an award winner. body which will complement the activities of the International Advisory Board of Chief Executives recently announced by Further afield,in Colombia, Carbones del Cerrejón, the coal President Mbeki. mining operation in which Anglo Coal has a 50% interest, established the Nuestra Señora del Pilar Foundation in 1998. The Foundation’s objective is to foster community projects within the area surrounding the mine.

In South Africa, the major channel for broad national social investment activity is through the Anglo American Chairman’s Fund which has operated since the early 1960s. During 1999, the company channelled over US$2.5 million in support of some 670 differ ent projects supporting commun i t y initiatives through which ordinary people are taking up their own development challenges.

52 Anglo American plc Annual Report 1999 Financial review

Basis of preparation Total operating profit before exceptional items increased from Anglo Am e r ican was listed in May 1999 fol l o wing the acquisition US$1,879 million (including US$101 million from joint ven t u re s of the interests in AAC and Minorco. In order to provide and US$581 million from associates) to US$2,142 million shareholders with a proper basis for comparison, the 1999 (including US$245 million from joint ven t u r es and US$592 million financial statements for Anglo American have been compared from associates).Acquisitions and disposals in 1999 contributed with pro forma financial statements for the year ended 1998. a net operating prof it of US$26 million and therefo r e underlyi n g These pro for ma financial statements have been prep a r ed to ref l e c t operating profit increased by US$237 million.The factors the restructuring of AAC and Minorco as if these restructuring contributing to this US$237 million increase were a transactions had occurred at the beginning of 1998. US$400 million currency gain arising prin c i p a l l y from the stren g t h of the US dollar relative to the South African rand and higher The principal adjustments in 1998 comprise: contributions from De Beers and FirstRand (US$137 million). – The full consolidation of Minorco; These positive factors were offset by the net impact of lower – The acquisition of an additional interest in Samancor; prices (US$109 million),lower sales (US$98 million), higher – The purchase of the minority interest in Amcoal; costs (US$75 million) and other items (US$18 million). – The purchase of the minority interest in Amic; The higher costs represent an increase of less than 1% over – The disposal of Minorco’s gold interests and their 1998, significantly below the overall rate of cost inflation. acquisition by AngloGold; The breakdown of operating profit,including Anglo American’s – The disposal of the Group’s interest in Engelhard; share of joint ventures and associates, is set out below: – The purchase of the minorities in Anamint and Amgold; – The treatment of Terra as an associate. Analysis of Total Operating Profit before Exceptional Items The effects of the Anamint and Amgold purcha s e s ,w h i c h occurred by Business Segment in May 1999 and the reclassification of Terra were not reflected US$ million 1999 1998 in the unaudited pro forma combined financial information contained in the Anglo Am e r ican Prospectus issued in Ap r il 1999. Gold 452 489 Platinum 480 331 Results for 1999 Diamonds 245 148 Turnover, including share of associates and joint ventures, fell Coal 114 166 by US$136 million to US$19,245 million.This decrease was Base Metals 174 86 Industrial Minerals 118 95 pri m a ri l y due to the impact of the disposal in 1999 by An g l o G o l d Ferrous Metals 75 164 of its interest in Drie f ontein and, in the second half of the yea r , Forest Products 272 232 by Terra of its distribution business and by AECI of its associate Industries 358 318 Polifin.This decline was offset by increased revenues from base Financial Services 138 98 metals and diamonds.The breakdown of turnover, including Exploration (138) (137) the share of associates and joint ventures, is set out below: Amortisation of goodwill (25) (21) Corporate activities Analysis of Turnover by Business Segment Recurring (108) (98) Non-recurring (13) 8 US$ million 1999 1998 2,142 1,879 Gold 2,235 2,650 Platinum 1,428 1,250 Diamonds 1,809 1,543 Coal 787 912 Base Metals 1,163 760 Industrial Minerals 1,008 1,073 Ferrous Metals 1,457 1,665 Forest Products 2,464 2,282 Industries 6,894 7,246

19,245 19,381

Anglo American plc Annual Report 1999 53 Financial review continued

The increase in costs in corporate activities is primarily the result Exceptional items contributed a net profit of US$410 million of the impact of a number of non-recurring items and the compared with US$165 million in 1998.The gains in 1999 establishment of the London office. Exploration expenditure arose primarily from the sale of AngloGold’s interest in of US$138 million was largely unchanged from 1998 but with Driefontein, the sale of Polifin by AECI, the sale of part of Anglo an increasing emphasis on activities in base metals. The goodwill American’s interest in South African Breweries and other non- generated on the restructuring of the group is being amortised core investments.These gains were partly offset by the loss on a straight-line basis over 20 years. incurred by Terra in disposing of its distribution business and restructuring costs in AECI. The depreciation charge in 1999 (excluding joint ventures and associates) remained broadly similar to 1998 at US$640 million. The profit for the period at US$1,552 million was US$300 Total goodwill amortisation at US$96 million was also in line million or 24% higher than in 1998. Headline profit at with 1998.The analysis by business segment is as follows: US$1,308 million, which excludes the impact of exceptional items and adjusts for the amortisation of goodwill, was US$149 Analysis of Depreciation by Business Segment million higher than in 1998.An analysis by business segment is set out below: US$ million 1999 1998

Gold 175 177 Analysis of Headline Profit by Business Segment Platinum 57 51 Coal 35 43 US$ million 1999 1998 Base Metals 91 53 Industrial Minerals 67 68 Gold 210 261 Ferrous Metals 27 40 Platinum 200 133 Forest Products 57 50 Diamonds 162 87 Industries 119 129 Coal 79 102 Other 12 17 Base Metals 97 62 Industrial Minerals 116 106 640 628 Ferrous Metals 67 100 Forest Products 199 125 Investment income net of interest payable fell from US$332 Industries 82 98 million to US$265 million.This was the result of lower rand Financial Services 112 79 De Beers investments 151 148 interest rates, the weakening of the rand versus the US dollar Exploration (112) (116) and the impact of the disposal of non-core investments on Corporate activities (55) (26) the level of dividend income. 1,308 1,159

The tax cha r ge for the year was US$481 million which included a net US$18 million credit in respect of exceptional items. Earnings per share at 403 US cents were 71 US cents higher Excluding the impact of exceptional items, the tax charge than in 1998.Headline profit per share at 340 US cents for the year represented an effective tax rate of 21% compared in 1999 was 11% higher than in 1998. with 26% in the previous year. The decline in the rate was primarily due to the impact of the reduction in the South Cash Flow African corporate tax rate from 35% to 30%,and high cap i t a l The following table summarises the major elements of Anglo ex p e n d i t u r e reducing the amount of current tax payable . American’s cash flow:

54 Anglo American plc Annual Report 1999 Cash Flow Analysis Anglo American’s capital expenditure budget for the year 2000 is US$1.7 billion of which 50% will be spent on maintaining US$ million 1999 1998 existing production and 50% on expansionary projects.The Group operating profit 1,305 1,197 following are the major projects included in the budget: Depreciation and amortisation 736 717 – US$150 million completing the development of the Loma Movement in working capital (268) (128) de Níquel nickel mine in Venezuela; Other items 77 73 – US$70 million on Project 777 at Hudson Bay Mining and Net cash inflow from operating activities 1,850 1,859 Smelting in Canada; Taxation (273) (395) – US$60 million on the rebuild of Anglo Platinum’s Waterval Net interest and dividend income 245 253 Disposal of fixed assets 84 161 smelter in South Africa; – US$50 million completing the development of the Available cash flow 1,906 1,878 Bafokeng Rasimone platinum mine in South Africa; Dividends paid – company and minorities (656) (877) Net acquisitions and disposals (134) 114 – US$150 million on the development of new shafts at the Capital expenditure (1,251) (1,441) Moab and Joel mines and shaft deepening at Mponeng Other 415 (378) and Elandsrand gold mines in South Africa; Movement in net funds/(debt) 280 (704) – US$130 million on Konkola Copper Mines in Zambia. Net (debt)/funds at start of the year (199) 505

Net funds/(debt) at end of the year 81 (199) Dividends In the cash flow, the total equity dividend paid by Anglo Net cash flow from operations at US$1,850 million was little American in 1999 of US$276 million represents the final changed from the previous year’s level of US$1,859 million. dividends paid by AAC and Minorco in the first quarter Anglo American’s continued expansion programme resulted in of 1999 and the interim dividend of 42 US cents per capital expenditure of US$1,251 million.Fixed assets disposals ordinary share paid by Anglo American in respect of 1999. contributed US$84 million. This compares with a combined dividend payment by AAC and Minorco in 1998 of US$517 million.The board intends Significant acquisitions during 1999 included the purchase in future years to pay approximately one-third of the annual of the Skorpion project (Reunion Mining) in Namibia, the dividend at the interim stage. increase of the interests in Anglo Platinum and AngloGold and, in Forest Products,the purchase of Amcor and Kohler. Net Funds

Capital Expenditure At the end of the year Anglo American held net funds of An analysis by business segment is set out below: US$81 million.This comprised US$3,618 million of cash and current asset investments offset by US$3,537 million Analysis of Capital Expenditure by Business Segment of total debt.

US$ million 1999 1998 The US$633 million proceeds from the sale of 12.6 million Gold 223 235 Anglo American shares in May were used to reduce sterling Platinum 239 252 borrowings. A US$750 million syndicated loan facility, which Coal 26 32 will mature in 2004, was arranged later in the year to fund Base Metals 257 329 future acquisitions. This facility will be used to help finance Industrial Minerals 70 85 the acquisition of Tarmac.The financial completion of the Ferrous Metals 47 52 Forest Products 181 165 Collahuasi project in November resulted in US$449 million Industries 175 256 of debt no longer being recourse to Anglo American. Other 33 35

1,251 1,441

Anglo American plc Annual Report 1999 55 Financial review continued

Hedging and risk management as far as practicable, by holding corresponding borrowings Anglo American uses derivative instruments, in particular in foreign currencies. forward contracts, swaps and options to manage the financial risks associated with the Group’s underlying business activities and the financing of these activities.The Group treasury which Exchange Rates against the US dollar operates in two locations, Johannesburg and Luxembourg, Average 1999 1998 manages the exposures faced by Anglo American and is responsible for ensuring that all hedge transactions remain South African rand 6.09 5.48 within the guidelines set by the board.These two centres also Pound sterling 0.62 0.60 manage the cash reserves of Anglo American as well as its Euro 0.94 0.90 liquidity. Independent control functions which operate within Year end each centre are subject to regular review by internal and South African rand 6.15 5.88 external audit.Gold hedging is managed by AngloGold. Pound sterling 0.62 0.60 Euro 0.99 0.86 Commodity Risk Fluctuations in precious metals, base metals and other Interest Rate Risk commodity prices can have a significant impact on Anglo Anglo American is exposed to interest rate risk, in particular American’s financial results. Derivatives are used to optimise to changes in US dollar, South African rand, sterling and Euro the value of Anglo Am e ri c a n ’ s production of these commodities. in t e r est rate s . Co rp o r a te policy is to maintain a high prop o rt i o n In mid 1999 AngloGold took the view that gold was oversold of floating rate debt.The cash reserves,managed by central and therefore to remain out of the forward market and to tre a s u r y, ar e also maintained in rel at i ve l y short term inves t m e n t s avoid further selling into an oversold market.The hedge in order to maintain liquidity while achieving a satisfactory position at the end of December 1999 was 16.3 million return for shareholders. ounces sold forward. Production is hedged at Hudson Bay and Mantos Blancos in order to optimise cash flow during Y2K a period of relatively depressed prices. The systems and contingency plans that were put in place to counter the year 2000 computer problem (“Y2K”) were Currency Risk effective and there was no impact on the Group during the Anglo American conducts business in many foreign currencies millennium changeover. Anglo American has spent US$36 while publishing its financial statements in US dollars. As million on the programme and does not envisage any a result it is subject to currency risks owing to exchange rate significant expenditure in the future. Ongoing scrutiny of movements which will affect Anglo American’s costs and the potential Y2K impacts will be maintained until all processing translation of the profits and net assets of subsidiaries whose cycles have been completed. Opportunities were taken to functional currency is not the US dollar. improve existing IT facilities in various businesses and to improve asset management and business continuity planning. The principal source of currency risk is the non US dollar denominated costs of mines in South Africa and, less importantly, Chile, Brazil and Canada which produce commodities that are priced on world markets in US dollars. Changes in the South African rand can have a significant impact on profit margins.

The principal exposure on the translation into US dollars of foreign currency net assets is to the South African rand, sterling and the Euro. The balance sheet effect is hedged,

56 Anglo American plc Annual Report 1999 Directors’ report

The directors have pleasure in submitting the statutory financial statements of the Company for the year ended 31 December 1999.

The Directors’ Report should be read in conjunction with the Chairman’s Statement,Review of Operations,Exploration Report,Safety, Health and Environment Report, Community Relations Report, Financial Review and the Remuneration Report which contain information on the Group’s individual business sectors, their performance and current and future developments.

Principal activities and business review Anglo American, with its subsidiaries, joint ventures and associates, is a world leader in gold, platinum group metals and diamonds, with significant interests in coal, base and ferrous metals,industrial minerals, forest products, industries, and financial services.

The Company’s business is a going concern as interpreted by the Guidance on Going Concern and Financial Reporting for directors of listed companies registered in the United Kingdom, published in November 1994.

Dividends An interim dividend of 42 US cents per ordinary share was paid on 22 October 1999.The directors recommend a final dividend of 108 US cents per ordinary share.This will make a total for the year to 31 December 1999 of 150 US cents per ordinary sh a r e. Subject to the app r oval of the shareholders at the annual general meeting to be held on Tue s d a y, 16 May 2000, the final dividend will be payable on Wed n e s d a y, 17 May 2000 to shareholders reg i s t e r ed in the books of the Company at the close of business on Frid a y, 7 Ap r il 2000.

On 26 August 1999, Gre e n w ood Nominees Limited, as nominee for Butterfield Trust (Guerns e y) Limited, the trustee for the Anglo American employee share schemes, waived its right to all dividends (except for 1 pence), payable by the Company. The amount waived during the year, in respect of the interim dividend was US$7,399,644.

Authorised Share Capital At an extraordinary general meeting held on 18 March 1999, the authorised share capital of the Company of £50,000, divided into 50,000 ordinary shares of £1 each, was converted into 50,000 preference shares of £1 each.At the same meeting, the authorised share capital was increased by US$300,000,000 by the creation of 600,000,000 ordinary shares of US$0.50 each.

Issued Share Capital The Company’s issued share capital is 50,000 preference shares of £1 each and 407,661,244 ordinary shares, of which 407,645,698 were allotted on 23 May 1999 and 15,546 on 6 December 1999.

The authorised and issued share capital of the Company is also set out in note 39 on page 121.

Details of interests of 3% or more in the ordinary share capital of the Company are shown on page 81.

Corporate Governance A rep o r t on corpo r a te gover nance and compliance with the Combined Code appended to the London Stock Exchange Listing Rules is set out on pages 69 to 72.

Anglo American plc Annual Report 1999 57 Directors’ report continued

Directorate The present directors with details of their specific responsibilities are shown on page 11.

The following changes were made to the composition of the board of directors during the accounting period and up to the date of this report:

Appointments Executive Non-Executive 18 March 1999 J Ogilvie Thompson, chairman and chief executive Sir Alick Rankin, deputy chairman and L Boyd, vice-chairman senior independent non-executive director MW King, vice-chairman NF Oppenheimer, deputy chairman JW Campbell RM Godsell AW Lea, finance director Sir Chips Keswick HR Slack Viscount Davignon AJ Trahar RJ Margetts TCA Wadeson, technical director PS Wilmot-Sitwell 19 April 1999 Dr CE Fay 6 December 1999 Sir David Scholey, deputy chairman and senior independent non-executive director

Resignations 18 March 1999 Hackwood Directors Limited (Company formation agents) 14 April 1999 HR Slack 31 December 1999 TCA Wadeson

It is with deep reg r et that we rep o r t the death of Sir Al i c k Rankin on 3 August 1999 after a long illness.

In terms of the Company’s articles of association, Sir David Scholey, who was appointed to the board during the year following the first annual general meeting, retires from the board at the forthcoming annual general meeting and offers himself for election. J Ogilvie Thompson,Viscount Davignon and Sir Chips Keswick, retire by rotation at the forthcoming annual general meeting, and, being eligible, offer themselves for re-election.

Details of the directors’ interests in any Group Company can be found in the Remuneration Report on pages 66 to 68.

Safety, Health and Environment A Safety, Health and Environment report is set out on pages 49 and 50.

Payment of Suppliers The Companies Act 1985 requires a public company to state its policy and practice on the payment of trade creditors. Anglo American plc is a holding company and, as such, had no trade creditors at the year end.The Company’s subsidiaries have no fixed payment policies but adhere to such terms as are agreed upon as and when contracts are entered into with suppliers.

