Anglo American Regulatory News (AAL)

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YEAR END FINANCIAL REPORT

for the year ended 31 December 2023 

22 February 2024

Anglo American Preliminary Results for the year ended 31 December 2023 

Production increase and strong cost performance outweighed by cyclical lows for PGMs and diamonds

?Quellaveco fully ramped up and produced 319,000 tonnes of copper at unit cost of 111 c/lb

?On track to reduce annual costs by c.$1 billion and capex by c.$1.6 billion over 2024-2026

?Underlying EBITDA* of $10.0 billion, a 31% decrease; 2% volume increase and unit costs held to +4% despite high inflation, more than offset by $5.5 billion revenue impact of PGMs and diamonds at cyclical lows

?Profit attributable to equity shareholders of $0.3 billion 

?Net debt* of $10.6 billion: investing in long term growth through the cycle, with leverage at 1.1x

?$1.2 billion total dividend for FY 2023, equal to $0.96 per share, consistent with our 40% payout policy.

Duncan Wanblad, Chief Executive of Anglo American, said: "2023 saw us increase production by 2% and contain the effect of high inflation on our costs, while facing a cyclical downturn in PGMs and diamonds. Against that backdrop, we are reducing annual run rate costs by $1 billion and capital spend by $1.6 billion over the next three years, while also cutting out unprofitable volumes. This value over volume mindset represents our biggest margin lever to enhance returns. We are systematically reviewing our assets and will take further actions as needed to ensure their competitiveness. We have also this week set out the difficult but necessary reconfigurations of our PGMs and Kumba operations to set them up on a far more sustainable footing, building on the recent 25% cost reduction from our consolidation of senior head office roles.

"We continue to make progress on safety, achieving our lowest ever injury rate in 2023. However, I am sad to report that three colleagues died during the year following two accidents, at Los Bronces and Kumba. We extend our deepest condolences to their families, friends and colleagues. We are unconditional in our commitment to safety and working to ensure that every colleague returns home safe and well each day.

"Operationally, we ramped up our flagship Quellaveco operation to full capacity in 2023, producing 319,000 tonnes of copper at a highly competitive unit cost. Minas-Rio set a number of performance records, while Kumba performed well but was limited by third-party rail constraints. At Los Bronces we have reconfigured the mine plan to remove unprofitable production during a phase of lower grades and hard ore, and in Australia we reset production plans to align with new safety protocols and ongoing challenging ground conditions at Moranbah. PGMs and De Beers performed well operationally but faced markets at cyclical lows.

"Underlying EBITDA of $10.0 billion at a 39% Mining EBITDA margin* reflects a 13% lower product basket price and a 4% unit cost increase, partially offset by our 2% volume growth. Net debt increasing to $10.6 billion reflects the growth investments we are making through the cycle in line with our belief in the strong long term fundamentals. Our updated assessment of global GDP growth and consumer demand were the main factors behind our $1.6 billion write-down of our book value of De Beers, principally relating to goodwill. Our $0.5 billion proposed final dividend of $0.41 per share is in line with our 40% payout policy.

"There is no doubt that while the immediate macro picture presents some challenges for our PGMs and diamonds businesses, the demand trends for metals and minerals have rarely looked better. We are focused on reducing complexities and continue to manage our assets, capital and portfolio dynamically and for value. This includes syndicating large greenfield projects for value, as we did with Quellaveco, and as we plan to do for Woodsmith at the right time. We also look to identify opportunities with adjacent assets where there is significant value to be unlocked, while progressing our sequence of organic project options that offer considerable value growth, predominantly in copper, crop nutrients and high quality iron ore."

Terms with this symbol * are defined as Alternative Performance Measures (APMs). For more information, refer to page 84.

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 6-34, our performance for the first four pillars is set out below:

(1)The following sustainability performance indicators for the year ended 31 December 2023 and the comparative period are externally assured: work-related fatal injuries; TRIFR; GHG emissions; and fresh water withdrawals.

(2)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 remain on track to achieve our 2030 water reduction targets, with a reduction to date of 22% against the 2015 baseline (48,666 ML).

(3)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.

(5) Local procurement is defined as procurement from businesses that are registered and based in the country of operation - also referred to as in-country procurement - and includes local procurement expenditure from the Group's subsidiaries and a proportionate share of the Group's joint operations, based on shareholding.

(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, being the amounts remitted by 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

Anglo American's number one value is safety, and it is our first priority, always. We are committed, and believe it is possible, to prevent our people from being harmed at work. Safety is foremost in everything we do; we train, equip and empower our people to work safely, because we believe that everybody, everywhere should return home safe at the end of their working day.

