REG - Anglo American PLC - Anglo American half year financial report 2023
27/07/2023 07:15
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RNS Number : 3286H Anglo American PLC 27 July 2023
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HALF YEAR FINANCIAL REPORT
for the six months ended 30 June 2023
27 July 2023
Anglo American Interim Results 2023
Underlying EBITDA of $5.1 billion reflects macro headwinds, ahead of
production step-up in second half of year
Financial highlights for the six months ended 30 June 2023
• Underlying EBITDA* of $5.1 billion, a 41% decrease, largely due to weaker
product prices
• Profit attributable to equity shareholders of $1.3 billion
• Net debt* of $8.8 billion (0.9 x annualised underlying EBITDA): investment
in value-adding growth amid weaker prices
◦ Targeted reduction of $0.3 billion in 2023 capital expenditure
• Quellaveco ramping up strongly and on track to produce 310-350 kt of
copper in 2023
• $0.7 billion dividend for H1 2023, equal to $0.55 per share, consistent
with our 40% payout policy.
Duncan Wanblad, Chief Executive of Anglo American, said: "Anglo American's
portfolio quality, product and geographic diversification together with strong
organic growth optionality over the next decade provide positive
differentiation and position our business to capitalise on highly attractive
structural supply and demand trends. Our unwavering focus is on driving
consistent, competitive performance across our operations - which starts with
the safety and health of our employees.
"We have made further progress on safety, with our overall injury rates
decreasing markedly in the first half. However, I am sad to report that we
lost one colleague in a machinery incident at our Kumba business in February.
None of us will rest until we achieve and sustain zero harm at Anglo American.
"Macro headwinds - principally, weaker prices for our products and input cost
inflation - certainly weighed on our first half financial performance. We are
on track to deliver on our full year production guidance, which includes a
significant anticipated step-up in volumes in the second half. Our focus on
operational stability and cost control are our key margin levers and we also
expect to deliver annual efficiencies of $0.5 billion from across our full
range of business support activities.
"Underlying EBITDA of $5.1 billion at a 41% Mining EBITDA margin* reflects a
19% lower product basket price and a 1% unit cost increase, partially offset
by a 10% volume increase compared with the first half of 2022. Our commitment
to capital discipline and to a strong balance sheet makes us more resilient to
the external environment and supports our range of options for value-adding
organic growth. As we drive greater effectiveness across our organisation, so
we are also ensuring capital efficiency, with an expected $0.3 billion
reduction in growth capital expenditure guidance in the current year. Net debt
increasing to $8.8 billion, less than 1 x annualised underlying EBITDA,
reflects the growth investments we are making through the cycle in line with
our belief in the strong long term fundamentals. Our $0.7 billion proposed
dividend for H1 2023 of $0.55 per share is in line with our 40%
payout policy.
"There is no doubt that while the nearer term macro picture presents
challenges, the longer term demand outlook for future-enabling metals and
minerals is ever more compelling. As most major economies accelerate their
decarbonisation programmes and as the global population grows by up to 2
billion people over the next 25 years, with an associated need for higher
living standards, our objective is to grow the value of our business into that
demand."
Six months ended 30 June 2023 30 June 2022 Change
US$ million, unless otherwise stated
Revenue 15,674 18,111 (13) %
Underlying EBITDA* 5,114 8,701 (41)%
Mining EBITDA margin* 41% 52%
Attributable free cash flow* (466) 1,564 (130)%
Profit attributable to equity shareholders of the Company 1,262 3,680 (66)%
Basic underlying earnings per share* ($) 1.38 3.11 (56)%
Basic earnings per share ($) 1.04 3.03 (66)%
Interim dividend per share ($) 0.55 1.24 (56)%
Group attributable ROCE* 18% 36%
Terms with this symbol * are defined as Alternative Performance Measures
(APMs). For more information, refer to page 77.
Sustainability performance
Key sustainability performance indicators((1))
Anglo American tracks its strategic progress using KPIs that are based on our
seven pillars of value: safety and health, environment, socio-political,
people, production, cost, and financial. In addition to the financial
performance set out above and our operational performance on pages 5-32, our
performance for the first four pillars is set out below:
Pillar of value Metric 30 June 2023 30 June 2022 Target Target achieved
Safety and health Work-related fatal injuries 1 1 Zero Not achieved
Total recordable injury frequency rate per million hours 1.92 2.36 Reduction year on year On track
New cases of occupational disease 0 0 Reduction year on year On track
Environment GHG emissions - Scopes 1 & 2 5.2 5.0 Reduce absolute GHG emissions by 30% by 2030 On track
(Mt CO(2)e)((2))
Fresh water withdrawals (ML)((2)) 13,700 12,500 Reduce fresh water abstraction in water scarce areas by 50% by 2030 On track on a three-year rolling average
Level 4-5 environmental incidents 0 0 Zero On track
Socio-political Social Way 3.0 implementation((3)) 66% 49% Full implementation of the Social Way 3.0 by end 2022 Behind schedule
Number of jobs supported 137,000 115,000
off site((4))
Local procurement spend ($bn)((5)) 6.5 5.7
Taxes and royalties ($m)((6)) 2,511 3,491
People Women in management 33% 31% To achieve 33% by 2023 On track
Women in the workforce 25% 24%
Voluntary labour turnover 3% 2% < 5% On track
((1) ) Sustainability performance indicators for the six months ended 30
June 2023 and the prior period are not externally assured.
((2) ) Data for current and prior period is to 31 May 2023 and 31 May
2022, respectively. Anglo American is on track to meet its target of a 30%
reduction in GHG emissions by 2030, based on the 2016 baseline, and despite
the expected increase in 2023 as production volumes increase from Quellaveco,
as outlined on page 24 of our Climate Change Report 2022. Fresh water
withdrawal data can vary year on year due to seasonal variations in
hydrological cycles, production profiles and operational requirements. The
fresh water savings projects and initiatives, as detailed in our
Sustainability Report 2022, are on track to achieve our 2030 water reduction
targets, compared with the 2015 baseline.
((3) ) Current and prior period data presented is at 31 December 2022 and
2021, respectively. While sites are assessed annually against all requirements
applicable to their context, for consistency during the transition period, the
metric reflects performance against the Social Way foundational requirements.
For further information on progress, see Socio-political commentary on page 4.
((4) ) Jobs supported since 2018, in line with the Sustainable Mining
Plan Livelihoods stretch goal. Current period data is to 30 June 2023 and
prior period data is to 31 December 2022.
((5) ) Local procurement spend relates to spend within the country where
an operation is located. The basis of calculation reflects the Group's
financial accounting consolidation; i.e. 100% of subsidiaries and a
proportionate share of joint operations, based on Anglo American's
shareholding. The figure for 30 June 2022 has been restated (previously $6.1
bn) due to a calculation error.
((6) ) Taxes and royalties include all taxes and royalties borne and
taxes collected by the Group. This includes corporate income taxes,
withholding taxes, mining taxes and royalties, employee taxes and social
security contributions and other taxes, levies and duties directly incurred by
the Group, as well as taxes incurred by other parties (e.g. customers and
employees) but collected and paid by the Group on their behalf. Figures
disclosed are based on cash remitted, net of entities consolidated for
accounting purposes, plus a proportionate share, based on the percentage
shareholding, of joint operations. Taxes borne and collected by equity
accounted associates and joint ventures are not included.
( )
Safety
At Anglo American, we are unconditional about safety and strive continuously
to create a workplace where every colleague arrives home safe and well at the
end of their working day. 'Always safe' is our safety vision and safety is our
number one value.
Following the safety reset and calls to action completed across the Group in
the second half of 2022, we have made solid progress in our safety journey,
recording our best ever total recordable injury frequency rate (TRIFR) of 1.92
(30 June 2022: 2.36). While encouraged by this improvement, we were deeply
saddened to lose a colleague in a machinery incident at our Kumba Iron Ore
business in South Africa in February. We are also investigating a recent
aviation fatality in Angola related to our exploration programme.
Across Anglo American we are continuing to implement our targeted safety
strategy, investing in systems and technology, standards, and training our
people. A key focus has been an increase in what we call Visible Felt
Leadership (VFL). VFL involves connecting operational leaders on a one to one
or small group basis around a task or activity to ensure that it is done
safely. This active, practical and highly visible expression of our Values is
helping to build trust with our workforce, fostering understanding and
improvements in safety performance, as well as encouraging our employees and
contractors to feel safe to speak up about concerns related to safety.
To deliver safe, responsible production, we know that we need to be better at
how we work with our contractors and how we support their safety on our sites,
ensuring they feel valued and respected as a critical contributor to
everyone's safety. We have, therefore, launched a new Contractor Performance
Management framework which has been designed as an end to end approach to
managing our contractors. It incorporates people, processes and systems and
provides the foundation for safe and stable production by creating a
psychologically and physically safe, healthy, and productive work environment
for employees, contractors, and suppliers.
Health
Our many years of work with employees and host communities on HIV/AIDS and TB,
and over three years on Covid-19, have positioned us to extend our learnings
from managing communicable diseases to
non-communicable diseases. A major focus in 2022, that has continued into
2023, was to develop bespoke programmes to address the main health risks that
employees face, focusing on the leading causes of preventable deaths generally
arising outside of work, such as lack of exercise, smoking and poor diet. We
expect these programmes will drive improvements not only in personal
well-being, but also engagement and productivity.
In the first half of 2023, there were no reported new cases of occupational
disease (30 June 2022: 0). In a bid to minimise the potential for workforce
exposure to hazards, all businesses have identified detailed exposure
reduction pathways which will continue to be implemented in the second half of
the year. Reducing exposure to noise, which remains our single greatest
occupational health risk, is a significant challenge. A number of our
businesses require technological shifts to continue to reduce noise exposure,
including further mine, processing and equipment modernisation and the use of
equipment attenuation technology.
Environment
Our Sustainable Mining Plan includes commitments to be a leader in
environmental stewardship. By 2030, we aim to reduce greenhouse gas (GHG)
emissions (Scopes 1 and 2) by 30%; improve energy efficiency by 30%; achieve a
50% reduction in fresh water abstraction in water scarce areas; and deliver
net-positive impacts in biodiversity wherever we operate.
In addition to our GHG emissions reduction aims, we also have a target to be
carbon neutral across our operations by 2040, and an ambition to halve our
Scope 3 emissions, also by 2040. We continue to make encouraging progress,
with Scope 1 and 2 GHG emissions broadly in line with the prior period,
despite the 10% increase in production volumes. In Peru, our Quellaveco copper
mine was supplied with 100% renewable electricity supply from April 2023,
completing the transition for all our South American operations. With our
Australian operations moving to renewable supply from 2025, we are on target
to be drawing approximately 60% of our global grid supply from renewables from
2025. In southern Africa, where we are developing a regional renewable energy
ecosystem through our partnership with EDF Renewables, known as Envusa Energy,
several off site and on site renewable energy projects are progressing through
feasibility studies and are targeted for construction to start in the second
half of 2023.