58 Anglo American plc Annual Report 1999 Acquisition of Tarmac plc On 17 November 1999, Anglo Am e r ican made a rec o m m e n d e d cash offer of 585p per share for the whole of the issued and to be issued share capital of Tarmac plc. The offer, which valued Tarmac’s issued share capital at approximately £1.2 billion (US$1.9 billion), became unconditional in all respects on 1 March 2000 having then been accepted by shareholders of Tarmac representing approximately 80% of its issued share capital.The Company has applied Sections 429 – 430F of the Companies Act 1985 to acquire compulsorily the outstanding Tarmac shares. The 9.5% convertible capital bonds issued by Tarmac Finance (Jersey) Limited were, with the consent of the holders thereof, redeemed on 24 March 2000 at a total cost of £111.8 million.

Acquisition of assets from Zambia Consolidated Copper Mines (ZCCM) In March 2000,51% owned subsidiary Zambia Copper Investments and Anglo American announced the formation of a consortium to purchase certain assets from ZCCM.The consortium will commit to a series of capital expenditure projects totalling US$208 million and will further commit to the implementation of the Konkola Deep Mining Project at a cost of US$523 million, subject to the raising of acceptable limited recourse finance.

Employment Policy The Anglo American group of companies operates in 37 countries. Notwithstanding the marked diversity in every respect that these employment bases represent, division and enterprise policies and practices conform with the following overarching philosophies:– We require an efficient and flexible workforce that is appropriately rewarded. We strive towards being a world class business that is able to attract and retain suitably skilled people, maintain sound employee relations and operate in a socially acceptable way. We adhere to national legal standards at all times and, where appropriate, industries’benchmark standards.We also recognise and support internationally accepted labour rights. Our human resources are an important asset to our businesses, as are the communities in which we operate.We remain committed to making a contribution to an enduring balance between economic, environmental and social development.

Donations During the year Anglo American and subsidiaries made charitable donations of US$15 million.A review of the contribution by Anglo American companies to local communities is set out on pages 51 and 52. No donations were made in the UK during 1999 for political purposes as defined by the Companies Act 1985.

Auditors A resolution to rea ppoint the auditors, Deloitte & Tou ch e , will be proposed at the for thcoming annual general meeting in accordance with Section 384 of the Companies Act 1985.

Annual General Meeting The 2000 annual general meeting will be held at 11:00 am on Tuesday, 16 May 2000 at The Banqueting House, Whitehall, London SW1A 2ER.The notice convening the meeting is set out on pages 78 and 79.In addition to the ordinary business of the meeting, as special business, shareholder consent will be sought to renew the directors’ existing authorities to: (i) allot ordinary shares up to an aggregate nominal amount of US$67,000,000 (equivalent to 134,000,000 ordinary shares of US$0.50 each), and (ii) allot ordinary shares for cash up to an aggregate nominal amount of US$10,000,000 (equivalent to 20,000,000 ordinary shares of US$0.50 each), and (iii) make market purchases of up to a maximum of 42,000,000 ordinary shares of the Company.

By order of the board Nicholas Jordan Company Secretary 21 March 2000

Anglo American plc Annual Report 1999 59 Statement of Directors’ Responsibilities

Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the profit or loss of the Group for that period. In preparing those financial statements, the directors are required to:

– select suitable accounting policies and then apply them consistently;

– make judgements and estimates that are reasonable and prudent;

– state whether applicable accounting standards have been followed, and

– prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue – in business.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 1985.They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

60 Anglo American plc Annual Report 1999 Remuneration report

Role and Membership of the Remuneration Committee The role of the Remun e r a tion Committee is to determine the remu n e r a tion of the cha i r man and chief exec u t i v e and the exec u t i v e di r ectors of Anglo American and to develop Anglo Am e ri c a n ’ s general policy on senior management remuneration.In drawing up this report, the committee has taken into account the provisions outlined in Schedule B of The Combined Code.

The members of the Remuneration Committee are:Sir David Scholey (chairman),Dr CE Fay, RJ Margetts and PS Wilmot- Sitwell.The chairman and chief executive is consulted as appropriate and outside advisers provide information and advice.

Remuneration Committee Policy Re mu n e r a tion policy is for mul a ted to att r a c t , retain and motivate high-quality executives to optimise shareholder returns by linking annual and long term incentive schemes to Anglo Am e ri c a n ’ s pe r fo rm a n c e . In for mul a ting its remu n e r a tion po l i c y , the committee has given consideration to The Combined Code as well as relevant London Stock Exchange provisions wh i c h rel a te to pe r fo rm a n c e - d ri v en remu n e r at i o n .

The remuneration of the executive directors is made up of three main elements, designed to balance long and short term objectives: base salary, annual bonus plan and a long term incentive in the form of an employee share option scheme. There are performance targets attached to the second two elements designed to encourage and reward superior performance and to align the interests of the executive directors as closely as possible with the interests of the shareholders. In addition to these main elements, the executive directors also receive retirement and other benefits as outlined below.

Base Salary The base salary of the executive directors is subject to annual review and is set with reference to external market data, relating to comparable international companies based in the UK and overseas;individual performance and co rp o r a te results are also ta k en into considerati o n .

Other Benefits Exe c u t i v e directors are entitled to the provision of car allowances (and in one case a fully-maintained car), medical insurance, death and disability insurance and reimbursement of reasonable business expenses. Ce r tain directors also rec e i v e housing loan subsidies at a preferential interest rate. The total value of benefits received by each director is shown on page 64.

Annual Bonus Plan All executive directors are eligible to participate in an annual bonus plan based on the achievement of short term performance targets set for each executive director.These targets include measures of corporate performance and di v i s i o n a l pe r fo r mance (where app l i c a ble) and the achi e vement of individual objectives .These targets are reviewed annually by the chairman and chief executive with the Remuneration Committee. The bonus (which is non-pensionable) may not exceed 50% of annual base salary.

Directors will be eligible to receive shares in Anglo American up to the value of 50% of the bonus which, if held for three years,will be matched by the Company on a one-for-one basis conditional upon the executive director’s continued employment.The first awards under this plan will be made in April 2000.

Share Option Scheme An executive share option scheme was introduced in May 1999 and all the current executive directors are eligible to participate in it. Grants of options are made annually.The value of shares over which options were granted was equivalent to 1.25 times base salary for the chairman and chief executive and the equivalent of one year’s base salary for each executive

Anglo American plc Annual Report 1999 61 Remuneration report continued

director. Options are not granted at a discount and are not pensionable. The exercise of options is subject to Anglo American’s earnings per share increasing by at least 6% above the UK Retail Price Index over a three-year period. Options are normally exercisable, subject to satisfaction of the performance condition, between three and ten years from the date of grant.The shares utilised for the scheme are existing issued shares held by a trust and thus do not dilute shareholder equity.

Pensions Each executive director, other than AW Lea,is a member of the Anglo Am e r ican plc Interna tional Ap p r oved Pension Sche m e . AW Lea is a member of the Anglo American plc Approved Pension Scheme (formerly known as the Minorco Executive Directors’Fund). Both of these schemes are defined contribution pension schemes. Contributions are made to the schemes, in respect of each of the executive directors, at the rate of 25% of base salary under their contracts with Anglo American International (IOM) Limited except in the case of AW Lea who, under the terms of his contract with Anglo American International (BVI) Limited, was previously entitled to company contributions at 35% of such base salary, a provision which continues to be honoured.

In respect of his South African contract, J Ogilvie Thompson has reached pensionable age and is currently drawing benefits under the Anglo American Corporation Retirement Fund (a defined contribution pension scheme),while JW Campbell, MW King and AJ Trahar are members of the Anglo American Corporation Pension Fund, under which they accrue benefits at the rate of 2.2% per annum of pensionable salary (as defined in the rules of that scheme) under their South African contract for each year of pensionable service. The scheme provides spouses’ benefits of two-thirds of the member’s pension on the death of a member. It does not have provision for guaranteed pension increases. L Boyd is a member of the Anglo American Corporation Retirement Fund, to which contributions are made at the rate of 15% of base salary under his South African employment contract. He elected to join this scheme when it was established in September 1998 and has transfer red his accrued benefits from the Anglo American Corporation Pension Fund, of which he was previously a member.AW Lea is entitled to deferred benefits in the Anglo American Corporation Pension Fund in respect of previous South African service. No pension costs were incurred in respect of the non-executive directors, save in respect of RM Godsell who continued to be a member of the AngloGold Pension Fund (a defined benefit pension scheme), in his capacity as chief executive officer of that company.

During the year, contributions were paid in respect of TCA Wadeson to the Anglo American plc Approved Pension Scheme and, from June 1999, into the Anglo American plc International Approved Pension Scheme. Contributions were, in the period up to 14 April 1999, allocated to the Minorco Deferred Compensation Fund in respect of HR Slack.

Non-executive Directors The remuneration of the non-executive directors is determined by the board as a whole. Each non-executive director is paid a fee of £30,000 per annum.Non-executive directors who are members of a committee of the board are paid an additional sum of £5,000 per annum in respect of each committee and a further £5,000 per annum where the non-executive director is chairman of a committee except in the case of the Nomination Committee (where the respective fees are £2,500 in each case). Sir David Scholey is paid an additional fee of £37,500 per annum in his capacity as a deputy chairman and senior independent non-executive director.

Directors’ Service Contracts In order properly to reflect their spread of responsibilities, all the executive directors, with the exception of AW Lea who is employed by Anglo American International (BVI) Limited, have contracts with Anglo American International (IOM) Limited and Anglo American Corporation of South Africa Limited (AAC). Under South African contracts the salary is payable in rand.

62 Anglo American plc Annual Report 1999 The employment contracts of all executive directors are terminable at 12 months’ notice by either party. All the non-executive directors have letters of appointment with Anglo American for a period of three years from their date of appointment. In addition to his service contract with Anglo American, RM Godsell has a service contract with AngloGold, an independently managed subsidiary of Anglo American,in his capacity as chief executive officer. Under this contract, his employment may be terminated by either party giving to the other 30 days’ notice.

Compensation for loss of office during the year, at the level of one year’s remuneration and related benefits, was paid to HR Slack, a director who left Group employment during April 1999.

External Appointments Subject to the approval of the board, executive directors are permitted to hold a directorship in one outside company and to retain the fees payable from this app o i n t m e n t . Those exec u t i v e directors who are also directors of AngloGold agreed to waive their rights to fees receivable from AngloGold with effect from the date of the listing of Anglo American on the London Stock Exchange.

1. Directors’ Emoluments Year ended 31 December 1999 The following tables set out an analysis of the pre-tax remuneration, including bonuses but excluding pensions, for individual directors who held office during the year in Anglo American plc as well as standalone predecessor companies of the Anglo American Group.The predecessor companies of Anglo American plc were AAC and its subsidiaries and Minorco Société Anonyme, hereby defined as the “predecessor companies”.

Predecessor Anglo companies American plc fees fees Non-executive directors £’000 £’000

Sir David Scholey – deputy chairman – 7 Sir Alick Rankin – deputy chairman (deceased) – 47 NF Oppenheimer – deputy chairman 12 35 Viscount Davignon 7 33 Dr CE Fay – 38 RM Godsell 9 32 Sir Chips Keswick 3 31 RJ Margetts – 40 PS Wilmot-Sitwell 8 43

Certain of the non-executive directors received emoluments on a concurrent basis under letters of appointment as directors of predecessor companies and Anglo American plc. Accordingly, emoluments in the above table have been analysed between those received from predecessor companies and those received from Anglo American plc.

Under RM Godsell’s rand denominated service contract with AngloGold, he received a base salary equivalent to £185,000 per annum and a performance bonus equivalent to £61,000 during the year. RM Godsell is also entitled to the provision of a car allowance, medical expenses insurance, death and disability insurance and a housing loan subsidy.The total value of benefits received by RM Godsell during 1999 amounted to £23,000. In addition,RM Godsell redeemed previously accrued leave pay which amounted to £35,000.

Anglo American plc Annual Report 1999 63 Remuneration report continued

1 January 1999 to 23 May 1999(1)

Accrued Annual Salary Salary leave performance Other and fees supplement(2) pay(3) bonus(4) benefits Total Executive directors £’000 £’000 £’000 £’000 £’000 £’000

J Ogilvie Thompson – chairman/CEO 142 18 – 64 8 232 MW King – vice-chairman 113 –– 51 14 178 L Boyd – vice-chairman 97 –– 44 10 151 JW Campbell 81 –– 36 12 129 AW Lea 143 –– 64 14 221 HR Slack 165 – – – 9 174 AJ Trahar 83 – 133 37 12 265 TCA Wadeson 81 6 – 36 13 136

24 May 1999 to 31 December 1999(1)

Salary Accrued Annual Compensation and Salary leave performance Other for loss of fees supplement(2) pay(3) bonus benefits office Total Executive directors £’000 £’000 £’000 £’000 £’000 £’000 £’000

J Ogilvie Thompson – chairman/CEO 364 26 – 164 25 – 579 MW King – vice-chairman 253 –– 114 38 – 405 L Boyd – vice-chairman 253 –– 114 22 – 389 JW Campbell 211 –– 95 30 – 336 AW Lea 211 –– 95 14 – 320 HR Slack ––––– 440 440 AJ Trahar 211 –– 95 24 – 330 TCA Wadeson 211 8 49 95 38 – 401

(1) The executive directors entered into service contracts with Anglo American plc and wholly owned subsidiaries which were conditional upon the Company obtaining a listing on the London Stock Exchange on 24 May 1999. Emoluments received during the period 1 January 1999 to 23 May 1999 represent emoluments received from or in respect of earnings from predecessor companies whilst emoluments received during the period 24 May 1999 to 31 December 1999 represent emoluments received from Anglo American plc and wholly owned subsidiaries. (2) Under the terms of their employment with AAC, J Ogilvie Thompson and TCA Wadeson were each paid a salary supplement in lieu of an employer contribution to the Anglo American Corporation Retirement Fund. This is classified as a salary supplement in the figures detailed above. (3) Executive directors who have service contracts with AAC are entitled to encash all their leave up until 1 January 2000. During the year AJ Trahar and TCA Wadeson exercised their entitlement for the redemption of this previously accrued leave and the value of this redemption is shown in the figures above. As part of a change in policy, with effect from 1 January 2000, directors may carry forward only 5 days’ leave entitlement each year, up to a maximum of 20 days. (4) The annual performance bonus in respect of the period 1 January 1999 to 23 May 1999 relates to earnings from predecessor companies but will be paid by Anglo American plc in April 2000.

Year ended 31 December 1998 The aggregate of the remuneration paid and benefits in kind granted to the directors of Anglo American plc, by predecessor companies or any of their subsidiary undertakings for the year ended 31 December 1998 under any description whatsoever, is estimated at £6.3 million.This includes gains of £3.1 million in respect of the exercise of options and the termination of long term incentive plan arrangements which had been in place for a number of years.

64 Anglo American plc Annual Report 1999 The number of directors whose remuneration paid and benefits in kind granted by predecessor companies under the arrangements described in the previous paragraph for the year ended 31 December 1998 fell within the following ranges was:

£0 to £200,000 9 £200,000 to £600,000 3 £600,000 to £800,000 2 £800,000 to £1,250,000 3

2. Pensions Defined contribution pension schemes The amounts paid into defined contribution pension schemes by Anglo American plc and predecessor companies in respect of the executive directors during the year were as follows: 1 January 1999 24 May 1999 to to 23 May 1999 31 December 1999 £’000 £’000

J Ogilvie Thompson – chairman/CEO – 50 MW King – vice-chairman – 27 L Boyd – vice-chairman 15 51 JW Campbell – 26 AW Lea 81 74 HR Slack 58 – AJ Trahar – 26 TCA Wadeson 35 31

Defined benefit pension schemes Pension contrib utions in the period 1 Janu a r y 1999 to 23 May 1999 wer e paid by predecessor companies whilst pension contribu t i o n s in the period 24 May 1999 to 31 December 1999 were paid by Anglo American plc.

Executive Directors are eligible for membership of the Anglo American Corporation Pension Fund (“the Fund”) in respect of their South African remuneration.The Fund is a funded final salary occupational pension scheme approved by the Financial Services Board and Commissioner of Inland Revenue in South Africa.

Pensionable salary is 97% of the member’s basic employment cost (defined as base salary and car allowance) in South Africa and members accrue pensions at the rate of 2% of pensionable salary for each year of service under age 35 and 2.2% over age 35.The normal retirement date is 31 December following attainment of age 60.The retirement pension which would be payable on early retirement would be reduced so as to be broadly financially neutral to the Fund.

On death before retirement, a lump sum of two times pensionable salary is provided together with a spouse’s pension of two-thirds of the member’s prospective pension at normal retirement age. A spouse’s pension of two-thirds of the member’s pre-commutation pension is also payable on death after retirement.

Under the rules of the Fund, pension increases are not guaranteed but may be granted at the discretion of the trustees with the consent of the employer. Allowance for discretionary increases of 5% less than the return on the Fund prior to retirement and 4.5% less than the return on the Fund after retirement, is made in transfer values on leaving service.

Members of the Fund contribute at a rate of 5.2% of pensionable salary, the balance of the cost being met by the employer.