In 2023, we renewed our focus on three key safety levers: supporting operational leaders to spend more time in the field; using our Operating Model principles to deliver planned work, with risk identification and mitigation at the heart of that work; and implementing our new Contractor Performance Management framework across the business. We have made solid progress in our safety journey, recording our lowest total recordable injury frequency rate (TRIFR) of 1.78 in 2023 (2022: 2.19). While encouraged by this improvement, we were deeply saddened to lose three colleagues at our managed operations: one at our Kumba iron ore business in South Africa, and two at our Los Bronces copper operation in Chile.

Alongside our continued use of innovative technologies to help make Anglo American a safer and healthier place to work, we are building a stronger safety culture, based on the established concept of Visible Felt Leadership (VFL). VFL involves connecting operational leaders on a one to one or small group basis around a task or activity and ensuring that it is done safely and effectively. Unlike traditional 'top-down' interventions, which were generally regarded by both leaders and frontline workers as "looking to see what's wrong", our approach to VFL recognises people for doing the right things, and encourages them to stand up for safety and speak up if they see something that doesn't look or feel right.

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 too 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: 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

In 2023, we continued to implement our Health and Well-being strategy in line with the World Health Organization (WHO) Healthy Workplace model and framework covering employee health. This strategy, supported by our WeCare well-being and livelihoods support programmes, requires us to work together to support our people and achieve our health and well-being goals.

Occupational diseases

In 2023, there were 15 reported new cases of occupational disease, of which 14 were related to noise exposure (2022: 5, all related to noise exposure). A significant challenge in reporting occupational disease is that many hazards do not cause immediate symptoms or measurable health harms. Occupational disease is often not detectable or definable until many years after exposure. This means cases reported in a given year are most likely to reflect accumulated past working conditions. This latency challenge underscores the importance of long term environment monitoring, comprehensive worker occupational health surveillance, and proactive risk assessment - preventative management strategies that are an ongoing focus at Anglo American.

Occupational exposures

At the beginning of 2023, we changed the definition of our occupational exposure metrics to reduce the threshold of definitions of exposure to inhalables and carcinogens in line with the Occupational Health and Safety Act 85 (1993) South Africa. This change to the reporting basis has led to an increase in the number of exposure incidents captured, resulting in 2023 data being incomparable to that reported in 2022.

Although it is not possible to compare year-on-year exposure levels, there has been a reduction in the number of employees exposed to occupational hazards above the occupational exposure limit over the course of 2023. Occupational noise exposure enhancements were driven by acoustic improvements at both PGMs and Copper. Advancements in relation to employees exposed to inhalables and carcinogens were largely driven by enhanced local exhaust ventilation controls at our PGMs processing operations and retrofitting of diesel exhaust after-treatment systems on a range of diesel-powered equipment at our underground operations.

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%; achieve a 50% reduction in fresh water abstraction in water scarce areas; and deliver net-positive impacts in biodiversity across our managed operations.

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 at least halve our Scope 3 emissions, also by 2040. We continue to make encouraging progress, with Scope 1 and 2 GHG emissions 6% lower than the prior year, despite the 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 operations in South America. With our operations in Australia 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, we are developing a regional renewable energy ecosystem through our partnership with EDF Renewables, known as Envusa Energy. In 2023, Envusa Energy made significant progress towards the delivery of solar and wind power to our operations. The three Koruson 2 projects, on the border of the Northern and Eastern Cape provinces, are expected to reach a key milestone - financial close - with the lenders consortium and EDF Renewables, imminently.

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. We have invested significantly, in excess of $100 million per annum, in methane capture infrastructure at our underground steelmaking coal operations. In 2023, across these operations, we abated approximately 60% of methane emissions, including 5.3 million tonnes of CO2e emissions through the capture and delivery of methane to gas-fired power stations with our partner and operator, EDL.

As part of our ambition to reduce our Scope 3 emissions by at least 50% by 2040, we are focusing on hard-to-abate sectors such as steel - from which most of our value chain emissions derive. In 2023, we agreed several MoUs with our customers, including H2 Green Steel, Meranti and Baowu, with a focus on reducing emissions within the steel value chain. The collaborations focus on accelerating the adoption of less carbon intensive production technologies, such as DRI and EAF, using Anglo American's premium quality iron ore products from the Kumba mines in South Africa and Minas-Rio mine in Brazil.

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 waste and accelerate our progress towards ending wet tailings storage, while also increasing production and reducing energy consumption. Following an 18-month pilot period at our El Soldado copper mine's technology-testing hub in Chile, the two processes, working in tandem with each other, have accelerated dewatering times significantly and yielded water recoveries of c.80%, while considerably lowering the liquefaction risk of stored tailings, as well as delivering significant energy savings. Full-scale CPR plants are at advanced stage of commissioning at Mogalakwena (PGMs) and Quellaveco (Copper).

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. The Social Way is our asset-level system for managing impacts to stakeholders, related risks to the business and delivery of socio-economic benefits. The Social Way 3.0 is a critical foundation of our business and an enabler of our sustainability commitments. We believe it is one of the most robust and comprehensive social performance management systems in the mining sector. 