Methane emissions from our Steelmaking Coal operations represent the largest
component of our Scope 1 emissions and we continue to explore ways to manage
and abate these emissions. Our ventilation air methane abatement engineering
study using regenerative thermal oxidation has now progressed to the
pre-feasibility stage. We actively participate in a number of industry methane
management forums and are supporting in a practical way the UN Environmental
Programme's International Methane Emissions Observatory (IMEO) measurement
trials this year.
As part of the our ambition to reduce our Scope 3 emissions by 50% by 2040, we
are focusing on hard-to-abate sectors such as steel - from which most of our
value chain emissions derive. We are joining forces with steelmakers in Europe
and Asia to research efficient feed materials - capitalising on the premium
physical and chemical qualities of our minerals, including iron ore pellets
and lump iron ore. These premium products are suited for use in the direct
reduced iron (DRI) process, a technically proven and significantly less carbon
intensive steel production method. In April, we signed an agreement with H2
Green Steel, a Swedish hydrogen and steel producer, to explore ways to use our
premium iron ore as feedstock for their DRI production process at their Boden
plant in Sweden.
With more than 80% of our global assets located in water scarce areas, we need
to reduce our dependence on fresh water and are working on technologies to
help us do that. Our combined technologies of coarse particle recovery (CPR)
and hydraulic dewatered stacking (HDS) are demonstrating a new way to safely
dispose of mining by-products and accelerate our progress towards ending wet
tailings storage, while also increasing production and reducing energy
consumption. Our El Soldado copper operation in Chile has been piloting a CPR
unit since 2021, and successfully handed over the unit to the operation in
January 2023. The pilot plant exceeded expectations in terms of achieving
significantly lower energy and fresh water usage per unit of copper produced.
Additional CPR units are being constructed and commissioned across the Group,
including at Mogalakwena North (PGMs) and Quellaveco (Copper). El Soldado also
completed its initial HDS testing phase in April, with the pilot project
scheduled to continue until the end of the year.
Socio-political
We continue working to strengthen and broaden our social performance
competencies through embedding the Social Way 3.0 (launched in 2020) across
Anglo American. More than 28,500 hours have been committed to Social Way 3.0
training since 2020. This includes orientation sessions for leaders,
completing Social Way Foundation Training, as well as cross-functional Social
Way Foundation Training for non-social performance teams, at all sites,
businesses and relevant functions.
While we did not meet our ambitious goal of implementation of the Social Way
3.0 at all sites by the end of 2022, we continued to make significant
progress and recognise the very much higher standards (the highest that we are
aware of across our industry) required of this third version of our social
management system. The programme is critical to underpinning many of our
ambitious 2030 Sustainable Mining Plan targets, demonstrating our commitment
to partnering with host communities and governments.
Since the launch of our Sustainable Mining Plan, 137,000 off site jobs had
been supported through socio-economic development programmes by the end of
June 2023, including local procurement, enterprise and supplier development
initiatives, training, mentoring and capacity development, loan funding to
small businesses, agriculture programmes, and collaborative regional
development initiatives.
The success of our business drives tax revenues for host communities, in
addition to the significant royalty and mining tax payments made and our
broader economic contribution to other stakeholders. Total taxes and royalties
borne and taxes collected amounted to $2,511 million, a 28% decrease compared
with the first half of 2022, reflecting lower profit before tax and revenues.
People
Tightly linked to our safety imperative and our Values, we strive to create a
workplace that places people even more at its heart. We are committed to
promoting an inclusive and diverse environment where every colleague is valued
and respected for who they are, and has the opportunity to fulfil their
potential.
We continue to make progress towards reaching our goal of 33% female
representation by the end of 2023 at all management levels, across the
business. We have set a similar target for 33% of our Executive Leadership
Team and those reporting to them to be women by the end of 2023. In the first
half of the year we were recognised for our work on reducing gender
inequalities in the workplace by being included in The Times' Top 50 Employers
for Gender Equality Index for the second year in a row; both Anglo American
plc and our PGMs business, Anglo American Platinum, were also included in the
Bloomberg Gender Equality Index in 2023. Anglo American was once again
included in the Top Employer listings in both South Africa and the UK. In
January 2023, Anglo American became the first mining company, and the third
company in the world, to secure a global living wage accreditation from the
Fair Wage Network, formally recognising our status as a committed living wage
employer across the Group.
( )
Operational and financial review of Group results for the six months ended
30 June 2023
Operational performance
Production volumes increased by 10% on a copper equivalent basis, primarily
driven by the ramp-up of our new Quellaveco copper mine in Peru, strong
operational performances at our iron ore assets in Brazil and South Africa, as
well as higher production from our steelmaking coal underground and open cut
operations in Australia. Lower grades impacted production at Los Bronces and
Collahuasi (Copper Chile), as well as Mogalakwena (PGMs) and Nickel.
Production was marginally lower at De Beers as the Venetia mine transitions
from open pit to underground operations.
Total copper production of 387,200 tonnes increased by 42% (30 June 2022:
273,400 tonnes), primarily driven
by volumes from Quellaveco (Copper Peru) which progressively ramped up to
deliver 137,800 tonnes of production, and reached commercial production levels
in June. Copper Chile's production of 249,400 tonnes
was 9% lower (30 June 2022: 273,400 tonnes), principally driven by
Los Bronces, where production decreased
by 13% to 112,500 tonnes (30 June 2022: 129,700 tonnes) due to lower grades,
coupled with unfavourable ore characteristics, including higher ore hardness.
Planned lower grades at Collahuasi resulted in a 10% decrease
in attributable production to 114,400 tonnes (30 June 2022: 127,800 tonnes).
Nickel production was in line with the prior period at 19,600 tonnes (30 June
2022: 19,600 tonnes), reflecting a strong operational performance largely
offset by lower grades.
Total PGM production decreased by 7% to 1,844,300 ounces (30 June 2022:
1,987,500 ounces), principally due to lower grade at Mogalakwena and the
impact of planned infrastructure closures at Amandelbult at the end of 2022.
De Beers' rough diamond production was marginally lower than the prior period
at 16.5 million carats (30 June 2022: 16.9 million carats), reflecting a
strong operational performance, despite the planned reduction in South Africa
as the Venetia open pit transitions to underground operations.
Iron ore production increased by 12% to 30.7 Mt (30 June 2022: 27.5 Mt).
Minas-Rio production increased by 22% to 12.0 Mt (30 June 2022: 9.8 Mt)
due to a strong operational performance and timing of maintenance. At Kumba,
production increased by 6% to 18.7 Mt (30 June 2022: 17.8 Mt), as Kolomela
recovered from operating challenges in the prior year.
Steelmaking coal production increased by 42% to 6.9 Mt (30 June 2022: 4.8
Mt), reflecting the benefit of all three underground longwall operations
running, with particularly high production from Moranbah, which underwent an
extended longwall move during the first half of 2022, as well as increased
production from the open cut operations that were impacted by unseasonal wet
weather in 2022.
Manganese ore production was in line with the prior period at 1.8 Mt (30 June
2022: 1.8 Mt).
Group copper equivalent unit costs increased by 1% as inflationary pressures,
particularly labour and electricity, were offset by the benefit of favourable
exchange rates and production from Quellaveco which started operations in July
2022. Excluding the favourable impact of foreign exchange, unit costs
increased by 7%.
Financial performance
Anglo American's profit attributable to equity shareholders decreased to
$1.3 billion (30 June 2022: $3.7 billion). Underlying earnings were
$1.7 billion (30 June 2022: $3.8 billion), while operating profit was $3.0
billion
(30 June 2022: $6.7 billion).
Underlying EBITDA*
Group underlying EBITDA decreased by $3.6 billion to $5.1 billion (30 June
2022: $8.7 billion) due to lower commodity prices and global cost
inflationary pressures, which increased our input costs. As a result, the
Group Mining EBITDA margin* of 41% was lower than the prior period (30 June
2022: 52%). A reconciliation of 'Profit before net finance costs and tax', the
closest equivalent IFRS measure to underlying EBITDA, is provided within note
3 to the Condensed financial statements.
Underlying EBITDA* by segment
Six months ended Six months ended
$ million 30 June 2023 30 June 2022
Copper 1,492 1,166
Nickel 110 239
PGMs 667 2,732
De Beers 347 944
Iron Ore 1,775 2,298
Steelmaking Coal 615 1,399
Manganese 138 223
Crop Nutrients (20) (18)
Corporate and other (10) (282)
Total 5,114 8,701
Underlying EBITDA* reconciliation for the six months ended 30 June 2022 to
six months ended 30 June 2023
The reconciliation of underlying EBITDA from $8.7 billion in 2022 to
$5.1 billion in 2023 shows the major controllable factors (e.g. cost and
volume), as well as those outside of management control (e.g. price, foreign
exchange and inflation), that drive the Group's performance.
$ billion
H1 2022 underlying EBITDA* 8.7
Price (4.5)
Foreign exchange 0.8
Inflation (0.5)
Net cost and volume 0.6
H1 2023 underlying EBITDA* 5.1
Price
Average market prices for the Group's basket of products decreased by 19%
compared with the first half of 2022, reducing underlying EBITDA by $4.5
billion. The PGMs basket price decreased by 29%, primarily driven by rhodium
and palladium, which decreased by 47% and 29% respectively. Alongside this,
the realised price for hard coking coal (HCC) reduced by 31% and the iron ore
price fell by 22%.
Foreign exchange
Favourable foreign exchange benefited underlying EBITDA by $0.8 billion,
primarily reflecting the impact of the weaker South African rand.
Inflation
The Group's weighted average CPI for the first half of the year was 6.3% as
inflation continued to increase in all regions, albeit slowing somewhat from
the 7.2% in the first six months of 2022. The impact of CPI inflation on costs
reduced underlying EBITDA by $0.5 billion (30 June 2022: $0.4 billion).
Net cost and volume
The net impact of cost and volume was a $0.6 billion increase in underlying
EBITDA, largely driven by the successful ramp-up of Quellaveco. Steelmaking
Coal benefited from all three underground longwall operations running as well
as increased performance from the open cut operations that were impacted by
unseasonal wet weather in the first half of 2022. Sales improved at Minas-Rio
on the back of a strong mining and plant performance. These were partly offset
by lower sales volumes at PGMs as refined production was impacted by the
Polokwane smelter ramp-up, planned asset integrity work, and deferred
production due to Eskom load-curtailment. Copper Chile sales were affected as
lower grades and ore hardness impacted production. In addition to these volume
impacts, above-CPI inflationary pressures contributed to higher costs across
the Group.
Underlying earnings*
Group underlying earnings decreased to $1.7 billion (30 June
2022: $3.8 billion), driven by the lower underlying EBITDA, partly offset by
a corresponding decrease in income tax expense and earnings attributable to
non‑controlling interests.