Anglo American plc Annual Report 1999 65 Remuneration report continued

Pension benefits Additional benefit earned (excluding inflation) Accrued during the year ended entitlement at Age at 31 December 1999 31 December 1999 31 December Pension Pension 1999 £’000 pa £’000 pa

MW King 62 19 143 JW Campbell 50 17 102 AW Lea(1) 51 – 37 AJ Trahar 50 2 105

(1) AW Lea is entitled to deferred benefits in respect of previous South African service.

No pension costs were incurred in respect of the non-executive directors, save in respect of RM Godsell who, as chief executive officer of AngloGold, continued to be a member of the AngloGold Pension Fund, a defined benefit pension scheme.The terms and conditions with respect to benefits obtained from the AngloGold Pension Fund are the same as those under the Fund as set out above, except that pensionable salary is 100% of basic employment cost and that the normal retirement date is the last day of the month in which the member attains age 60.

Pension benefits Additional benefit earned (excluding inflation) Accrued during the year ended entitlement at Age at 31 December 1999 31 December 1999 31 December Pension Pension 1999 £’000 pa £’000 pa

RM Godsell 47 25 114

3. Directors’ Options Roll-over options(1) AA plc options

Total Holding at Option Market Holding at Weighted holding at 1 January price price Gain 31 De c e m b e r Granted average 31 De c e m b e r Expiry 1999 (rand) Exercised (rand) (rand) 1999 1999(2) price £(3) 1999 date(5)

J Ogilvie Thompson 125,000 205 ––– 125,000 28,156 27.87 153,156 24 June 2009 MW King 100,000 205 ––– 100,000 15,791 27.84 115,791 24 June 2009 L Boyd 100,000 205 10,000 395.80 1,411,920 90,000 15,791 27.84 105,791 24 June 2009 JW Campbell 400 195 ––– 400 13,564 27.78 88,564 24 June 2009 74,600 205 ––– 74,600 AW Lea –––––– 39,429(4) 27.86 39,429 24 June 2009 AJ Trahar 75,000 205 5,000 321.80 507,278 66,000 13,623 27.77 79,623 24 June 2009 4,000 417.00 847,571 TCA Wadeson 75,000 205 15,000 321.80 1,761,839 60,000 –– 60,000 16 February 2008

(1) Certain of the executive directors had been granted share options prior to 1 January 1999 under a previous share option scheme operated by AAC which were ‘rolled-over’ into Anglo American plc options. (2) Options granted under the Share Option Scheme and under the Anglo American Share Savings (SAYE) Plan. (3) SAYE options were granted to all participants at a 20% discount to market price. (4) AW Lea did not benefit from the exchange of options over AAC shares which were ‘rolled-over’ into options over Anglo American plc shares and was therefore granted options with an aggregate exercise price not exceeding 300% of remuneration as opposed to 100% as in the case of other exec u t i v e di r e c t o r s . (5) Certain of the ‘roll-over’ options became exercisable before 1 January 1999. The executive options granted during 1999 only become exercisable in June 2002, subject to performance conditions where applicable. SAYE options are exercisable on the third, fifth or seventh anniversaries of their grant, depending upon the participants’ choice.

66 Anglo American plc Annual Report 1999 The highest and lowest mid-market price of the Company’s shares during the period 24 May 1999 to 31 December 1999 were £42.70 and £27.90 respectively. The mid-market price of the Company’s shares at 30 December 1999 was £41.15.

In addition to the above share options, RM Godsell has share options in AngloGold, an independently managed subsidiary of the Company. Details of his share options are as follows:

Holding at Option Market Holding at 1 January price price Gain 31 December Expiry 1999 (rand) Exercised (rand) (rand) 1999 date

RM Godsell 68,800 208 4,650 328.60 560,790 64,150 16 February 2008 Certain of RM Godsell’s options became exercisable before 1 January 1999. The highest and lowest mid-market-price of AngloGold’s shares during the period 1 January 1999 to 31 December 1999 were R418.00 and R226.00 respectively.The mid-market price of AngloGold’s shares at 30 December 1999 was R316.60.

4. Directors’ Share Interests Interests of directors who held office at 31 December 1999 in Ordinary Shares (“Shares”) of the Company and its subsidiaries were as follows:

Shares in Anglo American plc As at 24 May 1999 As at 31 December 1999 (or later date of appointment)

Beneficial Non-beneficial Beneficial Non-beneficial

J Ogilvie Thompson (1) 36,023 – 31,423 – Sir David Scholey –––– NF Oppenheimer(2) 29,257,783 358,784 29,257,783 358,784 L Boyd(3) 10,444 – 8,844 – MW King 26,077 – 26,077 – JW Campbell 9,323 – 9,323 – AW Lea(4) 2,123 – 2,123 – AJ Trahar 19 – 19 – Viscount Davignon –––– Dr CE Fay –––– RM Godsell 23 – 23 – Sir Chips Keswick 1,000 – 1,000 – RJ Margetts –––– PS Wilmot-Sitwell 1,000 – 1,000 –

There have been no changes in the above interests between 31 December 1999 and the date of this report. (1) J Ogilvie Thompson’s interest in 16,000 of these Shares arises as a result of his wife’s interest in a trust which owns these Shares. His interest in 20,000 of these Shares arises as a result of his being one of approximately 640 members of the Combined Annuity Retirement Fund, which is a registered retirement annuity fund under the South African Pensions Fund Act. In addition (and as previously disclosed) J Ogilvie Thompson has an interest in a discretionary trust which has an indirect economic interest in 4.59% of the 29,257,760 Shares referred to in the next footnote. (2) NF Oppenheimer’s beneficial interest in 29,257,760 of these Shares arises as a result of his interest in a discretionary trust which is treated as interested in shares held by Central Holdings Limited Société Anonyme (“Centhold”). The interest of Centhold in 29,257,760 Shares includes the interest of E Oppenheimer & Son (Proprietary) Limited (which is a wholly owned subsidiary of Centhold) in 14,418,250 Shares. His non-beneficial interest in 358,784 Shares arises as a result of his position as a trustee of a charitable trust. (3) L Boyd’s beneficial interest in 500 Shares arises as a result of his wife’s interest in these Shares. (4) AW Lea’s beneficial interest in 50 Shares arises as a result of his son’s interest in these Shares.

Anglo American plc Annual Report 1999 67 Remuneration report continued

Shares and debentures in subsidiaries of Anglo American plc

As from date of appointment As at 31 December 1999 to Anglo American plc

Beneficial Non-beneficial Beneficial Non-beneficial

Anglogold Limited NF Oppenheimer – 516,229(1) – 516,229(1) MW King 2,023 – 2,023 – RM Godsell 15,000(2) – 15,000(2) – Anglo American Platinum Corporation Limited MW King – 2,000 – 2,000 JW Campbell 12,000 – 12,000 – Highveld Steel and Vanadium Corporation Limited L Boyd – 100 – 100 MW King – 100 – 100 AJ Trahar – 100 – 100 The Tongaat-Hulett Group Limited MW King – 500 – 500 Zambia Copper Investment Limited J Ogilvie Thompson – 100 – 100

(1) Indirect partial (2) Debentures

68 Anglo American plc Annual Report 1999 Corporate governance

Compliance Statement Anglo American’s board of directors is responsible and accountable to shareholders for ensuring compliance with the highest standards of corporate governance and also that Anglo American’s system of internal control is both reviewed regularly and is effective. Since Anglo American was listed on 24 May 1999 the principles and detailed provisions of The Combined Code have been complied with except that the chairman of the board is also chief executive.This is commented on below.

The Combined Code has determined 14 principles of good gove rn a n c e, divided into four sections, wh i c h are refe r red to below.

The Board of Directors The board of directors is res p o n s i b le to the shareholders for setting the direction of Anglo Am e r ican through the establi s h m e n t of strategic objectives and key policies. The board meets on a regular basis, at least six times a year. During 1999 eight board meetings were held.The board considers issues of strategic direction, major acquisitions and disposals, approves major capital expenditure and other matters having a material effect on Anglo American. Presentations are made to the board by divisional management on the activities of operations and both executive and non-executive directors undertake regular visits to operations and projects.

The composition of the board, with a strong independent element that complies with The Combined Code, ensures that no one individual has unfettered powers of decision and authority.There are currently six executive and eight non-executive directors of Anglo American. NF Oppenheimer, who is the chairman of De Beers Group and AngloGold, is a non-executive deputy chairman. Sir David Scholey, the other non-executive deputy chairman, is the senior independent director. He, Viscount Davignon, Dr CE Fay, RJ Margetts and PS Wilmot-Sitwell are non-executive directors, independent of management and free from any business or other relationship with the Group.The other non-executive directors are Sir Chips Keswick and RM Godsell.

Anglo American’s directors have a wide range of expertise as well as significant experience in financial,commercial and mining activities. The board considers that J Ogilvie Thompson’s combined role as chairman and chief executive is in Anglo American’s best interests.This combined role will continue for a limited period until such time as conditions are appropriate, but no later than the annual general meeting to be held in 2002,whereafter it is intended that the functions of chairman and chief executive will be split.As chairman of Minorco and AAC, the two companies which were combined to form Anglo American in May 1999, J Ogilvie Thompson has a unique insight into those companies and thus the operations of the Group. He operates under the direction of the board and currently has no delegated authorities or powers of decision vested in him.

All directors have access to management,including the company secretary, and to such information as is needed to carry out their duties and responsibilities fully and effectively. Furthermore, all directors are entitled to seek independent professional advice concerning the affairs of Anglo American at its expense.

All directors are subject to election by shareholders at the first opportunity following their appointment. In addition, directors will retire by rotation and stand for re-election by shareholders at least once every three years in accordance with Anglo American’s articles of association.

Subject to specific fundamental, strategic and formal matters reserved for its decision,the board delegates certain responsibilities to a number of standing committees, which operate within defined terms of reference laid down by the board, as referred to below.

Anglo American plc Annual Report 1999 69 Corporate governance continued

Executive Committee The chairman of the board, J Ogilvie Thompson, chairs the Executive Committee which comprises all the executive directors of the Company.The Committee is empowered and responsible for implementing the strategies and policies determined by the board, managing the business and affairs of the Company, prioritising the allocation of capital and technical and human resources and establishing best management practices. The Committee is also responsible for senior management appointments and monitoring their performance and acts as the Anglo American risk committee for the purpose of reviewing and monitoring Anglo American’s systems of internal control.

The Executive Committee presently comprises: J Ogilvie Thompson (chairman), L Boyd (deputy chairman),MW King (deputy chairman), JW Campbell, AW Lea and AJ Trahar.

Remuneration Committee The Remuneration Committee, comprising solely independent non-executive directors, is responsible for establishing and developing Anglo American’s general policy on executive and senior management remuneration and determining specific remuneration packages for executive directors.

The Remuneration Committee presently comprises: Sir David Scholey (chairman),Dr CE Fay, RJ Margetts and PS Wilmot-Sitwell.

Audit Committee The Audit Committee, comprising solely non-executive di re c t o r s , is res p o n s i b le for the consideration of the app o i n t m e n t of external auditors,the maintenance of a professional relationship with them, reviewing accounting principles, policies and practices adopted in the preparation of public financial information and examining all documentation relating to the annual and interim financial statements. In addition,it reviews procedures and policies of internal control including internal financial control and internal audit reports.The Committee normally meets at least three times each year.

The Audit Committee presently comprises: Viscount Davignon (chairman),Sir Chips Keswick and RJ Margetts.

Investment Committee The Investment Committee’s role is to manage the process of capital allocation by ensuring that investments and divestments increase shareholder value and meet Anglo American’s financial criteria.The Committee makes recommendations to the Executive Committee and/or the board on these matters.

The Investment Committee presently comprises: AW Lea (chairman),MW King and (as co-opted members) WA Nairn, GR Pardoe, PG Whitcutt and CWP Yates.

Safety, Health and Environment (“SHE”) Committee The SHE Committee is responsible for developing framework policies and guidelines for safety, health and environment management and ensuring the progressive implementation of the same throughout the Group.

The SHE Committee pres e n t l y compris e s : Dr CE Fay (cha i rm a n ) , J Ogilvie Thompson, RM Godsell and PS Wilmot-Sitwell.

70 Anglo American plc Annual Report 1999 Nomination Committee The role of the Nomination Committee is to make recommendations to the board on the appointment of new executive and non-executive directors, including making recommendations as to the composition of the board generally and the balance between executive and non-executive directors.

The Nomination Committee presently comprises: J Ogilvie Thompson (chairman), Sir David Scholey, NF Oppenheimer and PS Wilmot-Sitwell.

Directors’ Remuneration The board’s Remuneration Report, providing a statement on Anglo American’s policy on executive directors’ remuneration, benefits, share options and pensions, is set out on pages 61 to 68 of this report.

Relations with Shareholders During the year there have been regular presentations and meetings with institutional investors in the UK and South Africa to communicate the strategy and performance of Anglo American.Presentations and meetings will be extended during the current year to include continental Europe. Executive directors attend such presentations and meetings. Regular contact with institutions is managed by the Investor Relations de p a r tment and the Company has a web site (www.a n g l o a m e ri c a n . c o. u k ) to provide the latest and historical financial and other information on Anglo American.

Shareholders will have the opportunity at the forthcoming annual general meeting, notice of which is set out on pages 78 to 79 of this report, to put questions to the board, including the chairmen of the various committees.

Accountability and Audit The board is req u i r ed to present a balanced and understandable assessment of Anglo Am e ri c a n ’ s financial position and pros p e c t s . Such assessment is provided in the Chairman’s Statement set out on pages 4 to 7, and the Financial Review set out on pages 53 to 56.The respective responsibilities of the directors and auditors are set out on pages 60 and 82 in relation to the financial statements. As referred to in the Directors’ Report on page 57, the directors have expressed their view that Anglo American’s business is a going concern.

Internal Control The board has established procedures necessary to implement in full the Turnbull guidance, Internal Control:Guidance for Directors on The Combined Code with effect from 1 January 2000.A review of the risk management process for significant risks was undertaken during the second half of 1999.This formed the basis for the new procedures which have been established in order to implement the guidance. In addition, the board and management are keeping under active review the need to enhance continuously the system of control.

For the year ended 31 December 1999, and in accordance with the transitional approach to Turnbull as laid down by the London Stock Exchange, Anglo American reports on internal financial controls under the guidance issued by the Rutteman Working Group in 1994.

The directors acknowledge that they are responsible for internal financial control.This control system is designed to safeguard Anglo American’s assets,maintain proper accounting records and ensure the reliability of financial information produced by Anglo American. Such a system is designed to provide only reasonable and not absolute assurance against material misstatement or loss.

Anglo American plc Annual Report 1999 71 Corporate governance continued

The board has reviewed the effectiveness of the system of internal financial control for 1999 and the period up to the approval of the Annual Report and Accounts. The key internal financial control procedures were as follows:

Delegation of Authority The board of directors determines Anglo American’s strategic direction and retains authority over all major business, financial and organisational issues. In particular, the board authorises all major capital expenditure proposals, acquisitions and disposals. Appropriate authorities are delegated to the Executive Committee.

Financial Reporting Anglo American has a comprehensive system for reporting financial results to the board. Each business division prepares a detailed budget and two year plan, which is reviewed by the Executive Committee and ultimately by the board before being adopted formally. Performance against the budget is reported to the board quarterly and variances analysed. Forecasts to the end of the year are prepared quarterly and include an analysis of material changes. Accounting policies are disseminated throughout Anglo American via the Group Accounting Manual.

Operating Units Controls Business divisions have developed internal financial control systems and detailed control procedures which are appropriate to the size and business of the operating unit.These are examined during internal audit visits to the operating companies and reports from such visits are circulated to both unit and executive management and any material concerns reported to the Audit Committee.

Monitoring The board reviews the effectiveness of internal financial controls across the Group.This task is carried out in conjunction with management and internal auditors. Annually, the Audit Committee ensures that the plans and resources of the internal audit functions are adequate and receives reports identifying material issues and concerns.This process is reinforced by a self-certification programme that requires the chief financial officer of each operating unit to confirm compliance with key control procedures and to identify any breakdowns in these procedures which have resulted in a material loss.