While we did not meet our ambitious goal of full implementation of the Social Way 3.0 at all sites by the end of 2022, we continued to progress embedding the system and have implemented a significant majority of the core elements. Half of the assets assessed have achieved the implementation goal, and we continue to work with those needing to make more progress. In early 2023, we re-baselined the site-level implementation pathways and challenged our teams to set realistic but ambitious goals for delivery, focusing on the most material elements that mattered to our stakeholders. By the end of 2023, our operations reported 96% delivery against those implementation pathways, and we expect this to continue in 2024 as we embed the implementation and use it to deliver value for our stakeholders and business. 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, we have supported 139,308 off site jobs through socio-economic development programmes, 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 is shared with a wide range of stakeholders, including national governments and host communities, through the significant corporate tax, mining tax and royalty payments that we make. Total taxes and royalties borne and taxes collected amounted to $5,081 million, a 14% decrease compared with the prior year, 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 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.

By the end of 2023, we exceeded our consolidated target of 33% female representation across the business for our management population, reaching 34%. However, for female representation for those on the Executive Leadership Team and for those reporting into an Executive Leadership Team member, we achieved 25% and 29%, respectively. The company is committed to building female representation in our Executive Leadership Team and those reporting to them. We have seen positive improvements year on year on other key performance metrics such as the percentage of women in the workforce which increased to 26% in 2023 (2022: 24%). 

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.

Living with Dignity - building a safe and inclusive culture

Building a safe and inclusive culture has been a longstanding focus Anglo American as part of our commitment to our people and the communities in which we operate. We are committed to listening to our people and the community stakeholders who support our business every day.

We deeply understand the unique role our business plays in society, and we believe that this extends beyond our mine fences. We launched our Living with Dignity programme in 2019, founded on the belief that everyone has the right to dignity - in our homes, schools, at work and everywhere in between. Through this programme, Anglo American is working collaboratively with our partners in government and civil society to build sustainable partnerships aimed at providing direct employee and community support to combat dignity harms, including gender-based and domestic violence.

We continue to build on this important work as part of our WeCare global lives and livelihoods programme and, in 2022, established our Living with Dignity Hub in South Africa to bring our policies to life in an independent unit dedicated to providing ongoing and committed support to our employees, contractors and their families. The Hub handles all formal complaints of dignity harms - including sexual harassment and gender-based violence - and bullying, harassment and victimisation across our South African footprint, and is overseen by an independent Ambassador to ensure we stand by our policies and remain committed to amplifying our efforts. We are proud of the results we have seen from the Hub, which has handled over 429 cases since opening and a consistent increase in reports as awareness rises, establishing itself as the primary support centre to get help when it is most needed.

Sustainable Mining Plan

Our Sustainable Mining Plan is designed to be a flexible, living plan and we will continue to evolve it as we learn and make progress and as technologies develop, while also ensuring it stays relevant and suitably stretching, in tune with our employees' and stakeholders' ambitions for our business. We are currently exploring a number of areas of the Sustainable Mining Plan that we feel may benefit from being updated to align more closely with our stakeholder expectations or deliver improved sustainability outcomes and will update the plan when we have developed these options more fully.

Operational and financial review of Group results for the year ended 31 December 2023

Operational performance

Production volumes increased by 2% on a copper equivalent basis, primarily driven by the ramp-up of our Quellaveco copper mine in Peru, a strong operational performance at our Minas-Rio iron ore operation in Brazil, as well as higher production from our Steelmaking Coal operations in Australia. Production was lower at De Beers, as the Venetia mine transitions from open pit to underground operations, and at PGMs due to lower production from the Kroondal joint operation (now sold) and planned infrastructure closures at Amandelbult. Lower grades impacted production at Los Bronces (Copper Chile).

Total copper production of 826,200 tonnes increased by 24% (2022: 664,500 tonnes), primarily driven by Quellaveco (Copper Peru), which reached commercial production levels in June 2023 and delivered 319,000 tonnes of copper in the year. Copper Chile's production of 507,200 tonnes was 10% lower (2022: 562,200 tonnes), principally driven by Los Bronces, where production decreased by 20% to 215,500 tonnes (2022: 270,900 tonnes) due to lower grades and ore hardness. Collahuasi's attributable production was marginally higher at 252,200 tonnes (2022: 251,100 tonnes) due to planned higher grades and the ongoing commissioning of a fifth ball mill that started at the end of October.

Nickel production increased marginally to 40,000 tonnes (2022: 39,800 tonnes), reflecting improved operational stability.

Total PGM production decreased by 5% to 3,806,100 ounces (2022: 4,024,000 ounces), principally due to lower production from the Kroondal joint operation (now sold), planned infrastructure closures at Amandelbult and lower grades at Mogalakwena, partially offset by higher production at Unki.