Reconciliation from underlying EBITDA* to underlying earnings*
Six months ended Six months ended
$ million 30 June 2023 30 June 2022
Underlying EBITDA* 5,114 8,701
Depreciation and amortisation (1,265) (1,226)
Net finance costs and income tax expense (1,550) (2,552)
Non-controlling interests (629) (1,136)
Underlying earnings* 1,670 3,787
Depreciation and amortization
Depreciation and amortisation increased by 3% to $1.3 billion (30 June
2022: $1.2 billion), reflecting the increased production alongside a higher
carrying value of our Steelmaking Coal assets due to the impairment reversal
recognised in 2022, and Quellaveco commencing commercial production in June
2023.
Net finance costs and income tax expense
Net finance costs, before special items and remeasurements, were in line with
the prior period at $0.2 billion (30 June 2022: $0.2 billion).
The underlying effective tax rate was higher than the prior period at 37.0%
(30 June 2022: 32.6%), reflecting the impact of the relative levels of
profits arising in the Group's operating jurisdictions. The tax charge for the
period, before special items and remeasurements, was $1.2 billion (30 June
2022: $2.2 billion), reflecting lower profit before tax.
As a result of the expected enactment of the Chile Mining Royalty Bill during
the second half of 2023, the underlying effective tax rate for the year ended
31 December 2023 is expected to increase by about 1% above the previously
guided range of 35-37%. The Group continues to evaluate the impact of this new
regime on the longer term underlying effective tax rate guidance of 33%-37%.
Non-controlling interests
The share of underlying earnings attributable to non-controlling interests of
$0.6 billion (30 June 2022: $1.1 billion) principally relates to minority
shareholdings in Kumba (Iron Ore), Copper and PGMs.
Special items and remeasurements
Special items and remeasurements (after tax and non-controlling interests) are
a net charge of $0.4 billion
(30 June 2022: net charge of $0.1 billion), principally relating to the
impairment of $0.4 billion recognised in
Barro Alto (Nickel).
Full details of the special items and remeasurements recorded are included in
note 9 to the Condensed financial statements.
Net debt*
$ million 2023 2022
Opening net debt* at 1 January (6,918) (3,842)
Underlying EBITDA* from subsidiaries and joint operations 4,685 8,011
Working capital movements (701) (1,013)
Other cash flows from operations (53) 19
Cash flows from operations 3,931 7,017
Capital repayments of lease obligations (125) (131)
Cash tax paid (1,096) (1,751)
Dividends from associates, joint ventures and financial asset investments 208 238
Net interest((1)) (303) (116)
Dividends paid to non-controlling interests (362) (1,079)
Sustaining capital expenditure (2,024) (1,757)
Sustaining attributable free cash flow* 229 2,421
Growth capital expenditure and other((2)) (695) (857)
Attributable free cash flow* (466) 1,564
Dividends to Anglo American plc shareholders (905) (2,052)
Acquisitions and disposals 197 467
Foreign exchange and fair value movements (2) (146)
Other net debt movements((3)) (704) (844)
Total movement in net debt* (1,880) (1,011)
Closing net debt* at 30 June (8,798) (4,853)
((1))Includes cash outflows of $196 million (30 June 2022: inflows of
$57 million), relating to interest payments on derivatives hedging net debt,
which are included in cash flows from derivatives related to financing
activities.
((2))Growth capital expenditure and other includes $59 million (30 June 2022:
$39 million) of expenditure on non-current intangible assets.
((3))Includes the purchase of shares (including for employee share schemes)
of $187 million; Mitsubishi's share of Quellaveco capital expenditure of $83
million; other movements in lease liabilities (excluding variable vessel
leases) increasing net debt by $89 million; and contingent and deferred
consideration paid in respect of acquisitions completed in previous years of
$124 million. 2022 includes the purchase of shares under the 2021 buyback
programme of $186 million; the purchase of shares for other purposes
(including for employee share schemes) of $252 million; Mitsubishi's share of
Quellaveco capital expenditure of $260 million; other movements in lease
liabilities (excluding variable vessel leases) decreasing net debt by $65
million; and contingent and deferred consideration paid in respect of
acquisitions completed in previous years of $157 million.
Net debt (including related derivatives) of $8.8 billion has increased by
$1.9 billion since 31 December 2022, which includes a working capital cash
outflow of $0.7 billion, primarily due to a reduction in payables. The Group
generated sustaining attributable free cash flow of $0.2 billion, used in the
funding of growth capital expenditure of $0.6 billion and dividends paid to
Anglo American plc shareholders of $0.9 billion. Net debt at 30 June 2023
represented gearing (net debt to total capital) of 21% (31 December
2022: 17%).
Cash flow
Cash flows from operations
Cash flows from operations decreased to $3.9 billion (30 June
2022: $7.0 billion), reflecting a reduction
in underlying EBITDA from subsidiaries and joint operations, and a working
capital build of $0.7 billion
(30 June 2022: build of $1.0 billion). Payables reduced by $1.0 billion,
largely driven by the impact of lower prices
on the valuation of the Purchase of Concentrate (POC) creditor and customer
prepayment at PGMs. The inventory increase of $0.3 billion was driven by
product mix and weaker demand for diamonds. This was partly offset by
a reduction in receivables of $0.6 billion, driven by price and volume
impacts at Copper Chile and timing impacts
at Steelmaking Coal.
Capital expenditure*
Six months ended Six months ended
$ million 30 June 2023 30 June 2022
Stay-in-business 1,242 1,010
Development and stripping 510 462
Life-extension projects 274 292
Proceeds from disposal of property, plant and equipment (2) (7)
Sustaining capital 2,024 1,757
Growth projects 636 818
Total capital expenditure 2,660 2,575
Capital expenditure increased to $2.7 billion (30 June
2022: $2.6 billion), due to additional sustaining capital expenditure.
Sustaining capital expenditure increased to $2.0 billion (30 June
2022: $1.8 billion) driven by additional stay-in-business expenditure for
Copper Chile related to the Collahuasi desalination plant project, planned
higher stay-in-business expenditure at PGMs, and Quellaveco stripping and
development.
Growth capital expenditure decreased to $0.6 billion (30 June 2022: $0.8
billion) as the Quellaveco project was successfully delivered in July 2022,
and reached commercial production levels in June 2023.
Total capital expenditure for 2023 is expected to be c.$6.0 billion
(previously $6.0-6.5 billion).
Attributable free cash flow*
The Group's attributable free cash flow decreased to an outflow of
$0.5 billion (30 June 2022: inflow of $1.6 billion) due to lower cash
flows from operations of $3.9 billion (30 June 2022: $7.0 billion) and
increased capital expenditure of $2.7 billion (30 June 2022: $2.6 billion).
This was partially offset by decreased tax payments of $1.1 billion (30 June
2022: $1.8 billion) and a reduction in dividends paid to non-controlling
interests of $0.4 billion (30 June 2022: $1.1 billion).
Shareholder returns
In line with the Group's established dividend policy to pay out 40% of
underlying earnings, the Board has
approved a dividend of $0.55 per share (30 June 2022: $1.24 ordinary
dividend per share), equivalent to
$0.7 billion (30 June 2022: $1.5 billion including special dividend).
Disposals
Cash received of $207 million in respect of disposals for the period ended 30
June 2023 principally relates to the final settlement of the deferred
consideration balance relating to the sale of the Rustenburg operations (PGMs)
completed in November 2016.
Balance sheet
Net assets decreased by $0.7 billion to $33.2 billion (31 December 2022:
$34.0 billion), reflecting dividend payments to Company shareholders and
non-controlling interests as well as foreign exchange movements, partially
offset by the profit in the period.
Attributable ROCE*
Attributable ROCE decreased to 18% (30 June 2022: 36%). Annualised
attributable underlying EBIT decreased to $5.9 billion (30 June 2022: $11.5
billion), reflecting the impact of lower realised prices achieved for the
Group's products and higher input costs as inflation remained high in all
regions. Average attributable capital employed increased to $33.1 billion
(30 June 2022: $32.0 billion), primarily due to capital expenditure,
largely at Quellaveco and the Collahuasi desalination project (Copper), partly
offset by the reduction in capital employed following the Crop Nutrients
impairment recorded at 31 December 2022.
Liquidity and funding
Group liquidity stands at $14.9 billion (31 December 2022: $16.1 billion),
comprising $7.8 billion of cash and cash equivalents (31 December 2022: $8.4
billion) and $7.1 billion of undrawn committed facilities (31 December 2022:
$7.7 billion).
During the first half of 2023, the Group issued $2.0 billion of bond debt. In
March 2023, the Group issued €500 million 4.5% Senior Notes due 2028, and
€500 million 5.0% Senior Notes due 2031 and, in May 2023, $900 million 5.5%
Senior Notes due 2033.
The weighted average maturity on the Group's bonds was broadly in line with
the prior year at 7.8 years (31 December 2022: 7.7 years).
The Group has an undrawn $4.7 billion revolving credit facility due to mature
in March 2025.
The Group received an upgrade to BBB+ (stable outlook) in March 2023 from
Fitch Ratings.
Attractive growth options
Anglo American continues to evolve its portfolio of competitive, world class
assets towards those future-enabling products that are fundamental to enabling
a low carbon economy and that cater to major global consumer demand trends.
Growth projects (metrics presented on a 100% basis unless otherwise indicated)
Progress and current expectations in respect of our key growth projects are as
follows:
Operation Scope Capex Remaining capex First production
$bn $bn
Copper
Collahuasi Implementation of the approved fifth ball mill continues with ramp-up expected Fifth ball mill c.0.1 (44% share) Expansion studies ongoing. Subject to permitting and approvals 2023
to commence in late Q4 2023. Additional debottlenecking options remain under
study and are expected to add
20-50 ktpa (44% share) in the medium term. Further expansions are in
early-stage study to increase plant capacity beyond 210 ktpd, delivering over
100 ktpa of copper (44% share).
Crop Nutrients
Woodsmith New polyhalite (natural mineral fertiliser) mine being developed in North Refer to page 26 for more information on project progress
Yorkshire, UK. Expected to produce POLY4 - a premium quality, comparatively
low carbon fertiliser suitable for organic use. Studies remain ongoing but the
indicative design capacity is currently expected to be c.13 Mtpa.
Iron Ore
Sishen Implementation of ultra high dense media separation (UHDMS) technology at Project plan under review
Kumba's Sishen operation will enable an increase in premium product production
and the beneficiation of lower grade run-of-mine (between 40% Fe and 48% Fe).
PGMs
Mogalakwena Evaluating various options to expand PGM production of the mine through Projects under review with a number of options being considered
technology development and deployment and the optimal mine plan to deliver
feed to the concentrators.
Life-extension projects (metrics presented on a 100% basis unless otherwise
indicated)
Progress and current expectations in respect of our key life-extension
projects are as follows:
Operation Scope Capex Remaining capex Expected first production
$bn $bn
Diamonds
Venetia 4 Mctpa underground replacement for the existing open pit. First production 2.3 0.9 2023
recently achieved with ramp-up over the next few years as development
continues.