72 Anglo American plc Annual Report 1999 Production statistics

Production statistics – for the year ended 31 December (1)

1999 1998

AngloGold (troy ounces) South Africa 5,745,000 6,368,000 North and South America (2) 911,000 779,000 Rest of the world 262,000 234,000

6,918,000 7,381,000

Anglo Platinum (troy ounces) Platinum 2,022,700 1,861,000 Palladium 1,017,200 930,900 Rhodium 171,700 176,700 Nickel (tonnes) 19,600 20,600

Anglo Coal (tonnes) Eskom 41,700,000 39,600,000 Trade 19,600,000 19,200,000 Cerrejón 500,000 1,000,000

61,800,000 59,800,000

Anglo Base Metals Copper (tonnes) Collahuasi 191,200 21,100(3) Mantos Blancos 151,600 138,100 Hudson Bay 50,300 47,100 Palabora 31,000 40,300

424,100 246,600

Nickel (tonnes) Codemin 6,500 6,900 Tati 3,700 3,500

10,200 10,400

Zinc (tonnes) Hudson Bay 82,800 93,400 Black Mountain 31,200 – Lisheen 7,200(3) –

121,200 93,400

Lead (tonnes) Black Mountain 73,800 – Lisheen 3,700(3) –

77,500 –

Namakwa Sands (tonnes) Chloride slag 85,700 40,900 Sulphate slag 13,900 9,200 Pig iron 60,200 20,600 Zircon 91,900 36,700 Rutile 17,800 6,700

Anglo American plc Annual Report 1999 73 Production statistics continued

1999 1998

Anglo Industrial Minerals (tonnes) Aggregates 26,701,000 28,416,000 Lime products 926,000 935,000 Concrete (m3) 2,612,000 2,466,000 Potash 825,000 1,014,000 Sodium tripolyphosphate 82,000 67,000 Phosphates 589,000 547,000

Ferrous Metals (tonnes) Chrome ore 1,360,000 1,321,000 Stainless steel 183,000 161,000 Vanadium slag 58,000 70,000 Chrome alloys 394,000 362,000 Manganese ore 1,462,000 1,365,000 Manganese alloys 255,000 249,000 Steel 1,228,000 1,347,000 Ferroalloys 240,000 226,000

Anglo Forest Products (tonnes) South Africa Pulp 346,000 330,000 Graphic papers 404,000 401,000 Packaging papers 436,000 516,000 Corrugated board (000 m2) 89,000 42,000 Lumber (m3) 385,000 464,000 Wood chips 1,018,000 947,000 Mining timber 133,000 221,000

Europe Pulp 137,000 135,000 Graphic papers 555,000 522,000 Packaging papers 347,000 303,000 Corrugated board (000 m2) 611,000 19,000 Paper sacks (000 units) 611,000 574,000

Brazil Pulp 149,000 138,000

(1) Includes entire output of consolidated entities and the Group’s share of joint ventures and associates where applicable. (2) Production in 1998 relates to Minorco’s gold operations. (3) Pre-commercial production.

74 Anglo American plc Annual Report 1999 Exchange rate and metal prices US dollar exchange rates at 31 December

1999 1998

South African rand 6.15 5.88 Pound sterling 0.62 0.60 Euro 0.99 0.86

Metal prices average market prices for the year ended 31 December

1999 1998

Gold – US$/oz 278 294 Platinum – US$/oz 376 372 Palladium – US$/oz 358 284 Rhodium – US$/oz 906 615 Copper – US cents/lb 71 75 Nickel – US cents/lb 273 210 Zinc – US cents/lb 49 46 Lead – US cents/lb 23 24

Anglo American plc Annual Report 1999 75 Reserves and resources

Tonnes (million)(2) Grade (g/t) Contained tonnes(2)

Reported (%) Attributable(1) (%) 1999 1998 1999 1998 1999 1998

AngloGold(3) – reserves South Africa (underground) 297.3 8.91 2,648.0 South Africa (surface) 382.1 0.46 176.4 Other Africa 17.2 2.73 47.0 North and South America 173.0 1.83 317.0 Australia 56.5 2.18 123.0 Total metric 100 50.4 926.1 3.58 3,311.4 Total imperial 100 50.4 1,020.8 0.093 oz/t 96.5 Moz

AngloGold(3) – resources South Africa (underground) 443.0 11.72 5,193.3 South Africa (surface) 885.9 0.39 348.9 Other Africa 78.0 1.92 149.6 North and South America 329.2 1.79 587.9 Australia 161.4 1.58 255.6 Total metric 100 50.4 1,897.6 3.44 6,535.3 Total imperial 100 50.4 2,091.7 0.100 oz/t 190.6 Moz

Platinum g/t(4) Total reserves 100 50.3 1,627.0 1,443.1 4.98 5.10 8,102.0 7,360.0 Total resources 100 50.3 167.0 167.1 4.90 4.90 818.0 817.8

Coal – reserves 100 100 Trade collieries 684.7 724.7 Power generation collieries 1,646.1 1,761.6 Coal – resources 100 100 Trade collieries 868.5 764.8 Power generation collieries 203.7 176.1 Other resources 4,474.8 4,461.7

Base Metals – reserves Contained tonnes (million) Copper %Cu Collahuasi 44 44 252.6 261.9 1.23 1.30 3.10 3.30 Mantos Blancos 100 77 317.8 257.5 0.71 0.80 2.26 2.10 Palabora 28.7 28.7 92.5 100.9 0.59 0.59 0.54 0.60 Quellaveco 100 61 965.6 – 0.63 – 9.92 – Hudson Bay 100 100 28.2 29.7 1.71 1.60 0.48 0.47 Black Mountain 100 100 8.5 8.7 0.52 0.50 0.04 0.05 Nickel %Ni Codemin 100 90 6.0 6.2 1.38 1.40 0.08 0.08 Loma de Níquel 100 85.5 40.7 – 1.49 – 0.60 – Zinc %Zn Hudson Bay 100 100 28.1 29.7 4.13 3.90 1.16 1.16 Black Mountain 100 100 8.5 8.7 2.60 2.9 0.22 0.25 Lisheen 100 62 13.2 13.4 13.3 13.3 1.76 1.78 Lead %Pb Black Mountain 100 100 8.5 8.7 4.38 5.5 0.37 0.48 Lisheen 100 62 13.2 13.4 2.4 2.4 0.32 0.32

76 Anglo American plc Annual Report 1999 Tonnes (million) Grade Contained tonnes (millions)

Reported (%) Attributable (%) 1999 1998 1999 1998 1999 1998

Base Metals – resources Copper %Cu Collahuasi 44 44 663.0 663.0 0.67 0.70 4.40 4.40 Mantos Blancos 100 77 155.0 158.7 0.71 0.70 1.10 1.10 Quellaveco 100 61 148.0 1100.0 0.45 0.63 0.67 6.90 Salobo 50 50 518.5 500.0 0.75 0.75 3.89 3.75 Nickel %Ni Codemin 100 90 8.7 9.1 1.26 1.30 0.110 0.12 Loma de Níquel 100 85.5 3.2 – 1.47 – 0.05 – Zinc %Zn Skorpion 100 100 24.8 19.5 10.96 10.1 2.72 2.00 Gamsberg 100 100 130.0 140.0 6.29 5.77 8.17 8.08 Lead %Pb Gamsberg 100 100 130.0 140.0 0.52 0.51 0.68 0.71

Heavy Minerals Namakwa Sands – reserves 100 100 % Ilmenite 502.8 515.3 3.4 3.4 17.2 17.4 Zircon 502.8 515.3 0.9 0.9 4.7 4.8 Rutile 502.8 515.3 0.2 0.2 1.1 1.1 Heavy Minerals Namakwa Sands – resources 100 100 Ilmenite 773.9 773.9 3.0 3.0 23.2 23.2 Zircon 773.9 773.9 0.6 0.6 4.3 4.3 Rutile 773.9 773.9 0.2 0.2 1.3 1.3

Ferrous Metals - reserves Chrome 40 40 29.3 15.6 Manganese 40 40 50.8 - Vanadium 100 73 203.1 204.7 Niobium 100 70 4.9 5.6 1.40 - 0.07 -

Ferrous Metals - resources Chrome 40 40 41.2 64.4 Vanadium 100 73 76.7 76.9 Niobium 100 70 1.2 1.2 0.92 - 0.01 -

Forest Products The Mondi Group in South Africa owns and manages 415,000 ha of sustainable man-made forest. All its producing forests have been certified by the Forestry Stewardship Council. The annual cut is 4.1 million tonnes and the sustainable future production significantly exceeds this figure.

(1) Attributable (%) refers to 1999. (2) Includes 100% of reserves and resources of consolidated entities and the Group’s share of joint ventures and associates where applicable. (3) AngloGold reserves are reported as a subset of resources. (4) 4E PGE grade.

Anglo American plc Annual Report 1999 77 Notice of Annual General Meeting

Notice is hereby given that the annual general meeting of shareholders will be held at The Banqueting House, Whitehall London SW1A 2ER, at 11:00 am on Tuesday, 16 May 2000 for the following business:

Ordinary Business 1. To receive and adopt the financial statements comprising the consolidated financial statements of the Anglo American Group and the unconsolidated financial statements of Anglo American plc, incorporated therein,and the reports of the directors and auditors for the year ended 31 December 1999.

2. To declare a final dividend of 108 US cents per ordinary share, which,together with the interim dividend declared in September and paid in October 1999 will result in a total dividend in respect of the year ended 31 December 1999 of 150 US cents per ordinary share.

3. In accordance with the provisions of the articles of association of the Company and upon the recommendation of the board, to elect Sir David Scholey as a director.

4. In accordance with the provisions for retirement in the articles of association of the Company to re-elect the following directors (as separate resolutions):

(a) J Ogilvie Thompson

(b) Viscount Davignon

(c) Sir Chips Keswick

5. To re-appoint Deloitte & Touche auditors for the ensuing year and authorise the directors to fix their remuneration.

Special Business To consider and, if thought fit , to pass the fol l o wing res o l u t i o n s which will be proposed, as to resolution 6, as an ordinary resolution and, as to resolutions 7 and 8 as special resolutions.

Ordinary Resolution 6.That the authority to allot ordinary shares conferred on the di r ectors by Ar ticle 9.2 of the Company’ s articles of associati o n be renewed until the date of the Annual General Meeting in 2001 up to an aggregate nominal amount of US$67,000,000 (134 million ordinary shares).

Special Resolution 7.That subject to the passing of Ordinary Resolution 6 set out in this notice, the power to allot ordinary shares for cash conferred on the directors by Article 9.3 of the Company’s articles of association be renewed for the period referred to in such resolution up to an aggregate nominal amount of US$10,000,000 (20 million ordinary shares).

78 Anglo American plc Annual Report 1999 Special Resolution 8.That the Company be and is generally and unconditionally authorised for the purpose of Section 166 of the Companies Act 1985 to make market purchases (within the meaning of Section 163(3) of the Companies Act 1985) of ordinary shares of US$0.50 each in the capital of the Company provided that:

(a) the maximum number of ordinary shares of US$0.50 each in the capital of the Company authorised to be acquired is 42,000,000;

(b) the minimum price which may be paid for the ordinary sh a r es is US$0.50 which amount shall be exclusive of expenses;

(c) the maximum price which may be paid for an ordinary share is an amount (exclusive of expenses) equal to 105% of the average of the middle market quotation for an ordinary share, as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which such ordinary share is contracted to be purchased; and

(d) the authority conferred shall expire at the conclusion of the annual general meeting of the Company to be held in 2001 (except in relation to the purchase of ordinary shares the contract for which was concluded before the expiry of such authority and which might be executed wholly or partly after such expiry) unless such authority is renewed prior to such time.

Any shareholder may, in writing, appoint a proxy, who need not be a shareholder, to represent him/her at any general meeting. Any company, being a shareholder, may execute a form of proxy under the hand of a duly authorised officer or may authorise in writing such person as it thinks fit to act as its representative at the meeting subject to the production to the Company of such evidence of authority as the board may require. The instrument appointing a proxy, and the written authority of a representative, together with evidence of the authority of the person by whom the proxy is signed (except in the case of a proxy signed by the shareholder) shall be deposited at the Registered Office of the Company or the office of the UK Registrar or its agent in South Africa, two clear business days (in the UK or South Africa as the case may be) before the time for the holding of the meeting or adjourned meeting at which the person named in such instrument proposes to vote. No instrument appointing a proxy shall be valid after the expiration of twelve months from the date of its execution.

By order of the board of directors:

Nicholas Jordan Company Secretary Anglo American plc 20 Carlton House Terrace London SW1Y 5AN Registered Number 3564138 13April 2000

Anglo American plc Annual Report 1999 79 Shareholder information

Dividends – Final Dividend Subject to approval at the annual general meeting, the final dividend for the year ended 31 December 1999 will be payable on Wed n e s d a y,17 May 2000 to ordinary shareholders reg i s t e re d in the books of the Company on Friday, 7 April 2000.

Dividend Payments Dividends are paid in pounds sterling to shareholders reg i s t e re d on the UK register of members, unless they elect for payment in US dollars, and those shareholders with addresses elsewhere will be paid in US dollars, unless they elect for payment in pounds sterling, provided that such elections are received by the UK Registrar by the Record Date applicable to the dividend being paid. However, shareholders on the South African branch register will be paid in South African rand.Anglo American’s dividend is declared in US dollars and converted into sterling and rand at the exchange rates applicable two business days prior to the declaration date.

Shareholders’ Diary 2000/2001 Financial year end: 31 December AGM 1999 16 May 2000 2000 May 2001 Reports and Financial Statements: – Interim Report September 2000 – Annual Results Announcement March 2001 – Annual Report April 2001 Interim dividend: Date of declaration September 2000 Date of payment October 2000 Final dividend: Date of recommendation March 2001 Date of payment May 2001

Analysis of ordinary shareholders at 31 December 1999

Number of Number of Percentage of Size of shareholding shareholders shares issued capital

1–500 13,658 1,996,212 0.49% 501–1,000 618 461,684 0.11% 1,001–5,000 2,599 4,214,704 1.04% 5,001–10,000 249 1,782,460 0.44% 10,001–25,000 196 3,084,378 0.76% 25,001–50,000 120 4,244,978 1.04% 50,001–100,000 108 7,859,194 1.93% 100,001–250,000 85 13,177,936 3.23% 250,001–500,000 35 11,540,516 2.83% 500,001–1,000,000 22 15,590,615 3.82% Over 1,000,000 38 343,708,567 84.31%

17,728 407,661,244 100.00%

80 Anglo American plc Annual Report 1999 Shareholder information

Anglo American Share Price on the LSE (1999)

Date Share Price

1 June £29.00 1 July £31.13 2 August £32.50 1 September £34.44 1 October £33.73 1 November £32.50 1 December £36.33 30 December £41.15

Substantial shareholdings As at 31 December 1999, the Company was aware of the following interests in 3% or more of the Company’s ordinary share capital:

Share Percentage of Name holding issued capital

De Beers Consolidated Mines Limited (1) 117,086,985 28.72% De Beers Centenary AG(2) 27,196,920 6.67%

De Beers Group 144,283,905 35.39% Standard Bank Nominees (Transvaal) (Pty) Ltd. 37,943,395 9.31% Central Holdings Limited SA(3), (4) 29,257,760 7.18% Nedcor Bank Nominees Ltd. 17,357,991 4.26% Butterfield Trust (Guernsey) Limited(5) 17,332,500 4.25% Old Mutual Nominees (Pty) Ltd. 13,085,319 3.21%

In terms of notifications pursuant to S.198 of the Companies Act of 1985, the Company has been notified of the following: (1) Held by De Beers Investments (Proprietary) Limited. (2) Held by Felton Holdings Limited. (3) The interests of Central Holdings Limited S.A. (“Centhold”) in 29,257,760 Ordinary Shares (the “Centhold Shares”) includes the interest of E Oppenheimer & Son (Proprietary) Limited (a wholly-owned subsidiary of Centhold) in 14,418,250 Ordinary Shares. (4) Each of Capricorn Trustees Limited, Central Holdings International Limited, Spectre Limited, Pradine Limited, Bastion Holdings Limited and the trustees of a discretionary trust are interested in the Centhold Shares by virtue of (in the case of Capricorn Trustees Limited) its voting power in Centhold, (in the case of Central Holdings International Limited) its position as a beneficiary of a trust and its voting control of Centhold, (in the case of the other aforementioned bodies corporate) their parent/subsidiary relationship and (in the case of the aforementioned trustees) of their voting power in those other aforementioned bodies corporate. (5) Held by Greenwood Nominees Limited as nominee for the trustee of the Anglo American employee share schemes.

Anglo American plc Annual Report 1999 81 Auditors’ report to the members of Anglo American plc

We have audited the financial statements on pages 83 to 124 which have been prepared under the accounting policies set out on pages 88 to 91. We have also audited the information specified by the London Stock Exchange to be audited in respect of directors’ remuneration, share options and pension entitlements and which is set out on pages 63 to 67 in the remuneration report.

Respective responsibilities of directors and auditors The company’s directors are responsible for preparing the Annual Report, including as described on page 60, the financial statements in accordance with applicable United Kingdom law and accounting standards. Our responsibilities,as independent auditors, are established by statute, the Auditing Practices Board, the Listing Rules of the London Stock Exchange, and by our profession’s ethical guidance.

We rep o r t to you our opinion as to whether the financial statements give a true and fair view and are prop e r l y prep a r ed in accordance with the Companies Act 1985. We also report to you if, in our opinion, the directors’ report is not consistent with the financial statements, if the company has not kept proper accounting records,if we have not received all the information and explanations we require for our audit,or if information specified by law or the Listing Rules regarding directors’ remuneration and transactions with the company and other members of the group is not disclosed.

We review whether the corporate governance statement on page 69 reflects the company’s compliance with the seven provisions of the Combined Code specified for our review by the Stock Exchange, and we report if it does not. We are not required to consider whether the board’s statement on internal control covers all risks and controls or forms an opinion on the effectiveness of the group’s corporate governance procedures or its risk and control procedures.

We read the other information contained in the Annual Report, including the corporate governance statement,and consider whether it is consistent with the audited financial statements.We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.

