Focused on Delivery

ANGLO AMERICAN PLC ANNUAL REPORT 2013 ANNUAL REPORT 2013 FOCUSED ON DELIVERY FOCUSED ON DELIVERY Other sources of information In a world where people want to build a better life for themselves and their families, but where resources are limited, Anglo American seeks to generate sustainable value from a country’s mineral resources for the You can find this report benefit of its people. and additional information about Anglo American on We will deliver an attractive and differentiated value our corporate website. proposition to our shareholders, business partners Although we have chosen not to produce and other stakeholders by having the right assets and an ‘integrated report’, technical expertise, the right people working with our we have included a comprehensive overview partners, and a commitment to responsible mining that of our non-financial performance in this report. will support us in delivering the products that make More detailed information our world work. on our sustainability performance is provided in our Sustainable We are focused on delivering our targeted returns to Development Report. shareholders while creating value for all our partners This can be found on and stakeholders. our corporate website. For more information, visit www.angloamerican.com/ reportingcentre PERFORMANCE HIGHLIGHTS CONTENTS FINANCIAL PERFORMANCE UNDERLYING Strategic report OPERATING PROFIT 02 Chairman’s statement 04 At a glance 2009 (2012: $6.3 bn) 06 Marketplace 0 0 08 Chief Executive’s statement 2010 12 Why mining matters 25 $6.6 bn 14 Our strategy 40 16 Our business model 2011 18 Key performance indicators 28 UNDERLYING EARNINGS 20 Strategic elements 46 (2012: $2.9 bn) 2012 46 Risk 32 54 Iron Ore and Manganese 53 60 Metallurgical Coal 2013 32 $2.7 bn 64 Thermal Coal 53 68 Copper UNDERLYING EARNINGS 72 Nickel Interim 76 Niobium and Phosphates Final PER SHARE 80 Platinum (2012: $2.28) 86 Diamonds 90 Other Mining and Industrial Governance $2.09 92 Chairman’s introduction 2009 94 Leadership 4.8 LOSS ATTRIBUTABLE TO 103 Effectiveness 2010 105 Engagement 5.0 EQUITY SHAREHOLDERS 2011 (2012: $(1.5) bn) 107 Safety and Sustainable 5.8 Development Committee 2012 108 Nomination Committee 6.0 109 Audit Committee 2013 $(1.0) bn 111 Audit Committee report 6.3 117 Remuneration Committee 118 Directors’ remuneration report 144 Directors’ report 150 Statement of directors’ responsibilities 150 Responsibility statement 2009 Financial statements 11.3 152 Independent auditor’s report 2010 154 Principal statements 7.4 2011 158 Notes to the financial statements 1.4 212 Financial statements of the 2012 parent company 8.5 215 Summary by business operation 2013 216 Key financial data 10.7 217 Reconciliation of reported earnings 218 Exchange rates and commodity prices Ore Reserves and Mineral Resources 219 Introduction 220 Iron Ore 223 Manganese Underlying operating profit is presented before special items and remeasurements Cover Image 224 Coal and includes the Group’s attributable associates’ and joint ventures’ operating profit Laboratory technician 232 Copper before special items and remeasurements, unless otherwise stated. See notes 3 David Tlaka (back cover); and 5 to the financial statements for underlying operating profit. For definition of maintenance planner 237 Nickel special items and remeasurements, see note 6 to the financial statements. See note Pieter Grobler and shift 238 Niobium 9 to the financial statements for the basis of calculation of underlying earnings. leader Silas Mongwe at 240 Phosphates the Eastern Bushveld ‘Tonnes’ are metric tons, ‘Mt’ denotes million tonnes, ‘kt’ denotes thousand Research Laboratory 241 Platinum Group Metals tonnes and ‘koz’ denotes thousand ounces;‘$’ and ‘dollars’ denote US dollars control room at Anglo 244 Diamonds and ‘cents’ denotes US cents. American Platinum’s Net debt includes related hedges and net cash in disposal groups. Polokwane smelter in Other information See note 24 to the financial statements. South Africa. 250 Attributable ROCE definition Certain balances related to 2012 have been restated to reflect the adoption of new Opposite 251 Production statistics accounting pronouncements. See note 2 to the financial statements for details. At Polokwane, concentrate is smelted 254 Quarterly production statistics Throughout the Strategic report, attributable ROCE, shown in terms of historical to produce furnace matte 255 Non-financial data performance, reflects the realised prices and foreign exchange during the period, before being sent for 256 The business – an overview and in line with commitments made as part of Driving Value. For more detail on this further processing at calculation and its methodology, please refer to page 250. the Waterval Smelter 258 Shareholder information in Rustenburg. IBC Other Anglo American publications Anglo American plc Annual Report 2013 011 STRATEGIC REPORT CHAIRMAN’S STATEMENT CHAIRMAN’S STATEMENT INDUSTRY BACKDROP SAFETY I have long admired the commitment of our people at In 2013, the world economy experienced a flat Anglo American and the