Jwaneng 9 Mctpa replacement (100% basis) for Cuts 7 and 8. The Cut-9 expansion of 0.3 (19.2% share) 0.2 (19.2% share) 2027
Jwaneng will extend the life of the mine to 2036.
Iron Ore
Kolomela 4 Mtpa high grade iron ore replacement project. The development of a new pit, 0.4 0.1 2024
Kapstevel South, and associated infrastructure at Kolomela to help sustain
output of c.12 Mtpa and extend the remaining life of mine to 2034. Approved in
July 2020, with first ore expected in 2024.
PGMs
Mototolo/ Project leverages the existing Mototolo infrastructure, enabling mining to 0.2 0.2 2024
extend into the adjacent and down-dip Der Brochen resource to extend the life
Der Brochen of the asset beyond 30 years. Approved in December 2021.
Technology projects((1))
The Group plans to invest c.$0.1-0.3 billion((2)) per year on projects to
support the FutureSmart Mining(TM) programme and the delivery of Anglo
American's Sustainable Mining Plan targets, particularly those that relate to
safety, energy, emissions and water, including the following innovative
technology projects. For more information on the progress of these
initiatives, refer to slide 73 of the HY2023 presentation. Furthermore, the
Group plans to continue investing in digital projects as part of the
FutureSmart Mining(TM) programme. For more information, please refer to our
Integrated Annual Report 2022, page 41.
Initiative Scope
Copper and Nickel
Bulk ore sorting (BOS) Deliver improved feed grade to plants through early rejection of waste,
resulting in energy, water and cost savings.
Copper, PGMs, and Iron Ore
Coarse particle recovery (CPR) Innovative flotation process allows material to be ground to a larger particle
size, rejecting coarse gangue and allowing water to release from coarser ore
particles, improving energy efficiencies and water savings.
Copper and PGMs
Hydraulic dewatered stacking (HDS) Engineering of geotechnically stable tailings facilities that dry out in
weeks, facilitating up to 85% water recovery.
Portfolio-wide
Zero emissions haulage solution (ZEHS) Through First Mode, developing hydrogen-powered ultra-class mining haul trucks
to decarbonise our largest source of diesel consumption through renewable
energy.
((1))Expenditure relating to technology projects is included within operating
expenditure, or if it meets the accounting criteria for capitalisation, within
Growth capital expenditure.
((2)) Technology and innovation capex is estimated to be between $0.1-0.3
billion per year (previously $0.2-0.5 billion per year), including capex on
the ZEHS programmes. The lower guidance reflects equity accounting of the SA
Regional Renewable Energy Ecosystem joint venture, Envusa Energy.
The Board
Changes during 2023 to the composition of the Board are set out below.
As announced on 28 February 2023, Magali Anderson joined the Board as a
non-executive director and member of the Board's Sustainability Committee on 1
April 2023.
Following Magali's appointment, four (40%) of the 10 directors on the Board
are female and two (20%) are people of colour.
As announced on 31 May 2023, Stephen Pearce, who has served as Finance
Director since April 2017, has indicated his intention to retire from the
Group. As announced on 27 July 2023, John Heasley, currently CFO of The Weir
Group PLC, will succeed Stephen Pearce as Finance Director.
The names of the directors at the date of this report and the skills and
experience our Board members contribute to the long term sustainable success
of Anglo American are set out on the Group's website:
www.angloamerican.com/about-us/leadership-team/board
(https://www.angloamerican.com/about-us/leadership-team)
Principal risks and uncertainties
Anglo American is exposed to a variety of risks and uncertainties which may
have a financial, operational or reputational impact on the Group, and which
may also have an impact on the achievement of social, economic and
environmental objectives. The principal risks and uncertainties facing the
Group relate to the following:
- Catastrophic and natural catastrophe risks
- Economic environment including product prices
- Cyber security
- Geo-political
- Community stakeholder conflict
- Power
- Safety
- Climate change
- Corruption
- Regulatory and permitting
- Water
- Pandemic
- Operational performance
- Future demand
The Group is exposed to changes in the economic environment, including tax
rates and regimes, as with any other business. Details of any key risks and
uncertainties specific to the period are covered in the business reviews on
pages 14-28. Details of relevant tax matters are included in note 6 to the
Condensed financial statements.
The principal risks and uncertainties facing the Group at the 2022 year end
are set out in detail in the strategic report section of the Integrated Annual
Report 2022 on the Group's website www.angloamerican.com
(http://www.angloamerican.com)
Copper
Financial and operational metrics
Production Sales Price Unit Group Underlying Mining Underlying Capex* ROCE*
volume volume cost* revenue* EBITDA* EBITDA EBIT*
margin*
kt kt((1)) c/lb((2)) c/lb((3)) $m((4)) $m $m $m
Copper Total 387 389 393 179 3,493 1,492 43% 1,176 878 19%
Prior period 273 265 401 150 2,443 1,166 47% 894 953 19%
Copper Chile 249 238 393 205 2,263 691 29% 418 657 20%
Prior period 273 265 401 150 2,443 1,166 47% 894 577 42%
Los Bronces((5)) 113 103 n/a 310 843 128 15% 24 340 n/a
Prior period 130 122 - 219 1,027 431 42% 324 363 -
Collahuasi((6)) 114 114 n/a 114 1,014 565 56% 447 297 n/a
Prior period 128 128 - 85 1,095 821 75% 697 145 -
Other operations((7)) 23 21 n/a n/a 406 (2) 17% (53) 20 n/a
Prior period 16 15 - - 321 (86) (3)% (127) 69 -
Copper Peru (Quellaveco)((8)) 138 151 394 132 1,230 801 65% 758 221 18%
Prior period - - - - - - - - 376 -
((1))Excludes 178 kt third-party sales (30 June 2022: 216 kt).
((2))Represents realised copper price and excludes impact of third-party
sales.
((3))C1 unit cost includes by-product credits.
((4))Group revenue is shown after deduction of treatment and refining charges
(TC/RCs).
((5))Figures on a 100% basis (Group's share: 50.1%).
((6))44% share of Collahuasi production, sales and financials.
((7))Other operations form part of the results of Copper Chile. Production and
sales are from El Soldado mine (figures on a 100% basis, Group's share 50.1%).
Financials include El Soldado and Chagres (figures on a 100% basis, Group's
share 50.1%), third-party trading, projects and corporate costs. El Soldado
mine C1 unit costs decreased by 1% to 301 c/lb (30 June 2022: 304 c/lb).
((8))Figures on a 100% basis (Group's share: 60%). Included in capex is the
project capex which represents the Group's share after deducting direct
funding from non‑controlling interests. In H1 2023, the Group's share of
project capex was $111 million (on a 100% basis, $185 million). In H1 2022,
the Group's share was $376 million (on a 100% basis, $626 million).
Operational performance
Copper Chile
Copper production of 249,400 tonnes was 9% lower than the prior period
(30 June 2022: 273,400 tonnes).
At Los Bronces, production decreased by 13% to 112,500 tonnes (30 June 2022:
129,700 tonnes) due to lower grades (0.52% vs 0.59%) and lower throughput
(22.5 Mt vs 23.1 Mt) as a result of unfavourable ore characteristics,
including higher ore hardness. The unfavourable ore characteristics in the
current area of mining will continue to affect the operation until the next
phase of the mine is accessed.
At Collahuasi, Anglo American's attributable share of copper production
decreased by 10% to 114,400 tonnes (30 June 2022: 127,800 tonnes) due to
planned lower grades (1.07% vs 1.14%).
Production at El Soldado increased by 42% to 22,500 tonnes (30 June 2022:
15,900 tonnes) due to planned higher grades (0.84% vs 0.54%), reflecting
production from a new phase of the mine.
Chile´s central zone continues to face severe drought conditions. Management
initiatives to improve water efficiency and secure alternative sources of
water will continue in order to mitigate the impact on production. From 2025,
more than 45% of Los Bronces' needs will be met through a desalinated water
supply.
The environmental permit for the Los Bronces open pit expansion and
underground development was approved on 17 April 2023. The Los Bronces mine
plan is being updated to take into account the delay in the permit approval
and reflect the ongoing permitting complexities in the region. The expected
delay in finalising the permitting process will impact the development of the
next phase of the mine, which enables access to higher grade, softer
ore. Studies for the Los Bronces underground expansion are ongoing.
Copper Peru
Quellaveco produced 137,800 tonnes, reflecting the progressive ramp-up in
production volumes since first production in July 2022. The plant successfully
completed planned maintenance in the first quarter, and achieved throughput
beyond nameplate capacity several times during the second quarter, reaching
commercial production levels in June.
Following first production from the molybdenum plant in April 2023, the
ramp-up is near completion.
With the mine operational, focus is now on completing the construction and
commissioning of the coarse particle recovery (CPR) plant.
Markets
Six months ended Six months ended
30 June 2023 30 June 2022
Average market price (c/lb) 394 443
Average realised price (Copper Chile - c/lb) 393 401
Average realised price (Copper Peru - c/lb) 394 -
The differences between the market price and the realised prices are largely a
function of provisional pricing adjustments and the timing of sales across the
period. At Copper Chile, 134,500 tonnes of copper were provisionally priced at
377 c/lb at 30 June 2023 (30 June 2022: 145,900 tonnes provisionally priced
at 374 c/lb). At Copper Peru, 91,700 tonnes of copper were provisionally
priced at 377c/lb at 30 June 2023.
At the start of the year, the LME copper price benefited from positive
macro-economic sentiment that drove markets higher, underpinned by the
re-opening of China, where Covid-19 restrictions were lifted. Market optimism
subsequently tapered off as global economic growth prospects were impacted by
rising interest rates and a slower than expected recovery in China. Copper's
underlying fundamentals, however, remain attractive, as continued global
decarbonisation efforts benefit the use of copper in applications and
infrastructure associated with the energy transition. Reported stocks fell to
historically low levels and supply disruptions continued to be a feature of
the sector.
Financial performance
Underlying EBITDA for Copper increased by 28% to $1,492 million (30 June
2022: $1,166 million), driven by Quellaveco which started production in July
2022, partly offset by a 19% increase in unit costs and a 2% decrease in
realised price.
Copper Chile
Underlying EBITDA decreased by 41% to $691 million (30 June 2022: $1,166
million), driven by lower sales and higher unit costs. Unit costs increased by
37% to 205 c/lb (30 June 2022: 150 c/lb), reflecting the impact of higher
inflation, lower production and a stronger Chilean peso.
Capital expenditure increased by 14% to $657 million (30 June 2022: $577
million), mainly driven by expenditure on the Collahuasi desalination project.
Copper Peru
Underlying EBITDA was $801 million, reflecting a realised price of 394 c/lb
and unit costs of 132 c/lb for the six month period.
Capital expenditure was $221 million. $111 million relates to our share of
project capex, the remainder primarily relates to development and stripping
costs.
Operational outlook
Copper Chile
Production guidance for Chile for 2023 is 530,000-580,000 tonnes, subject to
water availability.