De Beers' rough diamond production decreased by 8% to 31.9 million carats (2022: 34.6 million carats), due to planned lower production levels at Venetia as the operation transitions to underground.

Iron ore production was broadly in line with the prior year at 59.9 Mt (2022: 59.3 Mt). Minas-Rio production increased by 12% to 24.2 Mt (2022: 21.6 Mt), the best performance since the start of the operation in 2014, reflecting an integrated focus on stable and capable operating performance. At Kumba, production decreased by 5% to 35.7 Mt (2022: 37.7 Mt), as underperformance by the third-party logistics provider, Transnet, resulted in production in the fourth quarter being reduced to align to lower rail capacity and alleviate mine stockpile constraints.

Steelmaking coal production increased by 7% to 16.0 Mt (2022: 15.0 Mt), reflecting a steady step-up in performance from the Aquila underground operation due to its largely automated longwall, and increased production at the open cut operations which were impacted by unseasonal wet weather in 2022. Moranbah continues to operate through challenging strata conditions.

Manganese ore production was in line with the prior year at 3.7 Mt (2022: 3.7 Mt).

Group copper equivalent unit costs increased by 4% as inflationary pressures, particularly labour and electricity, were partially offset by the benefit of favourable exchange rates and ramp-up of 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 $0.3 billion (2022: $4.5 billion). Underlying earnings were $2.9 billion (2022: $6.0 billion), while operating profit was $3.9 billion (2022: $9.2 billion).

Underlying EBITDA*

Group underlying EBITDA decreased by $4.5 billion to $10.0 billion (2022: $14.5 billion). Financial results were impacted by lower prices in PGMs, as well as diamonds, which were predominantly driven by mix. As a result, the Group Mining EBITDA margin* of 39% was lower than the prior year (2022: 47%). Our strong balance sheet and ongoing focus on cost control and cash generation has allowed us to continue to invest appropriately in our future growth options. 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

Underlying EBITDA* reconciliation for the year ended 31 December 2022 to year ended 31 December 2023 

The reconciliation of underlying EBITDA from $14.5 billion in 2022 to $10.0 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.

Price

Average market prices for the Group's basket of products decreased by 13% compared to 2022, reducing underlying EBITDA by $4.8 billion. The PGMs basket price decreased by 35%, primarily driven by rhodium and palladium, which decreased by 58% and 37% respectively. Alongside this, the weighted average realised price for steelmaking coal reduced by 14% and the De Beers consolidated average realised price for diamonds fell by 25%, predominantly driven by mix. 

Foreign exchange

Favourable foreign exchange benefited underlying EBITDA by $1.0 billion, primarily reflecting the favourable impact of the weaker South African rand on costs.

Net debt*

(1) Includes cash outflows of $403 million (2022: outflows of $14 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 $133 million (2022: $129 million) of expenditure on non-current intangible assets. 

(3) Includes the purchase of shares (including for employee share schemes) of $274 million; Mitsubishi's share of Quellaveco capital expenditure of $129 million; other movements in lease liabilities (excluding variable vessel leases) increasing net debt by $120 million; and contingent and deferred consideration paid in respect of acquisitions completed in previous years of $128 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 $341 million; Mitsubishi's share of Quellaveco capital expenditure of $446 million; other movements in lease liabilities (excluding variable vessel leases) decreasing net debt by $33 million; and contingent and deferred consideration paid in respect of acquisitions completed in previous years of $165 million.

Net debt (including related derivatives) of $10.6 billion increased by $3.7 billion since 31 December 2022, which includes a working capital cash outflow of $1.2 billion, primarily due to a reduction in payables. The Group generated sustaining attributable free cash flow of $0.1 billion. Further funding includes growth capital expenditure of $1.3 billion and dividends paid to Anglo American plc shareholders of $1.6 billion. Net debt at 31 December 2023 represented gearing (net debt to total capital) of 25% (2022: 17%). Net debt to EBITDA ratio of 1.1x (2022: 0.5x) remains well within our target range of

Cash flow

Cash flows from operations

Cash flows from operations decreased to $8.1 billion (2022: $11.9 billion), reflecting a reduction in underlying EBITDA from subsidiaries and joint operations, and a working capital build of $1.2 billion (2022: build of $2.1 billion). Payables reduced by $0.8 billion, largely driven by the impact of lower PGM prices on the valuation of the Purchase of Concentrate (POC) creditor as well as the PGM customer prepayment. Receivables increased by $0.4 billion led by higher price and volume across Iron Ore and Copper. Inventory was flat in the year, with price and volume led reductions at PGMs offsetting a build at De Beers driven by weak demand for diamonds and the impact of logistics constraints on Kumba's inventory levels. 