Basis of opinion We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board.An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion In our opinion the financial statements give a true and fair view of the state of the affairs of the company and the group as at 31 December 1999 and of the profit of the group for the year then ended and have been properly prepared in accordance with the Companies Act 1985.

Deloitte & Touche Chartered Accountants and Registered Auditors London, 21 March 2000

82 Anglo American plc Annual Report 1999 Consolidated profit and loss account for the year ended 31 December 1999

pro forma (unaudited) US$ million Note 1999 1998

Group and share of turnover of joint ventures and associates 3 19,245 19,381 Less: Joint ventures’ turnover 3 (1,720) (1,219) Associates’ turnover 3 (5,947) (6,543)

Group turnover – subsidiaries 3 11,578 11,619 Operating costs (10,273) (10,422)

Group operating profit – subsidiaries 3 1,305 1,197 Share of operating profit of joint ventures 3 245 101 Share of operating profit of associates 3 592 581

Total operating profit before exceptional items 3 2,142 1,879 Profit on disposal of fixed assets 8 489 165 Costs of fundamental reorganisation by AECI Limited 8 (79) –

Profit on ordinary activities before interest 4 2,552 2,044 Investment income 9 869 1,045 Interest payable 10 (604) (713)

Profit on ordinary activities before taxation 2,817 2,376 Tax on profit on ordinary activities 11 (481) (570)

Profit on ordinary activities after taxation 2,336 1,806 Equity minority interests 4 (784) (554)

Profit for the financial year 4 1,552 1,252 Equity dividends to shareholders – paid and proposed 12 (585) (483)

Retained profit for the financial year 967 769

Headline profit for the financial year 13 1,308 1,159

Basic earnings per share (US$): Profit for the financial year 13 4.03 3.32 Headline profit for the financial year 13 3.40 3.07 Diluted earnings per share (US$): Profit for the financial year 13 3.98 3.29 Headline profit for the financial year 13 3.35 3.05 Dividend per share (US cents): 150 124 Basic number of shares outstanding (million) 13 385 377 Diluted number of shares outstanding (million) 13 390 380

Turnover and operating profit in respect of acquisitions and disposals in 1999 were not material.

Anglo American plc Annual Report 1999 83 Consolidated balance sheet as at 31 December 1999

pro forma (unaudited) US$ million Note 1999 1998

Fixed assets Intangible assets 14 1,585 1,377 Tangible assets 15 9,512 8,576 Investments in joint ventures: 16 1,564 1,409 Share of gross assets 3,394 3,287 Share of gross liabilities (1,830) (1,878) Investments in associates 16 5,338 5,632 Other financial assets 16 1,489 1,395

19,488 18,389

Current assets Stocks 18 1,431 1,507 Debtors 19 2,060 1,863 Current asset investments 20 2,315 3,206 Cash at bank and in hand 1,303 1,088

7,109 7,664 Short term borrowings 22 (999) (1,239) Other current liabilities 21 (2,611) (2,426)

Net current assets 3,499 3,999

Total assets less current liabilities 22,987 22,388 Long term liabilities 22 (2,538) (3,254) Provisions for liabilities and charges 24 (1,324) (1,414) Equity minority interests (2,951) (2,704)

Net assets 16,174 15,016

Capital and reserves

Called up share capital 25 204 195 Share premium account 26 1,815 958 Merger reserve 26 2,424 2,424 Other reserves 26 1,047 1,059 Profit and loss account 26 10,684 10,380

Total shareholders’ funds (all equity) 16,174 15,016

The financial statements were approved by the board of directors on 21 March 2000.

J Ogilvie Thompson A W Lea Chairman and Chief Executive Finance Director

84 Anglo American plc Annual Report 1999 Consolidated cash flow statement for the year ended 31 December 1999

pro forma (unaudited) US$ million Note 1999 1998

Net cash inflow from operating activities 27 1,850 1,859 Expenditure relating to fundamental reorganisation of AECI Limited (46) – Dividends from joint ventures and associates 209 341 Returns on investments and servicing of finance Interest received and other financial income 388 321 Interest paid (402) (493) Dividends received from fixed asset investments 50 84 Dividends paid to minority shareholders (380) (360)

Net cash outflow from returns on investments and servicing of finance (344) (448) Taxation UK corporation tax (10) (5) Overseas tax (263) (390)

Taxes paid (273) (395) Capital expenditure and financial investment Payments for fixed assets (1,251) (1,441) Proceeds from the sale of fixed assets 84 161 Payments for other financial assets(1) (45) (146) Proceeds from the sale of other financial assets(1) 534 445

Net cash outflow for capital expenditure and financial investment (678) (981) Acquisitions and disposals Acquisition of subsidiaries 29 (889) (477) Disposal of subsidiaries 30 103 266 Investment in associates (429) (240) Sale of interests in associates 592 266

Net cash outflow from acquisitions and disposals (623) (185) Equity dividends paid to Anglo American shareholders (276) (517)

Cash outflow before use of liquid resources and financing (181) (326) Management of liquid resources (2) 912 (518) Financing 27 (403) 934

Increase in cash in the year 328 90

(1) Disposal and acquisition of other financial assets included in fixed assets. (2) Cash flows in respect of current asset investments included in current assets.

Anglo American plc Annual Report 1999 85 Consolidated statement of total recognised gains and losses for the year ended 31 December 1999

pro forma (unaudited) US$ million Note 1999 1998

Profit for the financial year 4 1,552 1,252 Joint ventures 135 48 Associates 565 492 Currency translation differences on foreign currency net investments (549) (1,257)

Total recognised gains/(losses) for the financial year 1,003 (5)

86 Anglo American plc Annual Report 1999 Notes to financial statements

1. Basis of preparation Accounting for the combination of Anglo American Corporation of South Africa Limited (AAC) and Minorco Société Anonyme (Minorco) Pr ior to 24 May 1999 Anglo Am e r ican plc (the Company) was a dorma n t co m p a n y. On 24 May 1999 the Company acquired all of the sh a r es of AA C in consideration for Ordinary Shares on a one for one basis. Al s o , on 24 May 1999, the Company acquired the shares in Minorco, Anglo American Investment Trust Limited (Anamint) and Anglo American Gold Investment Company Limited (Amgold) not owned by AAC, the consideration being shares and, in the case of Minorco, a cash alternative.

The AA C transaction was accounted for as a group rec o n s t r uction under merger accounting prin c i p l e s .The other transactions were also accounted for as group reconstructions under merger accounting principles, except where shares wer e acquired fr om public shareh o l d e r s . In these cases acquisition accounting was applied and goodwill of US$759 million arose on these transactions.

Under merger accounting, the results and cash flows of the relevant entities are combined from the beginning of the financial period in which the merger occurred and their assets and liabilities combined at the amounts at which they were previously recorded,with adjustment for alignment of accounting policies.

Prior year comparatives So as to be comparable with the financial statements for the year ended 31 December 1999,the comparatives have been presented as if the companies which made up the Group on 24 May 1999 had been part of the Group throughout the year ended 31 December 1998.This is consistent with the basis of preparation of the comparatives as disclosed in the 1999 Interim Report and with the combined financial information as disclosed in Part III of the Prospectus issued on 22 April 1999.

Adoption of new accounting standards During the year the Group adopted FRS 12 “Provisions, contingent liabilities and contingent assets”,FRS 13 “Derivatives and other financial instruments:Disclosures”, FRS 14 “Earnings per share” and FRS 15 “Tangible fixed assets”.

Fol l o wing the implementation of FRS 12, the accounting policy for res t o r at i o n , reh ab i l i t a tion and envi r onmental costs has been a m e n d e d .R e s t o r at i o n , reh ab i l i t a tion and envi r onmental costs arising from the installation of plant and other site prep a r at i o n wor k , discounted to its net present val u e , ar e provided for and capitalised at the start of each proj e c t , as soon as the obli g at i o n to incur such costs arises. These costs are charged against profits over the life of the operation, through the depreciation of the asset and the unwinding of the discount on the provision. Under the previous accounting policy, the provision for such costs was built up over the productive life of the operation, and charged against profits on an annual basis.

The effect of FRS 12 on shareholders’ funds in the pro forma comparative data as at 31 December 1998 was a net credit of US$11 million, mainly arising from increases of US$38 million in tangible fixed assets and US$19 million in provisions, with a US$7 million increase in minority interests.The impact on the profit and loss account for 1998 (pro forma) and 1999 was not material.

The implementation of FRS 13 has resulted in the disclosure of the Group’s derivatives and other financial instruments in the financial statements as required by this accounting standard.

The implementation of FRS 14 has resulted in the reporting of earnings per share and diluted earnings per share figures in the financial statements, calculated in accordance with this new accounting standard.

The implementation of FRS 15 has not had a material impact on the financial statements.

Anglo American plc Annual Report 1999 87 Notes to financial statements continued

2. Accounting policies Accounting convention The financial statements have been prepared according to the historical cost convention, and in accordance with accounting standards applicable in the United Kingdom.

Other than the implementation of the new accounting standards listed in note 1, the accounting policies applied in prep a ri n g the financial statements are consistent with those adopted and disclosed in the Accountants’ Report on the Company included in Part IV of the Prospectus.

Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and all its subsidiarie s .

Acquisitions and goodwill arising thereon Where an investment in a subsidiary, joint venture or an associate is made, any difference between the purchase price and the fair value of the attributable net assets is recognised as goodwill.Goodwill is amortised over its estimated useful life up to a maximum of 20 years. Goodwill in respect of subsidiaries is included within intangible fixed assets. Goodwill relating to joint ventures and associates is included within the carrying value of the joint venture or associate. The unamortised balance is reviewed on a regular basis and, if an impairment in value has occurred, it is written off in the period in which the circumstances are identified.

Negative goodwill is created where the attributed fair value of the net tangible assets acquired exceeds the fair value of the consideration paid, and is recognised in the periods it is expected to benefit.

Joint ventures A joint venture is an entity in which the Group holds a long term interest and which is jointly controlled by the Group and one or more other venturers under a contractual arrangement.The Group’s share of the results of joint ventures is accounted for using the gross equity method of accounting.

Associates The equity method of accounting is used for investments over which the Group exercises significant influence and normally owns between 20 per cent and 50 per cent of the voting equity.

Results of associates are equity accounted from their most recent audited financial statements or unaudited interim statements. Any losses of associates are accounted for in the consolidated financial statements until the investment in, and loans to, such associates are written down to a nominal amount.Thereafter losses are accounted for only insofar as the Group is committed to providing financial support to such associates.

The carrying values of investments in associates represent the cost of each investment including unamortised goodwill, the share of post-acquisition retained earnings and any other movements in reserves.The carrying value of associates is reviewed on a regular basis and if an impairment in value has occurred, it is written off in the period in which those circumstances are identified.

When an investment is held in an associate which in turn holds an investment in the Group as its associate, the carrying value is adjusted for the impact of the progressive additions to equity accounted income arising from the effect of the cross-holding.

88 Anglo American plc Annual Report 1999 Joint arrangements The Group has contractual arrangements with other participants to engage in joint activities that do not create an entity carrying on a trade of its own.The Group includes its share of the assets, liabilities and cash flows in such joint arrangements,measured in accordance with the terms of each arrangement, which is usually pro-rata to the Group’s interest in the joint arrangement.

Other financial assets Investments, other than investments in joint ventures and associates, are included at cost less provision for any impairment in value.

Fixed assets Mining assets are included at cost less accumulated amortisation. Buildings, plant and equipment are reflected at cost less accumulated depreciation.

Interest on borrowings relating to the financing of major capital projects under construction is charged during the construction phase as part of the cost of the project.Where funds have been borrowed specifically to finance a project, the amount capitalised represents the actual borrowing costs incurred.Where the funds used to finance a project form part of the Group’s general borrowings, the amount capitalised is calculated using a weighted average of rates applicable to general borrowings of the Group during the period.

Mining assets include the cost of acquiring and developing mining properties,mineral rights and investments in and loans to companies holding mineral rights. Mining properties are amortised using the unit-of-production method based on proven and probable reserves. Amortisation is charged on new mining ventures from the date when the mining property is capable of commercial production.When there is little likelihood of a mineral right being exploited, or the value of the exploitable mineral right has diminished below cost, a write down is charged against profits. Amounts written off mineral rights are included in exploration expenditure.

Land and properties in the course of construction are not depreciated. Buildings, plant and equipment are depreciated at varying rates, on the straight-line basis over their estimated useful lives. Estimated useful lives vary up to a maximum of 15 years for items of plant and equipment and up to a maximum of 50 years for bui l d i n g s .

If the recoverable amount of any of the above assets is less than the carrying value, a provision is made for the impairment in value.

Research and exploration expenditure Research and exploration expenditure is written off in the year in which it is incurred.When a decision is taken that a mining property is capable of commercial production, all further pre-production expenditure is capitalised. Cap i t a l i s at i o n of pre- p r oduction expenditure ceases when the mining prop e r ty is capa ble of commercial prod u c t i o n .

Stocks Stocks and work-in-progress are valued at the lower of cost and net realisable value. The production cost of stocks includes an appropriate proportion of depreciation and overheads. Cost is determined on the following bases: • raw materials and consumables are valued at cost on a first-in,first-out (FIFO) basis; • metal, coal and coke stocks are valued at average cost; • finished products are valued at raw material cost, labour cost, and a proportion of manufacturing overhead expenses.

Anglo American plc Annual Report 1999 89 Notes to financial statements continued

Current asset investments Cu r rent asset investments consist mainly of bank term deposits, fix ed and floating rate debt securities and equity securit i e s . Debt securities that are intended to be held to maturity are recorded on the amortised cost basis. Debt securities that are not intended to be held to maturity are recorded at the lower of cost and market value. Equity securities are recorded at the lower of cost and market value.

Pensions and post-retirement benefits The expected costs of providing post-retirement benefits under defined benefit arrangements are charged against profits to spread the expected costs over the service lives of employees entitled to those benefits. Costs are assessed in accordance with the advice of qualified actuaries using the projected unit credit method. Experience adjustments and prior service costs resulting from plan amendments are amortised over the expected average remaining service lives of relevant current employees. The difference between pension cost and funding is treated as a provision or prepayment.

Restoration, rehabilitation and environmental costs An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing production of a mine or quarry. Costs arising from the installation of plant and other site preparation work, discounted to its net present value, are provided for and capitalised at the start of each project, as soon as the obligation to incur such costs arises.These costs are charged against profits over the life of the operation, through the depreciation of the asset and the unwinding of the discount on the provision. Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for and charged against profits as extraction progresses.

Revenue recognition Turnover represents the net invoice value of goods and services provided to third parties after deducting sales and value added taxes. Dividends are recognised from the last day of registration in respect of the dividend declared.

Deferred taxation Deferred taxation is provided on all timing differences, arising from the different treatment of items for accounting and taxation purposes that are expected to reverse in the future, to the extent that a liability or asset is expected to crystallise in the foreseeable future. The deferred taxation provision is calculated at the rates at which it is expected that tax will arise.

Leases Rental costs under operating leases are charged to profit and loss in equal annual amounts over the lease term.

Foreign currency translation The profit and loss account of foreign subsidiaries, joint ventures and associates as well as the cash flow statements of foreign subsidiaries are translated at weighted average rates of exchange, other than material exceptional items which are translated at the rates on the dates of the transactions. Assets and liabilities are translated at exchange rates prevailing at the balance sheet date.

Exchange differences on the translation of the net assets of subsidiaries less offsetting exchange differences on foreign currency loans financing these assets, are dealt with as a movement of reserves and in the consolidated statement of total recognised gains and losses.

All other exchange gains or losses on settlement of foreign currency transactions translated at the rate prevailing at the date of the transactions, or the translation of monetary assets and liabilities at year end exchange rates, are recorded in the profit and loss account.

90 Anglo American plc Annual Report 1999 Hedging transactions In order to hedge its exposure to foreign exchange, interest rate and commodity price risk,the Group enters into forward, option and swap contracts. Gains and losses on these contracts are recognised in the period to which the gains and losses of the underlying transactions relate. Net income or expense associated with interest rate swap agreements is recognised on the accrual basis over the life of the swap agreements as a component of interest.Where commodity option contracts hedge anticipated future production or purchases, the Group amortises the option premiums paid over the life of the option and recognises any realised gains and losses on exercise in the period in which the hedged production is sold or commodity purchases are made.

Government grants Grants in connection with fixed assets are released to trading profits over the expected useful life of the particular asset to which the grant relates. Grants relating to revenue expenditure are credited to revenue as they become receivable.

Reporting currency As permitted by UK company law, the Group reports in US dollars, the currency in which most of its business is conducted.