C1 unit cost guidance for 2023 is c.205 c/lb.
Copper Peru
Production guidance for Peru for 2023 is 310,000-350,000 tonnes.
C1 unit cost guidance for 2023 is c.100 c/lb.
Nickel
Financial and operational metrics
Production Sales Price Unit Group Underlying Mining Underlying Capex* ROCE*
volume volume cost* revenue* EBITDA* EBITDA EBIT*
margin*
t t $/lb((1)) c/lb((2)) $m $m $m $m
Nickel 19,600 19,100 9.04 550 383 110 29% 72 41 12%
Prior period 19,600 16,800 11.59 487 407 239 59% 201 32 30%
((1))Realised price.
((2))C1 unit cost.
Operational performance
Nickel production was in line with the prior period at 19,600 tonnes (30 June
2022: 19,600 tonnes), as lower grades were largely offset by improved
operational performance.
Markets
30 June 2023 30 June 2022
Average market price ($/lb) 10.98 12.52
Average realised price ($/lb) 9.04 11.59
Differences between the market price (which is LME-based) and our realised
price (the ferronickel price) are due to the discounts (or premiums) to the
LME price, which depend on market conditions, supplier products and consumer
preferences.
The average LME nickel price of $10.98/lb was 12% lower (30 June 2022:
$12.52/lb), mainly due to the uncertain macro-economic outlook. Global nickel
consumption grew strongly year on year, particularly in China which saw record
H1 volumes of nickel consumed in the stainless steel and battery sectors.
Global refined nickel production also increased, particularly in Indonesia.
Financial performance
Underlying EBITDA decreased by 54% to $110 million (30 June 2022: $239
million), as higher sales volumes
were offset by lower average realised prices and higher unit costs. C1 unit
costs increased by 13% to 550 c/lb (30 June 2022: 487 c/lb), reflecting the
impact of higher costs of production due to lower grade ore, as well as higher
consumable input prices.
Capital expenditure increased by 28% to $41 million (30 June 2022: $32
million), driven by higher sustaining capital expenditure.
Within special items and remeasurements, an impairment of $361 million (before
tax) was recognised at Barro Alto following revisions to the long term cost
profile.
Operational outlook
Production guidance for 2023 is 38,000-40,000 tonnes.
C1 unit cost guidance for 2023 is c.560 c/lb.
Platinum Group Metals (PGMs)
Financial and operational metrics
Production Sales Basket Unit Group Underlying Mining Underlying Capex* ROCE*
volume volume price cost* revenue* EBITDA* EBITDA EBIT*
PGMs PGMs margin*((5))
koz((1)) koz((2)) $/PGM oz((3)) $/PGM oz((4)) $m $m $m $m
PGMs 1,844 1,807 1,885 993 3,531 667 37% 505 449 20%
Prior period 1,988 2,044 2,671 948 5,555 2,732 55% 2,555 394 119%
Mogalakwena 461 462 1,930 961 898 437 49% 355 210 n/a
Prior period 510 540 2,543 821 1,374 871 63% 796 210 -
Amandelbult 299 309 2,174 1,200 676 206 30% 187 29 n/a
Prior period 343 372 3,016 1,184 1,122 603 54% 573 32 -
Other operations((6)) 438 414 1,815 954 773 235 30% 186 210 n/a
Prior period 456 436 2,780 924 1,210 581 48% 524 152 -
Processing and trading((7)) 646 622 n/a n/a 1,184 (211) (18)% (223) n/a n/a
Prior period 678 696 - - 1,849 677 37% 662 - -
((1))Production reflects own mined production and purchase of metal in
concentrate. PGM volumes consist of 5E metals and gold.
((2))Sales volumes exclude the sale of refined metal purchased from third
parties and toll material. PGM volumes consist of 5E metals and gold.
((3))Average US$ realised basket price, based on sold ounces (own mined and
purchased concentrate). Excludes the impact of the sale of refined metal
purchased from third parties.
((4))Total cash operating costs (includes on-mine, smelting and refining costs
only) per own mined PGM ounce of production.
((5))The total PGMs mining EBITDA margin excludes the impact of the sale of
refined metal purchased from third parties, purchase of concentrate and
tolling.
((6))Includes Unki, Mototolo and PGMs' share of joint operations (Kroondal and
Modikwa). Other operations margin includes unallocated market development,
care and maintenance, and corporate costs.
((7))Purchase of concentrate from joint operations, associates and third
parties for processing into refined metals, tolling and trading activities.
Operational performance
Total PGM production decreased by 7% to 1,844,300 ounces (30 June 2022:
1,987,500 ounces), principally due to lower grades at Mogalakwena and the
impact of planned infrastructure closures at Amandelbult at the end of 2022.
Own mined production
PGM production from own managed mines (Mogalakwena, Amandelbult, Unki and
Mototolo) and equity share of joint operations decreased by 8% to 1,198,700
ounces (30 June 2022: 1,309,400 ounces).
Mogalakwena PGM production decreased by 10% to 461,400 ounces (30 June 2022:
510,200 ounces), largely as a result of lower grades.
Amandelbult PGM production decreased by 13% to 299,400 ounces (30 June 2022:
343,300 ounces) as a
result of the planned mining infrastructure closures at the end of 2022, as
well as short term operational challenges
at Tumela.
Production from other operations decreased by 4% to 437,900 ounces (30 June
2022: 455,900 ounces), mainly due to lower production from Kroondal as a
consequence of planned ramp-down of the operation.
Purchase of concentrate
Purchase of concentrate (POC) decreased by 5% to 645,600 ounces (30 June
2022: 678,100 ounces), driven by the impact of lower production at Kroondal as
well as lower third-party receipts.
Refined production and sales volumes
Refined PGM production (excluding toll-treated metal) decreased by 13% to
1,699,800 ounces
(30 June 2022: 1,959,100 ounces) due to the ramp-up at Polokwane smelter in
January following its rebuild, planned asset integrity work at the processing
operations and the impact of Eskom load-curtailment (c.66,000 ounces of
deferred production).
PGM sales volumes decreased by 12% to 1,807,300 ounces (30 June 2022:
2,044,400 ounces) in line with lower refined production.
Markets
30 June 2023 30 June 2022
Average platinum market price ($/oz) 1,009 995
Average palladium market price ($/oz) 1,505 2,219
Average rhodium market price ($/oz) 8,957 17,167
Realised basket price ($/PGM oz) 1,885 2,671
PGM prices were mostly weaker in the first half of 2023, as a mixed
macro-economic backdrop was overlaid with adverse PGM-specific factors. The
average realised PGM basket price decreased by 29% in the period to $1,885 per
PGM ounce (30 June 2022: $2,671 per PGM ounce).
The average rhodium market price of $8,957 per ounce was 48% lower than for
the same period in 2022, driven by persistent selling pressure from the glass
industry, which has freed up stock by transitioning to a lower rhodium, higher
platinum mix. Palladium averaged $1,505 per ounce, 32% lower, owing to robust
Russian metal flows and subdued automotive demand. In contrast, platinum
increased by 1% to $1,009 per ounce. The minor PGMs, iridium and ruthenium,
continued to make robust contributions to the basket price.
Financial performance
Underlying EBITDA decreased to $667 million (30 June 2022: $2,732 million),
primarily driven by a lower basket price, which resulted in lower POC margins
and affected the cost of POC inventory. EBITDA was further impacted by a
decrease in sales volumes and higher unit costs. Unit costs increased by 5% to
$993/PGM ounce (30 June 2022: $948/PGM ounce), due to lower production and
higher inflation, partly offset by the weaker South African rand.
Capital expenditure increased by 14% to $449 million (30 June 2022: $394
million), driven by planned higher
stay-in-business expenditure, partly offset by the weaker South African rand.
Operational outlook
PGM metal in concentrate production guidance for 2023 is 3.6-4.0 million
ounces, with own mined output accounting for c.65%. Refined PGM production
guidance for 2023 is 3.6-4.0 million ounces, subject to the extent of Eskom
load-curtailment.
Unit cost guidance for 2023 is c.$1,000/PGM ounce.
De Beers - Diamonds
Financial and operational metrics((1))
Production Sales Unit Group Underlying EBITDA Underlying Capex* ROCE*
volume volume Price cost* revenue* EBITDA* margin((6)) EBIT*
'000 '000 $/ct((3)) $/ct((4)) $m((5)) $m $m $m
cts((2))
cts
De Beers 16,520 15,303 163 63 2,831 347 50% 190 302 5%
Prior period 16,884 15,329 213 59 3,595 944 53% 718 250 11%
Botswana 12,728 n/a 175 30 n/a 274 n/a 242 30 n/a
Prior period 11,705 - 189 32 - 333 - 295 31 -
Namibia 1,231 n/a 550 223 n/a 102 n/a 84 20 n/a
Prior period 1,016 - 632 292 - 93 - 78 19 -
South Africa 1,205 n/a 130 68 n/a 54 n/a 50 202 n/a
Prior period 2,916 - 147 39 - 227 - 162 169 -
Canada 1,356 n/a 89 46 n/a 23 n/a 1 32 n/a
Prior period 1,247 - 97 60 - 2 - (25) 19 -
Trading n/a n/a n/a n/a n/a 61 2% 58 1 n/a
Prior period - - - - - 401 12% 398 1 -
Other((7)) n/a n/a n/a n/a n/a (167) n/a (245) 17 n/a
Prior period - - - - - (112) - (190) 11 -
((1))Prepared on a consolidated accounting basis, except for production, which
is stated on a 100% basis except for the Gahcho Kué joint operation in
Canada, which is on an attributable 51% basis.
((2))Total sales volumes on a 100% basis were 17.3 million carats (30 June
2022: 17.3 million carats). Total sales volumes (100%) include De Beers
Group's joint arrangement partners' 50% proportionate share of sales to
entities outside De Beers Group from Diamond Trading Company Botswana and
Namibia Diamond Trading Company.
((3))Pricing for the mining businesses is based on 100% selling value
post-aggregation of goods. Realised price includes the price impact of the
sale of non-equity product and, as a result, is not directly comparable to the
unit cost.
((4))Unit cost is based on consolidated production and operating costs,
excluding depreciation and operating special items, divided by carats
recovered.
((5))Includes rough diamond sales of $2.5 billion (30 June 2022: $3.3
billion).
((6))Total De Beers EBITDA margin shows mining EBITDA margin on an equity
basis, which excludes the impact of non-mining activities, third‑party
sales, purchases, trading downstream and corporate.
((7))Other includes Element Six, brands and consumer markets, and corporate.
Markets
The high levels of polished diamond inventory in the midstream coming into
2023, as well as the ongoing macro-economic headwinds, impacted demand for
rough diamonds. The anticipated rebound in Chinese demand following the
removal of Covid-19 restrictions was impacted by a large wave of infections
during the first quarter of 2023, which dampened consumer confidence. Amid the
slow polished sector during the first half of 2023, midstream inventories have
continued to build, with profitability under strain from softening polished
prices and higher financing costs.