Capital expenditure*

Shareholder returns

In line with the Group's established dividend policy to pay out 40% of underlying earnings, the Board has proposed a final dividend of $0.41 per share (2022: $0.74 per share), equivalent to $0.5 billion (2022: $0.9 billion).

Disposals

Net cash inflows on disposals of $0.2 billion principally relate to the 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 $2.3 billion to $31.6 billion (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 year, which was impacted by the impairments at De Beers and Nickel.

Attributable ROCE*

Attributable ROCE decreased to 16% (2022: 30%). Attributable underlying EBIT decreased to $5.4 billion (2022: $9.7 billion), reflecting the impact of lower realised prices for the Group's products and inflationary cost pressures. Average attributable capital employed increased to $33.2 billion (2022: $32.0 billion), primarily due to capital expenditure, largely at Quellaveco and Collahuasi (Copper), and shipping vessel lease additions and revaluations (Corporate and Other), partly offset by the reduction in capital employed following the De Beers and Nickel impairments recorded in 2023.

Liquidity and funding

Group liquidity stood at $13.2 billion (2022: $16.1 billion), comprising $6.1 billion of cash and cash equivalents (2022: $8.4 billion) and $7.2 billion of undrawn committed facilities (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, ?500 million 5.0% Senior Notes due 2031 and, in May 2023, $900 million 5.5% Senior Notes due 2033. These were swapped to US dollar floating interest rate exposures in line with the Group's policy.

Consequently, the weighted average maturity on the Group's bonds was broadly in line with the prior year at 7.4 years (2022: 7.7 years).

In the second half of 2023, the Group refinanced its $4.7 billion revolving credit facility maturing in March 2025, to a one year $1 billion facility maturing in November 2024, and a $3.7 billion five year facility maturing in November 2028.

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:

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:

Technology projects(1)

The Group plans to invest c.$0.1-0.3 billion per year on projects to support the FutureSmart MiningTM programme and the delivery of Anglo American's Sustainable Mining Plan targets, particularly those that relate to safety, energy, emissions and water. The Group is currently optimising the technology programme, focusing only on those technologies that will bring the most benefit to the operating assets and development projects, as well as determining the most effective manner to execute these programmes. For more information on our technology, please refer to our Integrated Annual Report 2023, page 44, due to be published on the Group's website on 4 March 2024.

(1) Expenditure relating to technology projects is included within operating expenditure, or if it meets the accounting criteria for capitalisation, within Growth capital expenditure.

The Board

Changes during 2023 to the composition of the Board are set out below.

On 1 April 2023, Magali Anderson joined the Board as a non-executive director and member of the Board's Sustainability Committee.

On 1 December 2023, Stephen Pearce stepped down from the Board and as Finance Director, following his decision to retire from the Group in February 2024. John Heasley joined Anglo American as Finance Director and as an executive director on the Board on 1 December 2023.

At the date of this report, four (40%) of the 10 Board directors are female and two (20%) identify as minority ethnic. 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

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 are unchanged from those reported in 2022 and relate to the following:

-Catastrophic and natural catastrophe risks

-Product prices

-Cybersecurity

-Geopolitical

-Community and social relations

-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 15-34. 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 2023 year end are set out in detail in the strategic report section of the Integrated Annual Report 2023, published on the Group's website www.angloamerican.com, on 4 March 2024.

in the north of the country, the outlook for 2024 remains dry; a desalination water solution is expected to be operational from 2026.

Copper Peru

Quellaveco produced 319,000 tonnes (2022: 102,300 tonnes), reflecting the progressive ramp-up in production volumes since first production in July 2022, with commercial production achieved in June 2023.

Following first production from the molybdenum plant in April 2023, commercial production was achieved in November 2023.

With the mine operational, focus is on the commissioning of the coarse particle recovery plant, which started in November 2023, and will treat flotation tails, leading to improved metal recoveries.

Markets

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 year. At Copper Chile, 114,500 tonnes of copper were provisionally priced at 386 c/lb at 31 December 2023 (31 December 2022: 166,900 tonnes provisionally priced at 379 c/lb). At Copper Peru, 39,000 tonnes of copper were provisionally priced at 385 c/lb at 31 December 2023 (31 December 2022: 74,800 tonnes provisionally priced at 380 c/lb).

Copper prices were relatively stable during 2023, with LME prices averaging 385 c/lb, down 4% from last year (2022: 399 c/lb). Concerns over China's property sector weighed on market sentiment and copper prices, masking the solid underlying demand growth from China during the year, particularly from electric vehicles and the renewable energy sector. Copper prices remained sensitive to fluctuations in the strength of the US dollar throughout much of 2023, with prices benefiting in December from expectations that US interest rates have now peaked. Copper demand is well supported by ongoing global decarbonisation efforts and the infrastructure associated with the energy transition. However disruptions, mostly from social and environment concerns, continue to impact global mine supply.