Anglo American plc Annual Report 1999 91 Notes to financial statements continued

3. Segmental information

Turnover Operating profit Net operating assets(1) pro forma pro forma pro forma (unaudited) (unaudited) (unaudited) US$ million 1999 1998 1999 1998 1999 1998

By business segment Group subsidiaries Gold 2,102 2,486 404 428 2,990 2,634 Platinum 1,428 1,250 480 331 1,519 1,159 Diamonds – – (7) – 131 143 Coal 731 874 121 176 708 773 Base metals 740 657 49 50 1,606 1,292 Industrial minerals 988 1,072 116 95 1,184 1,243 Ferrous metals 839 1,174 40 121 470 500 Forest products 1,307 1,061 149 141 1,348 934 Industries 3,443 3,045 222 120 2,137 2,157 Financial services – – 19 (15) – (5) Exploration – – (138) (137) – – Corporate activities – – (150) (113) 441 370

11,578 11,619 1,305 1,197 12,534 11,200

Joint ventures Gold 108 7 44 1 Coal 43 – 5 – Base metals 307 – 95 – Industrial minerals 20 – 2 – Ferrous metals 149 132 (12) (12) Forest products 1,093 1,080 111 112

1,720 1,219 245 101

Associates Gold 25 157 4 60 Diamonds 1,809 1,543 252 148 Coal 13 38 (12) (10) Base metals 116 103 30 36 Industrial minerals – 1 – – Ferrous metals 469 359 47 55 Forest products 64 141 12 (21) Industries 3,451 4,201 136 198 Financial services – – 119 113 Corporate activities – – 4 2

5,947 6,543 592 581

19,245 19,381 2,142 1,879

(1) Net operating assets consist of tangible and intangible assets (excluding investments in joint ventures and associates), stocks and debtors less non-interest bearing current liabilities. See note 36 for the reconciliation of net operating assets to net assets.

92 Anglo American plc Annual Report 1999 3. Segmental information continued

Turnover Operating profit Net operating assets pro forma pro forma pro forma (unaudited) (unaudited) (unaudited) US$ million 1999 1998 1999 1998 1999 1998

By geographical segment (by origin) Group subsidiaries South Africa 8,258 8,710 1,173 1,077 8,039 7,984 Rest of Africa 259 197 (30) 17 150 65 Europe 1,442 1,223 50 18 1,864 1,569 North America 708 725 7 63 502 443 South America 614 694 114 35 1,431 1,097 Australia and Asia 297 70 (9) (13) 548 42 Joint ventures South Africa 192 132 (7) (6) Rest of Africa 64 – 35 – Europe 1,113 1,080 113 105 South America 351 7 104 2 Associates South Africa 3,108 4,072 388 432 Rest of Africa 1,075 893 163 102 Europe 123 170 13 15 North America 797 1,103 9 33 South America 88 69 2 (6) Australia and Asia 756 236 17 5

19,245 19,381 2,142 1,879 12,534 11,200

By geographical segment (by destination) Group subsidiaries South Africa(1) 5,522 6,372 Rest of Africa 462 410 Europe 2,632 2,016 North America 1,441 1,612 South America 497 387 Australia and Asia 1,024 822 Joint ventures South Africa 87 37 Rest of Africa 86 19 Europe 1,176 1,047 North America 111 46 South America 75 10 Australia and Asia 185 60 Associates South Africa 1,906 2,517 Rest of Africa 52 8 Europe 562 606 North America 1,871 2,372 South America 51 9 Australia and Asia 1,505 1,031

19,245 19,381

(1) Gold sales in South Africa are made to the Rand Refinery and the final destination is not known.

Anglo American plc Annual Report 1999 93 Notes to financial statements continued

4. Profit for the financial year The table below analyses the contribution of each division to the Group’s headline profit.

Profit before Net Equity Profit for the interest investment minority financial year US$ million 1999 income Tax interests 1999

By business segment Gold 469 38 (90) (207) 210 Platinum 495 20 (97) (218) 200 Diamonds 252 – (77) (13) 162 Coal 122 3 (46) – 79 Base metals 175 (64) (6) (8) 97 Industrial minerals 131 7 (15) (7) 116 Ferrous metals 80 (14) 3 (2) 67 Forest products 275 (47) (21) (8) 199 Industries 367 (39) (78) (168) 82 Financial services 131 21 (35) (5) 112 De Beers investments(1) – 296 (61) (84) 151 Exploration (see note 6) (138) 2 – 24 (112) Corporate activities (121) 42 24 – (55)

Headline profit for the year (see note 13) 2,238 265 (499) (696) 1,308 Headline profit adjustment (see note 13) 314 – 18 (88) 244

Profit for the financial year 2,552 265 (481) (784) 1,552

Profit before Net Equity Profit for the interest investment minority financial year Pro forma (unaudited) 1998 income Tax interests 1998

By business segment Gold 518 76 (132) (201) 261 Platinum 339 41 (87) (160) 133 Diamonds 148 17 (62) (16) 87 Coal 173 5 (76) – 102 Base metals 86 (9) (5) (10) 62 Industrial minerals 109 11 (9) (5) 106 Ferrous metals 164 (20) (23) (21) 100 Forest products 235 (73) (37) – 125 Industries 325 (61) (63) (103) 98 Financial services 98 23 (39) (3) 79 De Beers investments(1) – 289 (71) (70) 148 Exploration (see note 6) (137) –– 21 (116) Corporate activities (90) 33 29 2 (26)

Headline profit for the financial year (see note 13) 1,968 332 (575) (566) 1,159 Headline profit adjustment (see note 13) 76 – 5 12 93

Profit for the financial year 2,044 332 (570) (554) 1,252

(1) Represents De Beers’ share of Anglo American plc earnings for the 12 months to 31 December.

94 Anglo American plc Annual Report 1999 5. Group operating profit pro forma (unaudited) US$ million 1999 1998

Group turnover 11,578 11,619 Cost of sales (8,422) (8,382)

Gross profit 3,156 3,237 Selling and distribution costs (929) (852) Administrative expenses (817) (1,088) Other operating income 33 37 Exploration expenditure (see note 6) (138) (137)

Group operating profit 1,305 1,197

pro forma (unaudited) US$ million 1999 1998

Group operating profit is after charging: Depreciation of tangible fixed assets: Own assets 640 628 Goodwill amortisation 96 89 Rentals under operating leases: Hire of plant and machinery 50 77 Other operating leases 5 4 Research and development expenditure 34 45 Foreign currency loss 6 39 Auditors’ remuneration: Audit Group 11 10 Other services United Kingdom 3 1 Overseas 9 9

The fees paid to auditors in respect of forming the Group were US$10 million.These fees were capitalised as part of the overall costs of forming the Group.

Anglo American plc Annual Report 1999 95 Notes to financial statements continued

6. Exploration expenditure pro forma (unaudited) US$ million 1999 1998

Business segment Gold 48 62 Base metals 85 74 Other 5 1

138 137

7. Employee numbers and costs The average number of employees, excluding joint ventures’ and associates’employees was:

pro forma (unaudited) Thousands 1999 1998

Gold 86 102 Platinum 43 40 Coal 9 11 Base metals 4 6 Industrial minerals 5 5 Ferrous metals 9 16 Forest products 16 19 Industries 55 64 Corporate activities 2 2

229 265

The principal locations of employment were:

pro forma (unaudited) Thousands 1999 1998

South Africa 200 233 Rest of Africa 12 14 Europe 6 6 North America 4 5 South America 5 6 Australia and Asia 2 1

229 265

96 Anglo American plc Annual Report 1999 7. Employee numbers and costs continued Payroll costs in respect of these employees were: pro forma (unaudited) US$ million 1999 1998

Wages and salaries 2,730 2,698 Social security costs 102 67 Post retirement healthcare costs 16 35 Defined contribution pension plan costs 107 116 Defined benefit pension plan costs 44 52

2,999 2,968

Details of directors’emoluments and share options form part of these financial statements and are set out in the Remuneration Report on pages 61 to 68.

8. Exceptional items pro forma (unaudited) US$ million 1999 1998

Disposal of interest in Driefontein Consolidated Limited 89 – Partial disposal of interest in Gold Fields Limited 53 – Partial disposal of interest in South African Breweries plc 84 – Disposal of AECI’s interest in Polifin Limited 181 – Disposal of Terra Industries Incorporated’s distribution operations (33) – Disposal of Copebrás S.A. carbon black business – 124 Disposal of interest in Lonrho plc – (96) Disposal of other non-core assets 36 109 Share of associates’ exceptional items 79 28

Profit on disposal of fixed assets 489 165 Cost of fundamental reorganisation by AECI Limited (79) –

Exceptional items 410 165 Taxation 18 5 Minority interests (98) (1)

330 169

9. Investment income pro forma (unaudited) US$ million 1999 1998

Interest and other financial income 345 351 Share of investment income of joint ventures 30 19 Share of investment income of associates 440 574 Dividend income from other financial assets 54 101

869 1,045

Anglo American plc Annual Report 1999 97 Notes to financial statements continued

10. Interest payable pro forma (unaudited) US$ million 1999 1998

Bank loans and overdrafts 310 335 Other loans 95 160 Unwinding of discount on rehabilitation provisions 4 4 Share of interest payable of joint ventures 103 80 Share of interest payable of associates 182 252

694 831 Capitalised (90) (118)

604 713

11. Tax on profit on ordinary activities pro forma (unaudited) US$ million 1999 1998

United Kingdom corporation tax at 30.25% (1998: 31.5%) 10 16 South Africa corporation tax at 30% (1998: 35%) 237 285 Other overseas taxation 62 62 Share of joint ventures’ taxation 18 21 Share of associates’ taxation 186 221 Deferred taxation (14) (30) Tax on exceptional items (18) (5)

481 570

The effective tax rate for the year is low principally due to tax free capital gains on the disposal of certain assets and accelerated tax deductions over book depreciation for capital expenditure on assets for which no deferred tax provision is provided.

12. Dividends

pro forma (unaudited) US$ million 1999 1998

Interim paid – 42 US cents per ordinary share 164 161 Final proposed – 108 US cents per ordinary share 421 322

585 483

Anglo American paid its first interim dividend of 42 US cents per ordinary share in respect of the period to 30 June 1999 on 22 October 1999.The pro forma comparatives of 41 US cents and 83 US cents are estimates on the basis that Anglo American plc had been in existence since 1 January 1998.

98 Anglo American plc Annual Report 1999 13. Earnings per share pro forma (unaudited) 1999 1998

Weighted average number of ordinary shares in issue (million) 385 377 Ordinary shares issuable under employee share schemes (million) 5 3

Adjusted weighted average number of ordinary shares in issue (million) 390 380

Profit for the financial year: Basic earnings per share (US$) 4.03 3.32

Diluted earnings per share (US$) 3.98 3.29

Headline profit for the financial year: Basic earnings per share (US$) 3.40 3.07

Diluted earnings per share (US$) 3.35 3.05

Basic earnings per share is calculated by dividing the profit for the financial year attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year. The average number of shares in issue excludes the shares held by the employee benefit trust.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all dilutive potential ordinary shares. The only category of dilutive potential ordinary shares are share options granted where the ex ercise price is less than the aver a ge price of the Company’ s ordinary shares during the year.

Basic and dilutive earnings per share are also shown based on headline profit, which the directors believe to be a useful additional measure of the Group’s past performance. Headline earnings per share is calculated in accordance with the definition in the Institute of Investment Management and Research (“IIMR”) Statement of Investment Practice No. 1,“The Definition of IIMR Headline Earnings”.

Basic earnings Basic Earnings per share earnings pro forma pro forma Earnings per share (unaudited) (unaudited) US$ million 1999 1999 1998 1998

Profit for the financial year 1,552 4.03 1,252 3.32 Exceptional items (410) (1.06) (165) (0.44) Amortisation of goodwill 96 0.25 89 0.24 Related tax and minority interests 70 0.18 (17) (0.05)

Headline profit for the financial year 1,308 3.40 1,159 3.07

Anglo American plc Annual Report 1999 99 Notes to financial statements continued

14. Intangible fixed assets

US$ million Goodwill

Cost At 1 January 1999 (pro forma) 1,470 Subsidiaries acquired 363 Currency movements (54)

At 31 December 1999 1,779

Accumulated amortisation At 1 January 1999 (pro forma) (93) Charge for the year (96) Currency movements (5)

At 31 December 1999 (194)

Net book value At 31 December 1999 1,585

At 31 December 1998 (pro forma) 1,377

100 Anglo American plc Annual Report 1999 15. Tangible fixed assets Mining properties Land and Plant and US$ million and leases buildings equipment Other Total

Cost At 1 January 1999 (pro forma) 6,401 1,039 5,034 1,106 13,580 Additions 551 24 363 313 1,251 Subsidiaries acquired 862 83 69 24 1,038 Disposal of subsidiaries (38) (46) (95) (45) (224) Disposals (24) (37) (170) (3) (234) Reclassifications 3 (18) 143 (128) – Currency movements (399) (51) (221) (34) (705)

At 31 December 1999 7,356 994 5,123 1,233 14,706

Accumulated depreciation At 1 January 1999 (pro forma) (2,047) (244) (2,584) (129) (5,004) Charge for the year (308) (20) (306) (6) (640) Disposal of subsidiaries 24 8 49 – 81 Disposals 12 11 128 – 151 Impairments (26) (8) 3 – (31) Reclassifications 26 2 (52) 24 – Currency movements 117 13 113 6 249

At 31 December 1999 (2,202) (238) (2,649) (105) (5,194)

Net book value At 31 December 1999 5,154 756 2,474 1,128 9,512

At 31 December 1998 (pro forma) 4,354 795 2,450 977 8,576

The net book value of land and buildings comprises: pro forma (unaudited) US$ million 1999 1998

Freehold 736 765 Leasehold – long 19 22 Leasehold – short 1 8

756 795

Included in the cost above is US$90 million of interest (1998: US$118 million) which has been capitalised during the year.

Included in tangible fix ed assets are prop e r ties in the course of construction and land and buildings amounting to US$841 million (1 9 9 8 : US$549 million) which are not depreciated.

Other tangible fixed assets include properties in the course of construction and afforestation.

The discount rate used in determining the impairments varies between 7% and 15%.

Anglo American plc Annual Report 1999 101 Notes to financial statements continued

16. Fixed asset investments Interest in Other financial assets joint ventures Interest in associates Own US$ million Equity Loans Equity Loans Equity shares Total

Cost At 1 January 1999 (pro forma) 1,409 392 5,444 136 695 633 8,709 Group’s share of profits less losses 135 – 406 ––– 541 Amortisation of goodwill –– (15) ––– (15) Currency movements – (49) (174) (17) (15) – (255) Additions –– 287 – 28 866 1,181 Disposals –– (308) – (199) (633) (1,140) Reclassification 20 (150) (298) 154 274 –– Net asset value movements –– (183) ––– (183) Advances/(repayments) – 127 – (116) – (11) –

At 31 December 1999 1,564 320 5,159 157 783 855 8,838

Provisions for impairment At 1 January 1999 (pro forma) – (21) (183) (11) (58) – (273) Charge for the year ––––– (126) (126) Reclassifications – (10) 73 (25) (86) – (48)

At 31 December 1999 – (31) (110) (36) (144) (126) (447)

Net book value At 31 December 1999 1,564 289 5,049 121 639 729 8,391

At 31 December 1998 (pro forma) 1,409 371 5,261 125 637 633 8,436

Interest in associates at 31 December 1999 includes US$200 million of goodwill (1998: US$57 million).

17. Joint ventures and associates Joint ventures Associates Total Joint pro forma pro forma pro forma ventures Associates Total (unaudited) (unaudited) (unaudited) US$ million 1999 1999 1999 1998 1998 1998

Turnover 1,720 5,947 7,667 1,219 6,543 7,762

Fixed assets 2,537 3,780 6,317 2,566 4,198 6,764 Current assets 857 10,152 11,009 721 8,389 9,110 Liabilities due within one year (475) (5,768) (6,243) (508) (5,752) (6,260) Liabilities due after more than one year (1,355) (3,026) (4,381) (1,370) (1,331) (2,701)

102 Anglo American plc Annual Report 1999 18. Stocks pro forma (unaudited) US$ million 1999 1998

Raw materials and consumables 551 625 Work-in-progress 251 223 Finished products 629 659

1,431 1,507

The replacement cost of raw materials held by the Group as at 31 December 1999 was US$11 million greater than the amount stated in the financial statements. There were no significant differences between the replacement costs and the value shown for other stock categories.

19. Debtors Under one year Under After pro forma one year one year (unaudited) US$ million 1999 1999 1999 1998

Trade debtors 1,429 2 1,431 1,322 Amounts owed by joint ventures 67 – 67 – Other debtors 345 121 466 457 Prepayments and accrued income 88 8 96 84

1,929 131 2,060 1,863

Anglo American plc Annual Report 1999 103 Notes to financial statements continued

20. Current asset investments Group Market carrying Group value value Market carrying pro forma pro forma value value (unaudited) (unaudited) US$ million 1999 1999 1998 1998

Bank term deposits 693 693 1,231 1,231 Quoted fixed and floating rate debt securities 1,189 1,180 1,118 1,111 Unquoted fixed and floating rate debt securities 18 18 6 6 Quoted equity securities 34 32 34 33 Cash equivalents 392 392 825 825

2,326 2,315 3,214 3,206

21. Other current liabilities pro forma (unaudited) US$ million 1999 1998

Trade creditors 981 898 Taxation and social security 247 207 Other creditors 735 758 Accruals and deferred income 227 241 Proposed dividend (note 12) 421 322

2,611 2,426

104 Anglo American plc Annual Report 1999 22. Long term liabilities pro forma (unaudited) US$ million 1999 1998

Bank loans 2,070 2,728 Other loans 386 503 Amounts owed to associates 16 – Other creditors 66 23

2,538 3,254

Group financial liabilities (consisting of short term borrowings and long term liabilities – see note 23) have the following maturity profile: Within 1 year or on Between Between After US$ million demand 1-2 years 2-5 years 5 years Total

At 31 December 1999 Bank loans and overdrafts 921 363 1,260 833 3,377 Other financial liabilities 78 26 33 23 160

Total at 31 December 1999 999 389 1,293 856 3,537

At 31 December 1998 (pro forma) Bank loans and overdrafts 1,154 543 1,595 1,093 4,385 Other financial liabilities 85 2 14 7 108

Total at 31 December 1998 (pro forma) 1,239 545 1,609 1,100 4,493

At 31 December 1999 loans of US$276 million (1998:US$20 million) and US$574 million (1998: US$247 million) due within and after more than one year respectively were secured on the assets of the Group.