Operational performance
Mining
Rough diamond production was marginally lower than the strong first half of
2022, at 16.5 million carats
(30 June 2022: 16.9 million carats), reflecting strong operational
performance in most regions, offset by the
planned reduction in South Africa as the Venetia open pit transitions to
underground operations.
In Botswana, production increased by 9% to 12.7 million carats (30 June 2022:
11.7 million carats), driven by the planned treatment of higher grade ore at
Orapa.
Namibia production increased by 21% to 1.2 million carats (30 June 2022: 1.0
million carats), primarily driven by
the contribution from the Benguela Gem vessel, which commenced production in
March 2022, and the ongoing ramp-up and expansion of the mining area at the
land operations.
South Africa production decreased by 59% to 1.2 million carats (30 June 2022:
2.9 million carats), due to the planned completion of the Venetia open pit in
December 2022. Venetia continues to process lower grade surface stockpiles,
which will result in temporary lower production levels as it transitions to
underground operations, where first production was recently achieved. It will
ramp-up over the next few years as development continues.
Production in Canada increased by 9% to 1.4 million carats (30 June 2022: 1.2
million carats) as the treatment of higher grade ore offset planned plant
maintenance.
Financial performance
Total revenue decreased to $2.8 billion (30 June 2022: $3.6 billion), with
rough diamond sales decreasing to $2.5 billion (30 June 2022: $3.3 billion)
reflecting the softening in demand. Total rough diamond sales volumes of 15.3
million carats were in line with the prior period (30 June 2022: 15.3 million
carats), as a result of a higher proportion of lower value rough diamonds
being sold in 2023. This impacted the average realised price in the first half
of the year, which decreased by 23% to $163/ct (30 June 2022: $213/ct), and
reflects the more cautious approach Sightholders took to planning their 2023
allocation schedule due to the uncertain macro-economic outlook. The average
rough diamond price index also decreased by 2%, reflecting the overall
softening in consumer demand for diamond jewellery and build-up in rough
diamond inventory in the midstream.
Underlying EBITDA decreased by 63% to $347 million (30 June 2022: $944
million), driven by the lower
average realised price and higher unit costs. Unit costs increased by 7% at
$63/ct (30 June 2022: $59/ct),
as lower production volumes, higher inflation and input costs were partially
offset by the benefits of favourable exchange rates.
Capital expenditure increased by 21% to $302 million (30 June 2022: $250
million), largely due to the Venetia underground project as well as the
continued execution of life-extension projects.
De Beers and the Government of the Republic of Botswana have reached an
agreement in principle on a new
10-year sales agreement for Debswana's rough diamond production (through to
2033) and the new 25-year Debswana mining licences (through to 2054). Whilst
the implementation of the formal sales agreement and mining licences is being
finalised, the terms of the most recent sales agreement (which expired on 30
June) will remain in place. The new arrangements between De Beers and the
Government of Botswana constitute a related party transaction under the UK
Listing Rules, given that both Anglo American and the Government of Botswana
are shareholders in De Beers, and therefore will be subject to approval by
Anglo American's shareholders in due course.
Brands and consumer markets
The underlying demand for branded diamond jewellery remains strong. Despite
the ongoing macro-economic uncertainty, De Beers Jewellers delivered a solid
first half performance with double digit growth in bridal and collections and
continues to focus on developing the brand in China.
Operational and market outlook
Macro-economic conditions are expected to remain challenging over the near
term, impacting consumer spending on diamond jewellery.
Diamond provenance continues to grow in importance for stakeholders throughout
the diamond value chain.
In June 2023, De Beers announced that the Tracr™ blockchain platform would
open to participants across the diamond industry. Having immutable data at
scale about a diamond's journey from the source is a major step forward and
will underpin consumer confidence in natural diamonds and their provenance.
The increased focus
on diamond provenance by many retailers and global brands in key markets has
the potential to reinforce continued demand for De Beers' rough diamonds in
the medium and longer term.
Despite near term challenges faced by the diamond industry, our research
confirms consumers' desire for natural diamonds, which is expected to remain
robust in key consumer markets in the long term. The global supply of rough
diamonds is expected to decline owing to limited new discoveries, which in
turn is expected to support value growth potential for natural diamonds.
2023 Guidance
Production guidance for 2023 is 30-33 million carats (100% basis), subject to
trading conditions.
2023 unit cost guidance is c.$75/ct.
Iron Ore
Financial and operational metrics
Production Sales Price Unit Group Underlying Mining Underlying Capex* ROCE*
volume volume cost* revenue* EBITDA* EBITDA EBIT*
margin*
Mt((1)) Mt((1)) $/t((2)) $/t((3)) $m $m $m $m
Iron Ore Total 30.7 30.3 105 36 3,660 1,775 48% 1,554 382 30%
Prior period 27.5 28.3 135 40 4,393 2,298 51% 2,047 427 38%
Kumba Iron Ore((4)) 18.7 19.0 106 39 2,169 1,105 51% 975 277 69%
Prior period 17.8 19.6 135 43 2,907 1,570 54% 1,403 355 99%
Iron Ore Brazil (Minas-Rio) 12.0 11.4 104 32 1,491 670 44% 579 105 20%
Prior period 9.8 8.7 134 35 1,486 728 45% 644 72 23%
((1)) Production and sales volumes are reported as wet metric tonnes. Product
is shipped with c.1.6% moisture from Kumba and c.9% moisture from Minas-Rio.
((2)) Prices for Kumba Iron Ore are the average realised export basket price
(FOB Saldanha) (wet basis). Prices for Minas-Rio are the average realised
export basket price (FOB Brazil) (wet basis). Prices for total iron ore are a
blended average.
((3)) Unit costs are reported on an FOB wet basis. Unit costs for total iron
ore are a blended average.
((4)) Sales volumes, stock and realised price differ to Kumba's stand-alone
reported results due to sales to other Group companies.
Operational performance
Kumba
Production increased by 6% to 18.7 Mt (30 June 2022: 17.8 Mt), driven by a
23% increase at Kolomela to 6.0 Mt (30 June 2022: 4.8 Mt), following the
recovery from operational challenges in the comparative period. Production
at Sishen was broadly flat at 12.8 Mt (30 June 2022: 12.9 Mt). During the
first half of 2023, both operations were impacted by ongoing constraints at
Transnet - the third-party rail and port operator. The rail constraints have
led to a significant build-up of iron ore stockpiles, which necessitated
lower production given the lack of available storage space. The resulting low
levels of finished stock at the port impacted sales volumes, which decreased
by 3% to 19.0 Mt (30 June 2022: 19.6 Mt). Total finished goods inventory
increased to 7.9 Mt, with the majority of this located at the mines.
Minas-Rio
Production increased by 22% to 12.0 Mt (30 June 2022: 9.8 Mt), driven by
strong mining and plant performance and timing of maintenance. This has
resulted in a number of performance records being achieved in the second
quarter, reflecting the operational improvement.
Markets
30 June 2023 30 June 2022
Average market price (Platts 62% Fe CFR China - $/tonne) 118 140
Average market price (MB 65% Fe Concentrate CFR - $/tonne)((1)) 132 166
Average realised price (Kumba export - $/tonne) (FOB wet basis) 106 135
Average realised price (Minas-Rio - $/tonne) (FOB wet basis) 104 134
((1)) As publication of the Metal Bulletin (MB) 66 index has ceased, the
reference benchmark is the MB 65 index from 2023. 2022 updated to reflect MB
65 price.
Kumba's FOB realised price of $106/wet metric tonne was 4% higher than the
equivalent Platts 62% Fe FOB Saldanha market price (adjusted for moisture) of
$102/wet metric tonne. The premium for the higher iron content at 63.3% and
relatively high proportion (approximately 67%) of lump produced, in particular
because higher quality Fe product helps steel mills reduce emissions, more
than offset the impact of provisionally priced sales volumes.
Minas-Rio's pellet feed product is also higher grade (with iron content of 67%
and lower impurities) than the reference product used for the Platts 62% Fe
CFR China index. The MB 65 fines index, therefore, is used when referring to
the Minas-Rio product. The Minas-Rio realised price of $104/wet metric tonne
was 3% higher than the equivalent MB 65 FOB Brazil index (adjusted for
moisture) of $101/wet metric tonne, as the premium for our high quality
product more than offset the impact of provisionally priced sales volumes.
Financial performance
Underlying EBITDA for Iron Ore decreased by 23% to $1,775 million (30 June
2022: $2,298 million), driven by a 22% decrease in the realised iron ore price
offsetting higher sales and lower unit costs.
Kumba
Underlying EBITDA decreased by 30% to $1,105 million (30 June 2022: $1,570
million), driven by a lower average realised price and lower sales volumes.
Unit costs decreased by 9% to $39/tonne (30 June 2022: $43/tonne) due to
higher production volumes at Kolomela and the benefit of a weaker South
African rand.
Capital expenditure decreased by 22% to $277 million (30 June 2022: $355
million), fundamentally driven by the weaker South African rand.
Minas-Rio
Underlying EBITDA decreased by 8% to $670 million (30 June 2022: $728
million), as higher sales volumes and lower unit costs were more than offset
by the lower average realised price. Unit costs decreased by 9% to
$32/tonne (30 June 2022: $35/tonne), primarily reflecting the benefit of
higher production volumes.
Capital expenditure was 46% higher at $105 million (30 June 2022: $72
million), reflecting the impact of timing differences.
Operational outlook
Kumba
Production guidance for 2023 is 35-37 Mt, subject to third-party rail and port
performance.
2023 unit cost guidance is c.$43/tonne.
Minas-Rio
Production guidance for 2023 is 22-24 Mt.
2023 unit cost guidance is c.$33/tonn
Steelmaking Coal
Financial and operational metrics
Production Sales Price Unit Group Underlying Mining Underlying Capex* ROCE*
volume volume cost* revenue* EBITDA* EBITDA EBIT*
margin*
Mt((1)) Mt((2)) $/t((3)) $/t((4)) $m $m $m $m
Steelmaking Coal 6.9 6.9 274 135 2,000 615 31% 371 273 26%
Prior period 4.8 5.2 397 160 2,213 1,399 63% 1,246 265 92%
((1))Production volumes are saleable tonnes, excluding thermal coal production
of 0.8 Mt (30 June 2022: 0.8 Mt). Includes production relating to
processing of third-party product.
((2)) Sales volumes exclude thermal coal sales of 0.8 Mt (30 June
2022: 0.7 Mt). The first half of 2023 includes 0.2 Mt (30 June 2022: 0.1Mt)
of steelmaking coal mined by third parties and processed by Anglo American.
((3))Realised price is the weighted average hard coking coal and PCI export
sales price achieved at managed operations.
((4))FOB cost per tonne, excluding royalties and study costs.