Financial performance

Underlying EBITDA for Copper increased by 48% to $3,233 million (2022: $2,182 million), driven by the successful ramp-up of Quellaveco in Peru, partly offset by an 8% increase in unit costs and 19% lower sales from Los Bronces.

Copper Chile

Underlying EBITDA decreased by 26% to $1,452 million (2022: $1,952 million), driven by lower sales and higher unit costs. C1 unit costs increased by 27% to 200 c/lb (2022: 157 c/lb), reflecting the impact of lower production, cost inflation and a stronger Chilean peso, partially offset through cost control and higher by-product credits.

Capital expenditure increased by 4% to $1,268 million (2022: $1,217 million), mainly driven by expenditure at Collahuasi on the desalination plant and the fifth ball mill.

Copper Peru

The significant increase in underlying EBITDA to $1,781 million (2022: $230 million), reflects higher sales volumes and lower unit costs, as the operation ramped up. C1 unit costs decreased by 18% to 111 c/lb (2022: 136 c/lb), reflecting the benefit of higher production volumes.

Capital expenditure decreased by 49% to $416 million (2022: $814 million), reflecting the completion of major project spend for the construction of Quellaveco, which was successfully delivered in July 2022.

Operational outlook

Copper Chile

Los Bronces

Los Bronces is currently mining a single phase impacted by ore hardness, and with expected lower grades. Additional mining phases and intermediate ore stockpiles that would typically provide operational flexibility have not been developed as a result of delays in mine development, permitting and operational challenges.

While the operation works through the challenges in the mine, and until the economics improve, the older, smaller (c.40% of production volumes) and more costly Los Bronces processing plant will be placed on care and maintenance from mid-2024. This value over volume decision will enable the business to significantly reduce operating costs and improve competitiveness, at both the mine and the plant, reduce overheads, reduce capital spend as well as reduce reliance on external water sources (such as transportation via truck). The expected annualised unit cost saving from this action is c.30-40 c/lb.

The development of the first phase of the Los Bronces integrated water solution is also ongoing, which will secure a large portion of the mine's water needs through a desalinated water supply from the beginning of 2026.

Los Bronces remains a world class copper deposit, accounting for more than 2% of the world's known copper resources. The environmental permit for the Los Bronces open pit expansion and underground development was issued by the authorities in November 2023. Development work for the next higher grade, softer ore phase of the mine, Donoso 2, is now under way and is expected to benefit production and unit costs from early 2027. Pre-feasibility studies for the Los Bronces underground expansion are ongoing and are expected to be finalised in mid-2025.

Collahuasi

Collahuasi is a world class orebody with significant growth potential. Near term grades are expected to be c.1.05% TCu, with the exception of 2025 where the grade temporarily declines to c.0.95% TCu. Various debottlenecking options are being studied that are expected to add c.25,000 tonnes per annum (tpa) (our 44% share) between 2025-2028. Beyond that, studies and permitting are under way for a fourth processing line in the plant and mine expansion that would add up to 150,000 tpa (our 44% share). Timing of that expansion is subject to the permitting process; assuming permit approval in 2027, first production could follow from c.2032.

A desalination plant is currently under construction that will meet a large portion of the mine's water requirements when complete in 2026, and has been designed to accommodate capital-efficient expansion as the fourth processing line project progresses.

El Soldado

Following the exacerbation of the geotechnical fault at El Soldado by the heavy rainfall in 2023, the mine plan was revised in the third quarter of 2023. Production in 2024 is expected to be broadly comparable to 2023, before declining to 30,000-35,000 tpa as the mine reaches end of life by mid-2028. Following receipt of the environmental permit for phase 5, options are being evaluated that may enable a life extension.

Copper Chile

These impacts are reflected in the three-year guidance provided on pages 35-36, which is unchanged from the December 2023 Investor Update presentation. Production guidance for Chile for 2024 is 430,000-460,000 tonnes, subject to water availability. 2024 unit cost guidance is c.190 c/lb.

Copper Peru

A localised geotechnical fault in one of the phases previously scheduled for mining in 2024 necessitated a revised mining plan in the latter part of 2023, as it was determined that a change in the inter-ramp angle of that phase was required to ensure safety standards. While this stripping work progresses, other lower grade phases will be mined. As a result, access to higher grade sectors that were previously planned to be mined in 2024 have been rephased to 2027. However, as a result of further optimisation work within the revised mine plan, an additional c.25,000 tonnes of copper is expected to be mined over the next five years. Given the current copper market outlook, higher real term prices for these volumes may be achieved; thereby negating, or even benefiting, the NPV impact of the revised mine plan.