Loans repayable after more than five years bear interest at rates which are either fixed or fluctuate in line with market rates. At 31 December 1999, the rate of interest charged on the majority of these loans ranged from 5% to 15%.

Loans repayable after more than five years included in the above table as at 31 December 1999 include amounts of US$290 million payable by instalments.The aggregate amount of loans, any instalment of which falls due after more than five years, is US$487 million.

Anglo American plc Annual Report 1999 105 Notes to financial statements continued

23. Derivatives and other financial instruments Treasury and risk management A discussion of the objectives, policies and strategies of Group Treasury and Risk Management is given in the Financial Review on page 56.

Summary of the use of derivative instruments by the Group The Group utilises derivative and equity instruments to manage its exposure to fluctuations in foreign currency exchange rates, interest rates and commodity prices.These derivative instruments involve credit and market risk.The Group controls credit risk by only entering into derivative contracts with counterparties who are rated A1/P1 or AA or better by external rating agencies or who have received specific internal corporate credit approval.The use of derivative instruments is subject to limits and the positions are regularly monitored and reported on to senior management. Market risk is the possibility that future changes in foreign currency exchange rates, interest rates and commodity prices may make a derivative instrument more or less valuable. Since the Group utilises derivative instruments for risk management, market risk relating to derivative instruments will be offset by changes in the valuation of the underlying assets, liabilities or transactions being hedged.

Foreign exchange risk The Group uses forward exchange contracts, currency swaps and option contracts to limit the effects of movements in exchange rates on foreign currency denominated assets and liabilities.The Group also uses these instruments to hedge future transactions and cash flows. As at 31 December 1999 the net amount of hedging losses on all foreign exchange risk related instruments, and which had been deferred to a period in respect of which an exposure has been hedged, was US$9 million. Any ultimate gain or loss resulting from these contracts will be recognised when the instruments expire.

Interest rate risk The Group uses interest rate swap and option contracts to manage its exposure to interest rate movements on a portion of its existing debt and short term investments.The effect of these derivatives is reflected, as appropriate, in interest expense or interest income. As at 31 December 1999 the amount of net hedging gains on all interest rate risk related instruments, which had been deferred to a period in respect of which an exposure has been hedged, was US$21 million.

Commodity price risk The Group uses forward, spot deferred and option contracts to hedge the price risk of certain commodities that it produces, including gold and copper, and in respect of heating oil purchases. Gains or losses resulting from these activities are recognised concurrently with gains and losses associated with underlying transactions.The majority of the deferred gains or losses are unrealised and the ultimate amount of gains or losses to be realised will depend on commodity price movements until the end of the hedged contracts concerned.

In mid-1999, AngloGold considered that gold was oversold and therefore remained out of the forward market to avoid further selling into an oversold market. In 2000 AngloGold intends to continue to deliver into their hedge, which is likely to mean lower levels of hedge cover going forward. For the year 2000, AngloGold has in place price cover for half of production, with the balance of gold production of over 100 tonnes or 3.5 million ounces fully leveraged to the spot gold price.

The net forward position of AngloGold was 16.3 million ounces priced forward at 31 December 1999, covering periods up to December 2009, with a marked to market value of US$210 million as at 31 December 1999.The value was based on a gold price of US$288.5 per ounce, exchange rates of US$/ZAR6.137 and US$/AU$1.54 and the prevailing market interest rates and volatilities at the time. As at 9 February 2000, the marked to market value of the hedge book was US$47 million, based on a gold price of US$296 per ounce, exchange rates of US$/ZAR6.31 and US$/AU$1.59 and the prevailing market interest rates and volatilities at the time. Other companies undertake gold hedging which is not material to the Group.

106 Anglo American plc Annual Report 1999 Concentration of credit risk The Group is exposed to credit risk in respect of current asset investments, debtors and derivative financial instruments. Given the geographical and business diversity of the Group’s debtors, the concentration of credit risk is limited. In respect of current asset investments and derivative financial instruments, procedures and policies are in place to limit the amount of credit exposure to any one counterparty and in general those counterparties with formal investment grade ratings are used.The maximum credit risk exposure is limited to fair value (see note 23(b) below).

Numerical disclosures The disclosure of financial assets and financial liabilities which follows excludes debtors and other current liabilities, as permitted under FRS 13.

23(a) Interest rate and currency profile The following interest rate and currency profiles of the Group’s financial liabilities and assets are after taking into account interest rate swaps entered into by the Group: Financial liabilities Fixed rate financial liabilities Non-interest Weighted bearing average financial period liabilities Non-interest Weighted for which Weighted Floating rate Fixed rate bearing average the rate average period US$ million financial financial financial interest is fixed until maturity Currency Total liabilities liabilities liabilities rate % Years Years

At 31 December 1999 US$ 1,627 1,374 227 26 5.9 3.1 3.1 SA Rand 1,335 948 368 19 14.0 2.4 0.2 GBP 274 259 1 14 8.0 4.0 13.1 Euro 167 46 112 9 4.9 1.2 5.6 Other currencies 134 100 33 1 5.6 11.1 3.1

Gross financial liabilities 3,537 2,727 741 69 9.8 2.8 4.6

Interest on floating rate liabilities is based on the relevant national inter bank rates. Financial assets Non-interest bearing assets Fixed rate financial assets Other Weighted non-interest Weighted average period Floating rate Fixed rate bearing average for which the US$ million financial financial Equity financial interest rate is fixed Currency Total assets assets investments assets rate % Years

At 31 December 1999 US$ 2,295 1,776 401 118 – 6.6 3.3 SA Rand 1,720 1,097 112 511 – 14.2 3.8 GBP 165 152 12 1 – 6.9 0.1 Euro 54 20 8 26 – 4.4 3.4 Other currencies 144 88 40 15 1 8.3 5.2

Gross financial assets 4,378 3,133 573 671 1 8.2 3.5

Floating rate financial assets consist mainly of cash, bank term deposits and quoted debt securities. Interest on floating rate assets is based on the relevant national inter bank rates. Fixed rate financial assets consist mainly of quoted debt securities. Equity investments are fully liquid and have no maturity period.

Anglo American plc Annual Report 1999 107 Notes to financial statements continued

23(b) Fair value of financial assets and liabilities The estimated fair value of financial instruments at 31 December 1999, where different from carrying value, is shown in the following tables:

Primary financial instruments held or issued to finance the Group’s operations Estimated Carrying US$ million fair value value

Cash at bank, in hand and other liquid investments 1,303 1,303 Current asset investments 2,326 2,315 Long term investments (excluding own shares) 766 760

Gross financial assets at 31 December 1999 4,395 4,378

Short term borrowings 999 999 Long term borrowings 2,535 2,456 Other financial liabilities 82 82

Gross financial liabilities at 31 December 1999 3,616 3,537

Derivatives investments Estimated Estimated fair value fair value Carrying US$ million asset liability value

Derivatives to manage foreign exchange risk 15 32 (8) Derivatives to manage interest rate risk 29 5 3 Derivatives to manage commodity price risk: – Gold 220 – – – Copper –1– Other derivatives 1––

265 38 (5)

The following methods were used to estimate the fair value of the financial assets and liabilities: Long term investments – fair value represents the market value of quoted investments and directors valuation of other investments; Current asset investments – fair value is based on market prices for quoted short term investments. For non-quoted investments fair value is based on market prices of similar investments; Long term debt – fair value is determined by reference to quoted market prices for similar issues, where applicable, otherwise carrying value is used as an approximation to fair value; Derivative instruments – fair value is determined by reference to market prices where available, otherwise pricing or valuation models are applied to current market information to estimate their value.

108 Anglo American plc Annual Report 1999 23(c) Undrawn borrowing commitments The Group had the following undrawn committed borrowing facilities at 31 December 1999:

Expiry date US$ million

In one year or less 1,658 In more than one year but not more than two years 1,456 In more than two years 1,022

4,136

23(d) Hedging Gains and losses on instruments used for hedging are not recognised until the exposure that is being hedged is itself recognised. Unrecognised gains and losses on instruments used for hedging at 31 December 1999 are as follows:

Unrecognised gains and losses on hedges at 31 December 1999

US$ million Total net Expiry date Gains Losses gains

Gains and losses expected to be recognised during the year 2000 155 (11) 144 Gains and losses expected to be recognised during the years 2001 and following 91 (3) 88

246 (14) 232

23(e) Currency profile The main functional currencies of the Group are US dollars, South African rand, sterling and the Euro.The following analysis of net monetary assets and liabilities shows the Group’s currency exposures after the effects of forward contracts and other derivatives used to manage currency exposure.The amounts shown represent the transactional (or non-structural) exposures that give rise to the net currency gains and losses recognised in the profit and loss account. Such exposures comprise the monetary assets and monetary liabilities of the Group that are not denominated in the operating (or ‘functional’) currency of the operating unit involved, other than certain non-US dollar borrowings treated as hedges of net investments in overseas operations.

Net foreign currency monetary assets/(liabilities)

SA Other US$ million US$ Rand GBP Euro currencies Total

Functional currency of Group operations: US$ n/a (26) 107 (25) 45 101 SA Rand (503) n/a (13) (15) (80) (611) GBP 1 – n/a (32) 3 (28) Euro (30) – (118) n/a (1) (149)

Total (532) (26) (24) (72) (33) (687)

Anglo American plc Annual Report 1999 109 Notes to financial statements continued

24. Provisions for liabilities and charges

Post Restoration, retirement Pensions rehabilitation medical and similar Deferred and environ- US$ million funding obligations taxation mental Other Total

As at 1 January 1999 (pro forma) 487 148 126 342 311 1,414 Subsidiaries acquired/(disposed) 2 – 59 13 (68) 6 Charged to profit and loss 16 44 – 22 – 82 Reclassifications 9 (10) (5) 12 (32) (26) Unwinding of discount – – – 4 – 4 Unused amounts reversed during the year – – (14) (10) (36) (60) Currency movements (21) (2) (3) (3) (11) (40) Amounts applied (3) (28) – – (25) (56)

As at 31 December 1999 490 152 163 380 139 1,324

The amounts of deferred taxation provided and unprovided in the accounts are as follows:

pro forma pro forma (unaudited) (unaudited) Provided Provided Not provided Not provided US$ million 1999 1998 1999 1998

Capital allowances in excess of depreciation 187 140 1,101 1,111 Other timing differences (24) (14) (36) (29)

163 126 1,065 1,082

The rehabilitation and environmental provision represents the best estimate of the expenditure required to settle the obligation to rehabilitate environmental disturbances caused by mining operations.These costs are expected to be incurred over a period in excess of 20 years from the balance sheet date.

Other provisions mainly consisted of restructuring and closure provisions held by various entities which are expected to be utilised during 2000.

110 Anglo American plc Annual Report 1999 25. Called up share capital

Number of shares US$ Number of pro forma million shares US$ (unaudited) pro forma 1999 million 1998 (unaudited)

Authorised: 5% cumulative preference shares of £1 each 50,000 – 50,000 – Ordinary shares of 50 US cents each 600,000,000 300 600,000,000 300

300 300

Called up, allotted and fully paid: 5% cumulative preference shares of £1 each 50,000 – 50,000 – Ordinary shares of 50 US cents each 407,661,244 204 389,661,244 195

204 195

The share capital disclosed above for 1998 has been calculated from the transactions that created the Group in May 1999. 18 million shares were issued to the employee benefit trust. Every member who is present in person has one vote on show of hands and on a poll every member who is present in person or by proxy has one vote for every share of which he is a holder. In the event of winding up, the cumulative preference shareholders will be entitled to the repayment of a sum equal to the nominal capital paid up, or credited as paid up, on the cumulative preference shares held by them and any accrued dividend, whether such dividend has been earned or declared or not, calculated up to the date of the winding up. Details of shares issued during the year are disclosed in the directors’ report and in note 39.

Former AAC Executive Share Incentive Scheme Options to acquire ordinary shares of 50 US cents were outstanding under the terms of this scheme as follows: Options Option outstanding Options Options Options price per as at exercised lapsed outstanding Date exercisable share £ May 1999 in period in period 1999

31 December 1999 to 15 December 2007 16.69 853,100 198,500 12,900 641,700 31 December 1999 to 4 December 2008 19.74 5,916,400 469,000 23,400 5,424,000 4 January 2001 to 4 January 2009 16.68 179,000 – 3,000 176,000

6,948,500 667,500 39,300 6,241,700

The above share option prices have been calculated using a weighted average option price based on the shares outstanding at 31 December 1999 and converted to sterling using an exchange rate of £1.00 = ZAR 9.9372.

Executive Share Option Scheme Options to acquire ordinary shares of 50 US cents were outstanding under the terms of this scheme as follows: Option Options Number price per granted during Options outstanding Date exercisable share £ the year lapsed 1999

24 June 2002 to 23 June 2009 27.90 1,729,203 32,750 1,696,453 19 October 2002 to 18 October 2009 31.99 135,250 3,000 132,250

1,828,703

Anglo American plc Annual Report 1999 111 Notes to financial statements continued

25. Called up share capital continued SAYE Share Option Scheme Options to acquire ordinary shares of 50 US cents were outstanding under the terms of this scheme as follows:

Option Options Number price per granted during Options outstanding Date exercisable share £ the year lapsed 1999

01 September 2002 to 28 February 2003 25.51 70,658 1,571 69,087 01 September 2004 to 28 February 2005 25.51 127,685 902 126,783 01 September 2006 to 28 February 2007 25.51 47,874 1,006 46,868

242,738

Employee benefit trust The provision of shares to the Company’s share option schemes is facilitated by an employee benefit trust, which subscribed for new shares and holds them for the beneficiaries.

During the year 18 million new shares were issued to the employee benefit trust at an issue price of £30 per share.The trust was funded by way of a loan of £540 million (US$866 million) from the Company. 667,500 shares have been sold to employees on exercise of their options, and provisional allocations have been made to options already awarded. Since some options already awarded have been rolled over from the past AAC option scheme, the difference between the issue price and the option price is charged to reserves.The shares held by the trust have waived the right to receive dividends.

The market value of the 17.3 million shares held by the trust at 31 December 1999 was US$1,154 million.

26. Combined statement of movement in shareholders’ funds and movement of reserves

Issued Share Profit share premium Merger Other and loss Total US$ million capital account reserve(1) reserves account 1999

Group Balance at 1 January 1999 (pro forma – unaudited) 195 958 2,424 1,059 10,380 15,016 Profit for the financial year ––––1,552 1,552 Dividends paid and proposed ––––(585) (585) Currency translation differences ––––(549) (549) Reclassifications – – – (12) 12 – Shares issued (note 39) 9 857 – – (126) 740

Balance at 31 December 1999 204 1,815 2,424 1,047 10,684 16,174

(1) Merger reserve is principally the cost of acquisition of the minorities of Anamint, Amgold and Minorco and the other Group companies formally held by De Beers.

112 Anglo American plc Annual Report 1999 27. Consolidated cash flow statement analysis a) Reconciliation of group operating profit to net cash inflow from operating activities

pro forma (unaudited) US$ million 1999 1998

Group operating profit – subsidiaries 1,305 1,197 Depreciation and amortisation charges 736 717 Decrease in stocks 30 47 Increase in debtors (215) (345) (Decrease)/increase in creditors (83) 170 Other items 77 73

Net cash inflow from operating activities 1,850 1,859 b) Financing

pro forma (unaudited) US$ million 1999 1998

(Decrease)/increase in short term borrowings (254) 679 (Decrease)/increase in long term borrowings (705) 259 Redemption of minorities (15) (6) Share issue expenses (71) – Exercise of share options 9 2 Sale of Anglo American plc shares by subsidiaries 633 –

(403) 934 c) Reconciliation of net cash flow to movement in net funds/(debt)

pro forma (unaudited) US$ million 1999 1998

Increase in cash in the year 328 90 Cash outflow/(inflow) from debt financing 959 (938) Cash (inflow)/outflow from management of liquid resources (912) 518

Change in net debt resulting from cash flows 375 (330) Loans and current asset investments acquired with subsidiaries (149) (354) Currency translation differences 54 (20)

Movement in net funds/(debt) 280 (704) Net (debt)/funds at start of year (199) 505

Net funds/(debt) at end of year 81 (199)

Anglo American plc Annual Report 1999 113 Notes to financial statements continued

28. Movement in net debt

Acquisitions pro forma and disposals (unaudited) excluding cash Exchange US$ million 1998 Cash flow and overdrafts adjustments 1999

Cash at bank and in hand(1) 1,011 328 – (87) 1,252

Debt due after one year (3,236) 705 (132) 93 (2,570) Debt due within one year (1,180) 254 (17) 27 (916)

(4,416) 959 (149) 120 (3,486)

Current asset investments 3,206 (912) – 21 2,315

Total (199) 375 (149) 54 81

(1) Net of bank overdrafts.