Operational performance
Production increased to 6.9 Mt (30 June 2022: 4.8 Mt), reflecting the benefit
of all three underground longwall operations running, with particularly high
production from Moranbah, which underwent an extended longwall move during the
first half of 2022, as well as increased production from the open cut
operations that were impacted by unseasonal wet weather in 2022.
Despite longwall moves during the first half of 2023, production was higher at
both Grosvenor and Aquila, with both operations having started up during
February 2022.
Markets
30 June 2023 30 June 2022
Average benchmark price - hard coking coal ($/tonne)((1)) 294 467
Average benchmark price - PCI ($/tonne)((1)) 261 406
Average realised price - hard coking coal ($/tonne)((2)) 280 407
Average realised price - PCI ($/tonne)((2)) 236 322
((1))Represents average spot prices.
((2))Realised price is the export sales price achieved at managed operations.
Average realised prices differ from the average market prices due to
differences in material grade and timing of shipments. Hard coking coal (HCC)
price realisation increased to 95% of average benchmark price (30 June 2022:
87%), driven by a higher proportion of premium HCC sales and the impact of
sales timing.
The average benchmark price for Australian HCC decreased to $294/tonne
(30 June 2022: $467/tonne) as seaborne steelmaking coal prices declined from
record highs set in March 2022, amid lower global crude steel production. HCC
prices increased at the start of 2023 in response to supply impacts in
Queensland, arising from flooding due to heavy rainfall and a rail outage,
before declining in the second quarter on reduced seaborne demand for
Australian coking coal amid a recovery in supply.
Underlying EBITDA decreased to $615 million (30 June 2022: $1,399 million),
driven by a 31% decrease in the weighted average realised price for
steelmaking coal. This was partially offset by increased sales volumes and a
16% decrease in unit costs to $135/tonne (30 June 2022: $160/tonne),
reflecting benefits of increased production. The first half of 2022 included a
$250 million receipt from the Group's self-insurance entity.
Capital expenditure increased to $273 million (30 June 2022: $265 million),
with higher stay-in-business spend at Grosvenor largely offset by lower
life-extension expenditure following the completion of the Aquila project in
2022.
Operational outlook
Export steelmaking coal production guidance for 2023 is 16-19 Mt.
Unit cost guidance for 2023 is c.$105/tonne.
Manganese
Financial and operational metrics
Production Sales Group Underlying Mining Underlying Capex* ROCE*
volume volume revenue* EBITDA* EBITDA EBIT*
margin*
Mt Mt $m $m $m $m
Manganese 1.8 1.8 346 138 40 % 96 n/a 95%
Prior period 1.8 1.8 475 223 47 % 192 - 162%
Operational performance
Attributable manganese ore production was in line with the prior period at 1.8
Mt (30 June 2022: 1.8 Mt).
Financial performance
Manganese (Samancor)
Underlying EBITDA decreased by 38% to $138 million (30 June 2022:
$223 million), driven mainly by the weaker average realised manganese ore
price, partially offset by lower operating costs.
The average benchmark price for manganese ore (Metal Bulletin 44% manganese
ore CIF China) decreased by 26% to $5.19/dmtu (30 June 2022: $6.99/dmtu).
Supply impacts at the beginning of the year incrementally increased prices,
but as supply recovered and demand outlook weakened, prices declined and ended
the first half at $4.54/dmtu.
Crop Nutrients
Financial and operational metrics
Production Sales Group Underlying Mining Underlying Capex* ROCE*
volume volume revenue* EBITDA* EBITDA EBIT*
margin*
$m $m $m $m
Crop Nutrients n/a n/a 93 (20) n/a (20) 307 n/a
Prior period - - 110 (18) - (18) 242 -
Woodsmith project n/a n/a n/a n/a n/a n/a 307 n/a
Prior period - - - - - n/a 242 -
Other((1)) n/a n/a 93 (20) n/a (20) n/a n/a
Prior period - - 110 (18) - (18) - -
((1))Other comprises projects and corporate costs as well as the share in
associate results from The Cibra Group, a fertiliser distributor based
in Brazil.
Crop Nutrients
Anglo American is developing the Woodsmith project in the north east of
England to access the world's largest known deposit of polyhalite, a natural
mineral fertiliser product containing potassium, sulphur, magnesium and
calcium - four of the six nutrients that every plant needs to grow.
The Woodsmith project is located on the North Yorkshire coast, just south of
Whitby, where polyhalite ore will be extracted via 1.6 km deep mine shafts and
transported to Teesside via an underground conveyor belt in a 37 km mineral
transport system (MTS) tunnel, thereby minimising any environmental impact on
the surface. It will be granulated at a materials handling facility to produce
a comparatively low carbon fertiliser - known as POLY4 - that will then be
exported from the port facility, where we have priority access, to a network
of customers around the world. POLY4 will enable farmers to enhance their crop
yield, increase crop quality and improve soil structure with one core product.
Progress update
Woodsmith project
Good progress continued on the core infrastructure during the first half, with
capital expenditure of $0.3 billion (30 June 2022: $0.2 billion) out of an
expected $0.7 billion for the year as a whole (previously $0.8 billion,
reflecting the revised timing of payments for certain non-critical
activities). Sinking activities at the two deep shafts are progressing well.
The service shaft is now c.500 metres deep. Sinking activities, which began in
January 2023 at 120 metres below the surface for the production shaft,
successfully ramped up to planned sinking rates and reached a depth of c.245
metres.
Excavation of the three shallow shafts that will provide both ventilation and
additional access to the MTS tunnel is now complete, having completed the
first in 2022.
The MTS tunnel is also progressing to plan and has now reached c.24 km of the
total 37 km length.
In parallel to the core infrastructure development, we are enhancing the
project's configuration to allow a higher production capacity and more
efficient, scalable mining methods over time. The required studies are under
way and will ensure that additional infrastructure is optimally designed to
enable optionality in the future and maximise long term value over the
expected multi-decade asset life.
Market development - POLY4
The ongoing focus of the market development activities is to develop and
implement detailed sales and marketing strategies for each region and to
support customers with their own market development activities to further
promote POLY4 to the end users of the product - farmers.
We have continued to develop our routes to market partnerships in key
high-value regions, working closely with our customers and with farmers.
Results from on-farm demonstrations continue to reinforce the quality and
characteristics of POLY4, which include increased crop yields and improved
soil health, tackling some of the greatest challenges the food industry is
facing today.
POLY4 offers farmers a solution to agricultural efficiency and sustainability
challenges through its naturally low chloride multi-nutrient composition, its
suitability for organic use and comparatively low carbon profile, and with
little waste generated in its production.
Corporate and Other
Financial metrics
Group Underlying Underlying Capex*
revenue* EBITDA* EBIT*
$m $m $m $m
Segment 254 (10) (95) 28
Prior period 258 (282) (360) 12
Exploration n/a (65) (65) -
Prior period - (64) (65) -
Corporate activities and unallocated costs((1)) 254 55 (30) 28
Prior period 258 (218) (295) 12
((1))Revenue within Corporate activities and unallocated costs primarily
relates to third-party shipping activities, as well as the Marketing
business's energy solutions activities.
Financial overview
Exploration
Exploration expenditure was $65 million, in line with the prior period
(30 June 2022: $64 million).
Corporate activities and unallocated costs
Underlying EBITDA was a $55 million gain (30 June 2022: $218 million loss),
driven primarily by the Marketing business's energy solutions activities and
the Group's self-insurance entity. The positive period-on-period variance
reflects the finalisation of the Grosvenor claim in the first half of 2022 by
the Group's self-insurance entity, which resulted in an expense in Corporate
activities that was offset within the underlying EBITDA of Steelmaking Coal.
There have been no equivalent insurance claim settlements in the current
period.
Guidance summary
Production and unit costs
Unit costs Production volumes
2023F
Units 2023F 2024F 2025F
Copper((1)) c.166 c/lb kt 840-930 910-1,000 840-930
Nickel((2)) c.560 c/lb kt 38-40 39-41 37-39
PGMs - metal in concentrate((3)) c.$1,000/PGM ounce 3.6-4.0 3.6-4.0 3.5-3.9
Moz
Platinum Moz 1.6-1.8 1.6-1.8 1.6-1.8
Palladium Moz 1.2-1.3 1.2-1.3 1.1-1.2
Other Moz 0.8-0.9 0.8-0.9 0.8-0.9
PGMs - refined((4)) Moz 3.6-4.0 3.6-4.0 3.3-3.7
Diamonds((5)) c.$75/ct Mct 30-33 29-32 32-35
Iron ore((6)) c.$39/tonne Mt 57-61 61-65 64-68
Steelmaking Coal((7)) c.$105/tonne Mt 16-19 20-22 20-22
Note: Unit costs exclude royalties, depreciation and include direct support
costs only. FX rates used for H2 2023 costs: ~18 ZAR:USD, ~1.5 AUD:USD, ~4.8
BRL:USD, ~800 CLP:USD, ~3.7 PEN:USD.
((1)) Copper business only. On a contained-metal basis. Total copper is the
sum of Chile and Peru. Unit cost total is a weighted average based on the
mid-point of production guidance. 2023 Chile: 530-580 kt; Peru 310-350 kt.
2024 Chile: 550-600 kt; Peru: 360-400 kt. 2025 Chile: 530-580 kt; Peru 310-350
kt. Production in Chile is subject to water availability. Chile 2023 unit cost
is c.205 c/lb. Peru 2023 unit cost is c.100 c/lb.
((2)) Nickel operations in Brazil only. The Group also produces approximately
20 kt of nickel on an annual basis as a co-product from the PGM operations.
Nickel production is impacted by declining grades. Bulk ore sorting unit
benefits 2024, and 2025 is impacted by a maintenance shutdown.
((3)) Unit cost is per own-mined 5E + gold PGMs metal in concentrate ounce.
Production is 5E + gold PGMs produced metal in concentrate ounces. Includes
own-mined production (~65%) and purchased concentrate volumes (~35%). Metal in
concentrate production is impacted by lower grade and recoveries at
Mogalakwena, planned infrastructure closures and lower volumes from
Amandelbult. Kroondal switches to a tolling arrangement upon our exit from the
operation, expected in 2024. Lower volumes in 2025 reflect the transition of
the Siyanda POC agreement to tolling.
((4)) 5E + gold produced refined ounces. Includes own-mined production and
purchased concentrate volumes. Refined production is subject to the impact of
Eskom load-curtailment. Kroondal switches to a tolling arrangement upon our
exit from the operation, expected in 2024. Lower volumes in 2025 reflect the
transition of the Siyanda POC agreement to tolling.
((5)) Unit cost is based on De Beers' share of production. Production on a
100% basis except for the Gahcho Kué joint operation, which is on an
attributable 51% basis, subject to trading conditions. Venetia continues to
transition to underground operations - with first production recently
achieved. Step-up in 2023 unit cost is primarily driven by change in
production mix, as Venetia transitions to underground operations and delivers
a lower carat profile during ramp-up.
((6))Wet basis. Total iron ore is the sum of Kumba and Minas-Rio. Unit cost
total is a weighted average based on the mid-point of production guidance.