While current focus remains on embedding safe, consistent and stable operational performance, there is significant expansion potential that could sustain production beyond the initial high grade area. The first step, subject to permitting, would be an increase in throughput rates to 150,000 tonnes per day (tpd) (from the currently permitted level of 127,500 tpd), with limited capital required and no additional water required. Beyond that, different expansion alternatives are under study, including a possible third ball mill. There is also interesting regional potential that our Discovery team is progressing - including the adjacent Mamut area, c.10 km away.

These impacts are reflected in the three-year guidance provided on pages 35-36, which is unchanged from the December 2023 Investor Update presentation. Production guidance for Peru for 2024 is 300,000-330,000 tonnes and 2024 unit cost guidance is c.110 c/lb. Production in Peru will be weighted to the second half of the year, primarily as a result of the grades temporarily declining to between 0.6-0.7% TCu in the first half of the year.

Nickel

Operational and financial metrics

(1) Realised price.

(2) C1 unit cost. 

Operational performance

Nickel production increased marginally to 40,000 tonnes (2022: 39,800 tonnes), reflecting improved operational stability.

Markets

Differences between the market price (which is LME-based) and our realised price (the ferronickel price) are due to the discounts to the LME price, which depend on market conditions, supplier products and consumer preferences.

The average LME nickel price of $9.74/lb was 16% lower than prior year (2022: $11.61/lb), mainly due to significant supply growth of refined nickel products in Indonesia and China, along with the impact of higher interest rates on consumer inventory levels, resulting in consumer destocking and widening market discounts for ferronickel. Offsetting this, global nickel consumption grew strongly year on year, particularly in China, which saw record volumes of nickel consumed in the stainless steel and battery sectors.

Financial performance

Underlying EBITDA decreased by 65% to $133 million (2022: $381 million), primarily as a result of lower realised prices. C1 unit costs increased by 5% to 541 c/lb (2022: 513 c/lb), reflecting the stronger Brazilian real and the impact of higher costs of production due to lower grade ore, including planned maintenance costs to secure asset integrity and availability.

Capital expenditure increased by 15% to $91 million (2022: $79 million), mainly driven by higher deferred stripping costs capitalised.

Within special items and remeasurements, total impairments of $779 million (before tax) were recognised at Barro Alto in 2023 following revisions to the pricing outlook and the long term cost profile of the asset.

Operational outlook

Following safety improvements within the mine plan, certain geotechnical parameters have been revised, so the amount of material accessed from higher grade areas of the mine has reduced. The next higher grade area of the pit is currently going through permitting, with production expected from 2028 to blend with the lower grade areas of the existing pit. Also, bulk ore sorting has not yet delivered the scale that had previously been anticipated. While studies are ongoing to calibrate and adapt the technology, these benefits are no longer incorporated into guidance due to their early maturity. Additional drilling is under way to increase coverage and enhance confidence levels within the geological models.

These impacts are reflected in the three-year guidance provided on pages 35-36, which is unchanged from the December 2023 Investor Update presentation. Production guidance for 2024 is 36,000-38,000 tonnes, and 2024 unit cost guidance is c.600 c/lb.

Platinum Group Metals (PGMs)

Operational and financial metrics

(1) Production reflects own-mined production and purchase of metal in concentrate. PGM volumes consist of 5E metals and gold.

(2) Sales volumes exclude tolling and third-party trading activities. 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, our 50% share of Modikwa (joint operation), and our 50% share of Kroondal until the disposal of our interest in the joint operation on 1 November 2023. Other operations margin includes unallocated market development, care and maintenance, and corporate costs.

(7) Includes purchase of concentrate from joint operations and third parties for processing into refined metals, tolling and third-party trading activities, with the exception of production and sales volumes which exclude tolling and trading. The disposal of our 50% interest in Kroondal on 1 November 2023, resulted in Kroondal moving to a 100% third-party POC arrangement, until it transitions to a toll arrangement expected at the end of H1 2024.

Operational performance

Total PGM production decreased by 5% to 3,806,100 ounces (2022: 4,024,000 ounces), primarily due to lower production from the Kroondal joint operation (now sold), planned infrastructure closures at Amandelbult and lower grades at Mogalakwena, partially offset by higher production from Unki.

Own mined production

PGM production from own-managed mines (Mogalakwena, Amandelbult, Unki and Mototolo) and equity share of joint operations decreased by 7% to 2,460,200 ounces (2022: 2,649,200 ounces).

Amandelbult production decreased by 11% to 634,200 ounces (2022: 712,500 ounces) due to planned infrastructure closures and poor ground conditions at Dishaba.

Mogalakwena production decreased by 5% to 973,500 ounces (2022: 1,026,200 ounces), largely as a result of lower grades, and lower throughput from unplanned maintenance, despite moving into a higher grade, lower waste area towards the end of the year.

Production from other operations decreased by 6% to 852,500 ounces (2022: 910,500 ounces), mainly due to lower production from Kroondal, reflecting both a planned ramp-down of the operation and the disposal of our 50% interest, effective 1 November 2023; Kroondal has now transitioned to a 100% third-party purchase of concentrate arrangement. This arrangement is then expected to transition to a toll arrangement at the end of the first half in 2024.