considerable changes they have implemented to help us achieve ‘zero harm’ across the entire growth rate of 3%, the same as in 2012. This organisation. I am therefore personally saddened when I am told of our people losing their lives at our operations. In 2013, led to weak activity in the first six months of 14 people lost their lives on company business, four of the year in Western Europe, China and other whom died following a major geological event at the now-divested Amapá iron ore operation in Brazil, with a emerging economies. further two still missing. With a rigorous eye on the progress to zero harm, a further decline in lost-time injuries was achieved, while the great majority of our sites remain fatality- Sir John Parker free. I speak for the whole Board in expressing our sympathy for those who have been bereaved and I wish to reassure all our stakeholders that we will strive unremittingly to achieve our goal of an incident-free workplace. CAPITAL PROJECTS As we enter 2014, the Minas-Rio iron ore project is now 84% complete and, while risk remains in such a vast project, I am pleased to report that it remains on target for first ore The global mining industry encountered considerable on ship at the end of 2014, and within the expected capital challenges, and for much of the year it experienced budget. Its completion will ease our capital commitments lacklustre demand and falling prices for most commodities from 2015 onwards and should also enhance our free cash – exacerbated by persistent above-inflation cost pressures, flow. The Board continues to exercise discipline and scrutiny labour disputes and low productivity. of costs around capital expenditures – be it ‘stay in business’ or ‘expansionary’. ANGLO AMERICAN’S STRATEGIC RESPONSE The Board has recommended Against this backdrop, Anglo American faced its share of DIVIDEND operational challenges as we continued to restructure our a final dividend The focus on increasing free cash flow from operational Platinum business, pursue the turnarounds of copper in of 53 cents efficiency and cash-saving initiatives is a measure of Chile, the Sishen iron ore mine in South Africa and the per share, to the Board’s determination to protect our dividend to flagship Jwaneng diamond mine in Botswana. A recovery maintain a shareholders until higher sustainable free cash flow plan was also put in place at Nickel following the need to dividend of is generated. 85 cents for rebuild the two new furnaces at Barro Alto. The Board has recommended a final dividend of 53 cents the year. April saw a smooth and professional transition from per share, to maintain a total dividend of 85 cents for the Cynthia Carroll to Mark Cutifani as our new chief executive. year. That we were able to do so during a period when Since that time, Mark and his new top management team substantial expenditure was being incurred on major capital have worked closely with our Board in finalising an agreed projects underlines our confidence in the business and its Group strategy and clear targets – Driving Value. At its ability to keep returns to our shareholders competitive with heart we aim to shift the Group to achieve at least a 15% those of our peer group. attributable return on capital employed by 2016, and place it on a sounder footing to deliver sustainable returns into the future. It will involve cost reductions on a range of fronts, A COMPANY THAT LIVES OUT ITS VALUES controlled expenditure on our pipeline of new projects, One of the things that attracted me to Anglo American withdrawing from some longer-term future projects (as we some 4½ years ago was that it was known as a company have done with Pebble in Alaska), and being ready to exit that has always had a social conscience, which endeavours those businesses that cannot achieve the target returns. to live out its values. Within the ranks of natural resource Mark, as the industry recognises, is a ‘miner’s miner’ who companies, Anglo American has invariably been at the brings his decades-long experience of mining at the sharp forefront in engaging with stakeholders and with civil society end with a relentless focus on improving the operational more broadly. performance of all our assets, while also redesigning the organisation to be more effective and efficient. The Board is heartened by the improving trend in operational performance during the second half, which has contributed to the delivery of a creditable financial performance, ahead of budget. 02 Anglo American plc Annual Report 2013 Our chief executive, Mark Cutifani, is totally committed Jim Rutherford joined the Board in November and has reportStrategic to living out Anglo American’s social values. He has been appointed to the S&SD Committee. He has more recently played a major role in engaging with the Catholic than 25 years’ experience in investment management and Church and the Kellogg Innovation Network to look at how investment banking, both as an institutional investor and mining companies, which can be key development players, analyst.

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