2023 Kumba: 35-37 Mt (production is impacted by high levels of on-mine
inventory); Minas-Rio: 22-24 Mt. 2024 Kumba: 37-39 Mt (subject to finalisation
of UHDMS plant review); Minas-Rio: 24-26 Mt. 2025 Kumba: 39-41 Mt; Minas-Rio:
25-27 Mt. Kumba production is subject to the third-party rail and port
performance. Kumba 2023 unit cost is c.$43/tonne. Minas-Rio 2023 unit cost is
c.$33/tonne.
((7))Steelmaking Coal FOB/tonne unit cost comprises managed operations and
excludes royalties and study costs. Production excludes thermal coal
by-product.
Capital expenditure((1))
2023F 2024F 2025F
Growth ~$1.5bn ~$0.8bn ~$0.8bn
(previously ~$1.8bn) (previously ~$1.0bn) (previously ~$1.0bn)
Includes ~$0.7bn Woodsmith capex (previously ~$0.8bn)
Sustaining ~$4.5bn $4.5-5.0bn $4.0-4.5bn
(previously $4.2-4.7bn) Reflects $3.5-4.0bn baseline, ~$0.7bn lifex projects and ~$0.3bn Collahuasi Reflects $3.2-3.7bn baseline, ~$0.5bn lifex projects and ~$0.3bn Collahuasi
desalination plant((2)) desalination plant((2))
Reflects ~$3.5bn baseline (previously $3.1-3.6bn), ~$0.6bn lifex projects
(previously ~$0.7bn) and ~$0.4bn Collahuasi desalination plant((2))
Total ~$6.0bn $5.3-5.8bn $4.8-5.3bn
(previously $6.0-6.5bn) (previously $5.5-6.0bn) (previously $5.0-5.5bn)
Further details on Anglo American's high quality growth and life-extension
projects, including details of the associated volumes benefit, are disclosed
on pages 11-12.
Long term sustaining capital expenditure is expected to be $3.0-3.5 billion
per annum((3)), excluding life-extension projects.
Other guidance
- 2023 depreciation: $3.0-3.2 billion (previously $3.3-3.5 billion)
- 2023 underlying effective tax rate: 36-38%((4)) (previously 35-37%)
- Long term underlying effective tax rate: 33-37%((4))
- Dividend payout ratio: 40% of underlying earnings
- Net debt:EBITDA: <1.5x at the bottom of the cycle
((1))Cash expenditure on property, plant and equipment including related
derivatives, net of proceeds from disposal of property, plant and equipment
and includes direct funding for capital expenditure from non-controlling
interests. Shown excluding capitalised operating cash flows. Consequently, for
Quellaveco, remaining growth capex reflects attributable share. Guidance
includes unapproved projects and is, therefore, subject to progress of the
project studies and unapproved Woodsmith capex of ∼$1 billion per annum is
excluded after 2023. Refer to the H1 2023 results presentation slides 41-44
for further detail on the breakdown of the capex guidance at project level.
((2))Attributable share of capex. Collahuasi desalination capex shown includes
related infrastructure.
((3))Long term sustaining capex guidance is shown on a 2022 real basis.
((4)) Underlying effective tax rate is highly dependent on a number of
factors, including the mix of profits and any corporate tax reforms impacting
the countries where we operate, and may vary from the guided ranges. The ~1%
increase in 2023 underlying effective tax rate guidance reflects the expected
deferred tax impact of the Chile mining royalty bill which is expected to be
substantively enacted in H2 2023.
( )
For further information, please contact:
Media Investors
UK UK
James Wyatt-Tilby Paul Galloway
james.wyatt-tilby@angloamerican.com paul.galloway@angloamerican.com
Tel: +44 (0)20 7968 8759 Tel: +44 (0)20 7968 8718
Marcelo Esquivel Emma Waterworth
marcelo.esquivel@angloamerican.com emma.waterworth@angloamerican.com
Tel: +44 (0)20 7968 8891 Tel: +44 (0)20 7968 8574
Rebecca Meeson-Frizelle Juliet Newth
rebecca.meeson-frizelle@angloamerican.com juliet.newth@angloamerican.com
Tel: +44 (0)20 7968 1374 Tel: +44 (0)20 7968 8830
South Africa Michelle Jarman
Nevashnee Naicker michelle.jarman@angloamerican.com
nevashnee.naicker@angloamerican.com Tel: +44 (0)20 7968 1494
Tel: +27 (0)11 638 3189
Sibusiso Tshabalala
sibusiso.tshabalala@angloamerican.com
Tel: +27 (0)11 638 2175
Notes to editors:
Anglo American is a leading global mining company and our products are the
essential ingredients in almost every aspect of modern life. Our portfolio of
world-class competitive operations, with a broad range of future development
options, provides many of the future-enabling metals and minerals for a
cleaner, greener, more sustainable world and that meet the fast growing
everyday demands of billions of consumers. With our people at the heart of our
business, we use innovative practices and the latest technologies to discover
new resources and to mine, process, move and market our products to our
customers - safely and sustainably.
As a responsible producer of copper, nickel, platinum group metals, diamonds
(through De Beers), and premium quality iron ore and steelmaking coal - with
crop nutrients in development - we are committed to being carbon neutral
across our operations by 2040. More broadly, our Sustainable Mining Plan
commits us to a series of stretching goals to ensure we work towards a healthy
environment, creating thriving communities and building trust as a corporate
leader. We work together with our business partners and diverse stakeholders
to unlock enduring value from precious natural resources for the benefit of
the communities and countries in which we operate, for society as a whole, and
for our shareholders. Anglo American is re-imagining mining to improve
people's lives.
www.angloamerican.com (http://www.angloamerican.com)
Webcast of presentation:
A live webcast of the results presentation, starting at 9.00am UK time on 27
July 2023, can be accessed through the Anglo American website at
www.angloamerican.com (http://www.angloamerican.com)
Note: Throughout this results announcement, '$' denotes United States dollars
and 'cents' refers to United States cents. Tonnes are metric tons, 'Mt'
denotes million tonnes and 'kt' denotes thousand tonnes, unless otherwise
stated.
Group terminology
In this document, references to "Anglo American", the "Anglo American
Group", the "Group", "we", "us", and "our" are to refer to either
Anglo American plc and its subsidiaries and/or those who work for them
generally, or where it is not necessary to refer to a particular entity,
entities or persons. The use of those generic terms herein is for convenience
only, and is in no way indicative of how the Anglo American Group or any
entity within it is structured, managed or controlled. Anglo American
subsidiaries, and their management, are responsible for their own day-to-day
operations, including but not limited to securing and maintaining all relevant
licences and permits, operational adaptation and implementation of Group
policies, management, training and any applicable local grievance mechanisms.
Anglo American produces Group-wide policies and procedures to ensure best
uniform practices and standardisation across the Anglo American Group but is
not responsible for the day to day implementation of such policies. Such
policies and procedures constitute prescribed minimum standards only. Group
operating subsidiaries are responsible for adapting those policies and
procedures to reflect local conditions where appropriate, and for
implementation, oversight and monitoring within their specific businesses.
Forward-looking statements and third-party information:
This document includes forward-looking statements. All statements other than
statements of historical facts included in this document, including, without
limitation, those regarding Anglo American's financial position, business,
acquisition and divestment strategy, dividend policy, plans and objectives of
management for future operations, prospects and projects (including
development plans and objectives relating to Anglo American's products,
production forecasts and Ore Reserve and Mineral Resource positions) and
sustainability performance related (including environmental, social and
governance) goals, ambitions, targets, visions, milestones and aspirations,
are forward-looking statements. By their nature, such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of Anglo
American or industry results to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding
Anglo American's present and future business strategies and the environment in
which Anglo American will operate in the future. Important factors that could
cause Anglo American's actual results, performance or achievements to differ
materially from those in the forward-looking statements include, among others,
levels of actual production during any period, levels of global demand and
commodity market prices, unanticipated downturns in business relationships
with customers or their purchases from Anglo American, mineral resource
exploration and project development capabilities and delivery, recovery rates
and other operational capabilities, safety, health or environmental incidents,
the effects of global pandemics and outbreaks of infectious diseases, the
impact of attacks from third parties on our information systems, natural
catastrophes or adverse geological conditions, climate change and extreme
weather events, the outcome of litigation or regulatory proceedings, the
availability of mining and processing equipment, the ability to obtain key
inputs in a timely manner, the ability to produce and transport products
profitably, the availability of necessary infrastructure (including
transportation) services, the development, efficacy and adoption of new or
competing technology, challenges in realising resource estimates or
discovering new economic mineralisation, the impact of foreign currency
exchange rates on market prices and operating costs, the availability of
sufficient credit, liquidity and counterparty risks, the effects of inflation,
terrorism, war, conflict, political or civil unrest, uncertainty, tensions and
disputes and economic and financial conditions around the world, evolving
societal and stakeholder requirements and expectations, shortages of skilled
employees, unexpected difficulties relating to acquisitions or divestitures,
competitive pressures and the actions of competitors, activities by courts,
regulators and governmental authorities such as in relation to permitting or
forcing closure of mines and ceasing of operations or maintenance of Anglo
American's assets and changes in taxation or safety, health, environmental or
other types of regulation in the countries where Anglo American operates,
conflicts over land and resource ownership rights and such other risk factors
identified in Anglo American's most recent Annual Report. Forward-looking
statements should, therefore, be construed in light of such risk factors and
undue reliance should not be placed on forward-looking statements. These
forward-looking statements speak only as of the date of this document. Anglo
American expressly disclaims any obligation or undertaking (except as required
by applicable law, the City Code on Takeovers and Mergers, the UK Listing
Rules, the Disclosure and Transparency Rules of the Financial Conduct
Authority, the Listings Requirements of the securities exchange of the JSE
Limited in South Africa, the SIX Swiss Exchange, the Botswana Stock Exchange
and the Namibian Stock Exchange and any other applicable regulations) to
release publicly any updates or revisions to any forward-looking statement
contained herein to reflect any change in Anglo American's expectations with
regard thereto or any change in events, conditions or circumstances on which
any such statement is based.
Nothing in this document should be interpreted to mean that future earnings
per share of Anglo American will necessarily match or exceed its historical
published earnings per share. Certain statistical and other information about
Anglo American included in this document is sourced from publicly available
third-party sources. As such it has not been independently verified and
presents the views of those third parties, but may not necessarily correspond
to the views held by Anglo American and Anglo American expressly disclaims any
responsibility for, or liability in respect of, such information.
©Anglo American Services (UK) Ltd 2023. (TM) and (TM) are trade marks of
Anglo American Services (UK) Ltd.
Anglo American plc
17 Charterhouse Street London EC1N 6RA United Kingdom
Registered office as above. Incorporated in England and Wales under the
Companies Act 1985.
Registered Number: 3564138 Legal Entity Identifier: 549300S9XF92D1X8ME43
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