114 Anglo American plc Annual Report 1999 29. Acquisition of subsidiaries The following acquisitions were made during the year to 31 December 1999 and were accounted for under the acquisition method.

Percentage Date of Name of company acquired acquired acquisition

Amcor Fibre Packaging Europe Limited 100 January 1999 McConnell Dowell Limited 65 February 1999 Reunion Mining plc 100 May 1999 Kohler Limited 100 October 1999 Acacia Resources Limited 100 December 1999 Anglo American Platinum Corporation Limited 5 piecemeal in 1999 Anglogold Limited 2 piecemeal in 1999

Fair value pro forma Book to group (unaudited) US$ million amount Revaluations(1) 1999 1998

Net assets acquired: Tangible fixed assets 665 373 1,038 1,042 Stocks 90 1 91 393 Debtors 132 24 156 58 Current liabilities (270) (13) (283) (479) Provisions (224) 208 (16) (54) Loans (68) (64) (132) (382) Minority interest 135 (20) 115 (356) Goodwill – 363 363 255

460 872 1,332 477

Satisfied by: Shares allotted 443 – Cash 889 477

(1) In terms of FRS 7 identifiable assets and liabilities of the acquired subsidiaries are revalued and included in the consolidated financial statements at their fair values as at the date of acquisition. The above figures are provisional and will be finalised by 31 December 2000.

The cash flows generated from the subsidiaries acquired did not have a material effect on the cash flow statement.

Anglo American plc Annual Report 1999 115 Notes to financial statements continued

30. Disposal of subsidiaries

pro forma (unaudited) US$ million 1999 1998

Net assets disposed: Tangible fixed assets 143 116 Stocks 84 19 Debtors 28 28 Current liabilities (123) (16) Provisions (10) (3) Loans – (2) Minority interest (13) – (Loss)/profit on disposal (6) 124

103 266

Principal disposals during the year included Kynoch Fertilizer (Pty) Limited for US$57 million and divisions of Kohler Limited for US$31 million. In 1998 Copebrás SA disposed of its carbon black operations for US$220 million. The cash flows of the disposed subsidiaries did not have a material effect on the cash flow statement.

31. Capital commitments

pro forma (unaudited) US$ million 1999 1998

Contracted but not provided 820 1,018

32. Contingent liabilities Contingent liabilities comprise aggregate amounts of US$289 million (1998: US$241 million) in respect of loans and performance guarantees given to banks and other third parties.

There are further guarantees by a subsidiary arising under loan agreements for financing the expansion of the Richards Bay Coal Terminal. Joint liability has been accepted with certain other parties for drawing under the loan facilities, the maximum liability being US$23 million plus interest accrued.

Mondi Minorco Paper S.A. and Frantschach A.G. have guaranteed the obligations of Framondi N.V., a company they own equally, to invest at least US$117 million on capital items at Frantschach Swiecie S.A. over the next four years.

The Group has agreements with Companhia Vale do Rio Doce (CVRD) and Banco Nacional de Desenvolvimento Econômico e Social (BNDES) giving the Group an initial 50% ownership of the mineral rights of the Salobo copper/gold project situated in Pará State, Brazil through its interest in Salobo Metais S.A. If the project proceeds the Group will be obliged to pay as consideration for the mineral rights, additional pre-production capital expenditure of US$99 million over an estimated period of four years and, following profitability, a finder’s fee of up to US$27 million to CVRD. Under the agreement BNDES has a right to participate in Salobo Metais up to one third of the equity (in non-voting form) by contributing one third of the pre-production capital expenditure.

No provision is made for taxes that might become payable if retained earnings of subsidiaries and associates are distributed by way of dividend because there is no intention to distribute reserves. Note 24 sets out details of contingent liabilities arising as a result of using the partial deferred tax liability method, as opposed to the comprehensive method.

There are a number of legal or potential claims against the Group, the outcome of which cannot at present be foreseen. Provision is made for all liabilities which are expected to materialise.

116 Anglo American plc Annual Report 1999 33. Operating leases At 31 December 1999 the Group was committed to making the following payments during the next year in respect of operating leases:

Land and buildings Other Land and pro forma pro forma buildings Other (unaudited) (unaudited) US$ million 1999 1999 1998 1998

Expiring within: One year 16 10 15 9 Two to five years 13 17 11 17 After five years 5141

34 28 30 27

Anglo American plc Annual Report 1999 117 Notes to financial statements continued

34. Pension schemes and other post-retirement benefit plans The Group operates a number of defined contribution and defined benefit plans for the majority of its employees.These retirement plans are generally funded, with the assets of the schemes held separately from those of the Group, in independently administered funds.The Group accrues pension costs based upon annual independent actuarial valuations for each plan using the projected unit credit method, and funds these costs in accordance with statutory requirements or local practice.The pension cost is disclosed in note 7 and the provision in note 24.

The defined benefits plans were valued by independent qualified actuaries.

The funded status of these plans is as follows:

Plans with assets in Plans with accrued excess of accrued benefits benefits in excess of assets

pro forma pro forma (unaudited) (unaudited) US$ million 1999 1998 1999 1998

Present value of accrued benefit obligations of unfunded plans – – (476) (477)

Present value of accrued benefit obligations of funded plans 2,482 2,343 175 476 Fair value of plan assets 3,107 2,695 144 349

Funded status 625 352 (31) (127)

The principal actuarial assumptions used to determine the above actuarial present value of benefit obligations and pension costs are as follows: pro forma (unaudited) Percentage 1999 1998

Discount rate 12.5 12.2 Expected rate of return on plan assets 11.9 11.7 Compensation increase 9.1 8.9 Expected increase in healthcare costs 9.5 10.0

The Group provides post-retirement healthcare benefits to its staff in South Africa and North America.The benefits are charged on an accruals basis similar to that used for pensions.The post-retirement healthcare costs are disclosed in note 7 and the provision in note 24.

35. Related party transactions The principal shareholders of the Group are listed on page 81.

The Group and its subsidiaries, in the ordinary course of business, enter into various sales, purchase, service and investment transactions with joint ventures and associates and others in which the Group has a material interest.These transactions are under terms that are no less favourable than those arranged with third parties.These transactions, in total, are not considered to be significant.

118 Anglo American plc Annual Report 1999 36. Reconciliation of net operating assets to net assets

pro forma (unaudited) US$ million 1999 1998

Net operating assets (see note 3) 12,534 11,200 Financial fixed assets 8,391 8,436 Current asset investments 2,315 3,206 Cash at bank and in hand 1,303 1,088 Interest bearing and tax liabilities (1,135) (1,220) Long term liabilities (2,538) (3,254) Provisions (1,324) (1,414) Equity minority interests (2,951) (2,704) Proposed dividend (421) (322)

Net assets 16,174 15,016

37. Reconciliation of pro forma 1998 profit disclosed in the Prospectus to pro forma comparatives

Total operating Tax on 1998 profit before Net profit on Equity Profit for the exceptional Exceptional investment ordinary minority financial year US$ million items items income activities interests (unaudited)

Per Prospectus 2,016 149 43 (441) (618) 1,149 Acquisition of minorities: Anglo American Gold Investment Co. Ltd ––––4949 Anglo American Investment Trust Ltd ––––5353 Adjustments and reallocations: De Beers diamonds (23) (3) (38) (11) 26 (49) De Beers investments (57) 19 260 (62) (77) 83 Amortisation of goodwill (27) ––––(27) Reclassification of companies as associates (39) – 35 (14) 18 – Other adjustments and reclassifications 9 – 32 (42) (5) (6)

Pro forma comparatives 1,879 165 332 (570) (554) 1,252

38. Reconciliation of pro forma 1998 balance sheet disclosed in the Prospectus to pro forma comparatives

Provisions Equity Intangible Tangible Fixed asset Net current and long minority US$ million assets assets investments assets term liabilities interests

Per Prospectus 269 10,353 6,416 4,223 (5,221) (3,547) Acquisition of minorities: Anglo American Gold Investment Co. Ltd 247 – 47 – – 294 Anglo American Investment Trust Ltd 139 – 611 – – 14 Goodwill adjustments 700 (237) 565 (81) (54) (130) Reclassification of companies as associates (23) (1,515) 465 (272) 706 610 Other adjustments and reclassifications 45 (25) 332 129 (99) 55

Pro forma comparatives 1,377 8,576 8,436 3,999 (4,668) (2,704)

Anglo American plc Annual Report 1999 119 Notes to financial statements continued

39. Financial statements of Anglo American plc

Profit of parent As permitted by section 230 of the Companies Act, the profit and loss account is not presented as part of these accounts.

Balance sheet

US$ million 1999

Fixed assets Investment in subsidiaries 4,974 Investment in own shares 729

5,703 Cash at bank and in hand 10 Bank loans due within one year (50) Amounts owed to subsidiaries (473) Proposed dividend (161)

Net current liabilities (674)

Net assets 5,029

Capital and reserves Called up share capital 204 Share premium account 1,815 Profit and loss account 3,010

Total shareholders’ funds (all equity) 5,029

The Company was incorporated on 14 May 1998 with shareholders’ funds of £2 and current assets of £2.The Company was dormant within the meaning of section 250 of the Companies Act 1985 throughout the period from incorporation to 31 December 1998.

120 Anglo American plc Annual Report 1999 39. Financial statements of Anglo American plc continued

Statement of movement in shareholders’ funds and movement of reserves

Issued Share Profit share premium and loss US$ million capital account account Total

Balance at 1 January 1999 –––– Profit for the financial year – – 3,352 3,352 Dividends paid and proposed – – (216) (216) Shares issued 204 1,815 (126) 1,893

Balance at 31 December 1999 204 1,815 3,010 5,029

Dividends paid and proposed relate only to shareholders on the London Stock Exchange. Shareholders on the Johannesburg Stock Exchange are paid through the Dividend Access Share agreement by a South African subsidiary.

Called up share capital Number of US$ Number of US$ shares million shares million 1999 1999 1998 1998

Authorised: 5% cumulative preference shares of £1 each 50,000 – – – Ordinary shares of 50 US cents each (1998 – £1 each) 600,000,000 300 50,000 –

300 –

Called up, allotted and fully paid: 5% cumulative preference shares of £1 each 50,000 – – – Ordinary shares of 50 US cents each (1998 – £1 each) 407,661,244 204 2–

204 –

During the year the Company issued 389,661,242 shares (US$194,830,622) in exchange for the shares of AAC and for the acquisition of the minorities of Anamint, Amgold and Minorco. 50,000 5% cumulative preference shares of £1 each were issued for a consideration of £50,000. In addition 18 million shares were issued to the employee benefit trust at £30 per share.

Anglo American plc Annual Report 1999 121 Notes to financial statements continued

40. Principal subsidiaries, joint ventures and associates The principal subsidiaries, joint ventures and associates of the Group at 31 December 1999, and the Group percentage of equity capital and joint venture interest are set out below:

Country of Percentage of Subsidiary undertakings incorporation Business equity owned

Gold Anglogold Limited South Africa Gold 50.4

Platinum Anglo American Platinum Corporation Limited South Africa Platinum 50.3

Coal Anglo Coal(1) South Africa Coal 100

Base metals Black Mountain Mineral Development(1) South Africa Copper, zinc and lead 100 Namakwa Sands(1) South Africa Mineral sands 100 Gamsberg Zinc Corporation(1) South Africa Zinc project 100 Hudson Bay Mining and Smelting Co. Ltd Canada Copper and zinc 100 Ambase Exploration (Namibia) Proprietary Limited Namibia Zinc project 100 Codemin SA Brazil Nickel 90 Minera Loma de Níquel, CA Venezuela Nickel project 85.5 Empresa Minera de Mantos Blancos SA Chile Copper 76.9 Minera Quellaveco SA Peru Copper project 61.5 Zambia Copper Investments Limited Bermuda Mining holding company 51.0

Industrial minerals Tilcon Northern Limited UK Construction materials 100 Tilcon South Limited UK Construction materials 100 Nash Rocks Limited UK Construction materials 100 Cleveland Potash Limited UK Potash 100 Elbekies GmbH Germany Construction materials 100 Lausitzer Grauwacke GmbH Germany Construction materials 100 Steetley Iberia SA Spain Construction materials 100 Copebrás SA Brazil Sodium tripolyphosphate 73

Ferrous metals Scaw Metals(1) South Africa Iron, steel and engineering works 100 Highveld Steel and Vanadium Corporation Limited South Africa Steel, vanadium and ferroalloys 73.9 Mineração Catalão de Goiás Ltda Brazil Niobium 70

Forest products Mondi Limited South Africa Paper and packaging 100 Mondi Packaging (UK) Limited UK Packaging 100 Mondi Packaging (France) SA France Packaging 100

Industries Boart Longyear(1)/Boart Longyear Limited South Africa Tools, equipment and contracting services 100 LTA Limited South Africa Construction 67.9 AECI Limited South Africa Chemicals and related products 53 The Tongaat-Hulett Group Limited South Africa Sugar, starch, textiles, aluminium and building materials 51

122 Anglo American plc Annual Report 1999 40. Principal subsidiaries, joint ventures and associates (continued)

Country of Percentage of Subsidiary undertakings incorporation Business equity owned

Joint ventures(2) Compañia Minera Doña Inés de Collahuasi SCM Chile Copper 44 Lisheen (unincorporated) Ireland Zinc and lead 61.9 Salobo Metais SA Brazil Copper and gold project 50 Columbus Stainless South Africa Production of stainless steel 38 Frantschach AG Austria Paper sacks 50 Neusiedler AG Austria Paper 74.5 Frantschach Swiecie SA Poland Pulp, paper and packaging 48 Aylesford Newsprint Holdings Limited UK Newsprint 50

Associates(2) De Beers Consolidated Mines Limited(3) South Africa Diamonds 32.2 De Beers Centenary AG(3) Switzerland Diamonds 28.6 Carbones del Cerrejón SA Colombia Coal 33.3 Richards Bay Coal Terminal Company Limited South Africa Coal 26 Palabora Mining Company Limited South Africa Copper 28.7 Anaconda Nickel Limited(4) Australia Nickel 23 Tati Nickel Mining Company (Proprietary) Limited Botswana Nickel 43.4 Samancor Limited South Africa Chrome and manganese 40 Groote Eylandt Mining Company Proprietary Australia Manganese 40 Limited (Gemco) Tasmanian Electro Metallurgical Company Australia Manganese 40 Proprietary Limited (Temco) Aracruz Celulose SA(4) Brazil Pulp 11.8 Terra Industries Inc. USA Nitrogen fertiliser and methanol 49.9 Li & Fung Limited Hong Kong Multinational export trading house 15.7 FirstRand Limited(5) South Africa Financial services 20.6 South African Eagle Insurance Company Limited South Africa Financial services 25.3

(1) A division of Anglo Operations Limited, a wholly owned subsidiary. (2) All are ordinary shares. (3) Interest held through De Beers-Centenary linked units. (4) The Group holds 28% of the voting equity. (5) Financial year ended 30 June.

Anglo American plc Annual Report 1999 123 Notes to financial statements continued

41. Events occurring after end of year On 17 November 1999, Anglo American made a recommended cash offer of 585p per share for the whole of the issued share capital of Tarmac plc.The offer which valued Tarmac at approximately US$1.9 billion became unconditional in all respects on 1 March 2000.

On 15 December 1999, Anglo American’s 51% held subsidiary, Zambia Copper Investments Limited (ZCI), signed a contract for the acquisition through Konkola Copper Mines PLC (KCM) of certain Zambian copper assets owned by Zambia Consolidated Copper Mines Limited (ZCCM).These assets include the Konkola Division and the Nchanga Division (including the Chingola refractory ore stock piles at the Nampundwe pyrite mine). KCM also obtained an option over the Nkana smelter, refinery and acid plant of ZCCM which would be managed by Anglo American during the option period. Completion is scheduled for 31 March 2000 subject to the approval of ZCI shareholders on 29 March and the remaining conditions precedent.The consideration will include US$30 million payable on completion, a deferred cash consideration of US$60 million, the benefit of copper and cobalt price participation schemes and ZCCM receiving a 5% free and 15% repayable carried interest in KCM. KCM will, subject to the viability of the operations, be committed to capital expenditure of at least US$208 million during the first three years following completion. KCM is also committed to commence the Konkola Deep Mining Project at an expected cost of US$523 million within eighteen months of completion or as soon thereafter as limited recourse finance of US$313 million on acceptable terms is available. In a parallel transaction ZCI has agreed to sell its 25.3% interest in ZCCM to the Zambian government for US$30 million payable on a deferred basis.

124 Anglo American plc Annual Report 1999