Purchase of concentrate

Purchase of concentrate decreased by 2% to 1,345,900 ounces (2022: 1,374,800 ounces), primarily due to lower production from Kroondal in light of the planned ramp-down of the operation.

Refined production and sales volumes

Refined PGM production (excluding toll-treated metal) was broadly unchanged at 3,800,600 ounces (2022: 3,831,100 ounces).

PGM sales volumes increased marginally to 3,925,300 ounces (2022: 3,861,300 ounces) as inventory was drawn down to mitigate the lower production.

Markets

Following record pricing in 2021-2022, a general easing of supply concerns that had arisen post Russia's invasion of Ukraine and end-user destocking saw sharp falls in palladium and rhodium prices. This drove the average realised PGM basket price down by 35% in 2023 to $1,657 per PGM ounce (2022: $2,551 per PGM ounce).

The average rhodium market price of $6,611 per ounce was 57% lower than in 2022, impacted in the first half of the year by persistent selling of excess stock from the glass industry, which had shifted to a lower rhodium, higher platinum mix. Palladium declined 37%, averaging $1,336 per ounce, as robust Russian metal flows met automotive industry destocking. Platinum was broadly flat at $965 per ounce. The minor PGMs, iridium and ruthenium, continued to make historically large contributions to the basket price. By the end of the year, PGM pricing was firmly into the cost curve, and several producers responded by restructuring existing mines or mothballing future plans. 

Financial performance

Underlying EBITDA decreased to $1,209 million (2022: $4,417 million), primarily driven by a lower basket price, which resulted in lower POC margins and affected the cost of POC inventory. Additionally, own-mined unit costs increased by 3% to $968/PGM ounce (2022: $937/PGM ounce), due to lower production and higher inflation, partly offset by the weaker South African rand.

Capital expenditure increased by 9% to $1,108 million (2022: $1,017 million), as planned higher stay-in-business expenditure was partially offset by the weaker South African rand.

Operational outlook

PGM prices remain at low levels and the prevailing macro-economic conditions and uncertainty have prompted the difficult but necessary action to reconfigure our PGM business to ensure the long term sustainability and competitive position of our operations.

There is an intentional strategy at the concentrators to produce higher grade concentrate which results in the same PGM content, but from lower concentrate volume. This reduces required primary furnace capacity and allows us to place the Mortimer smelter on care and maintenance - reducing both operating and capital expenditure while enhancing overall processing competitiveness.

Overall, sustainable cost reduction initiatives will deliver annual cost savings of c.$0.3 billion from a 2023 baseline, and in 2024, the business is targeting an all-in-sustaining cost of c.$1,050/3E oz.

Furthermore, in line with lower capital expenditure and near term asset optimisation, work on the option for the third concentrator at Mogalakwena will not be progressing, nor will the expansion opportunities at both Amandelbult and Mototolo.

These extensive measures will improve the positioning of our world-class PGM assets for the long term, securing the highly attractive value proposition of Mogalakwena.

These impacts are reflected in the three-year guidance provided on pages 35-36, which is unchanged from the December 2023 Investor Update presentation. PGM metal in concentrate production guidance for 2024 is 3.3-3.7 million ounces, with own-mined output of 2.1-2.3 million ounces and purchase of concentrate of 1.2-1.4 million ounces. Refined PGM production guidance for 2024 is 3.3-3.7 million ounces. Refined production is usually lower in the first quarter than the rest of the year, due to the annual stock count and planned processing maintenance. Production remains subject to the impact of Eskom load-curtailment.

Unit cost guidance for 2024 is c.$920/PGM ounce.

De Beers - Diamonds

Operational and financial metrics(1)

Operational performance

Mining

Operational performance was strong in 2023. The new Venetia underground project delivered first production in June and will ramp up over the next few years.

Rough diamond production decreased to 31.9 million carats (2022: 34.6 million carats), due to planned lower production levels at Venetia as the operation transitions to underground.

In Botswana, production was broadly stable, with a 2% increase to 24.7 million carats (2022: 24.1 million carats), driven by the planned treatment of higher grade ore at Orapa.

Namibia production increased by 9% to 2.3 million carats (2022: 2.1 million carats), primarily driven by a full year of production from the Benguela Gem vessel (commissioned in March 2022) and the ongoing ramp-up and expansion of the mining area at the land operations.

South Africa production decreased by 64% to 2.0 million carats (2022: 5.5 million carats), due to the planned completion of the Venetia open pit in December 2022. Venetia continues to process lower grade surface stockpiles, while the new underground project commenced operations in June, and will ramp up over the next few years as development continues.

Production in Canada was stable at 2.8 million carats (2022: 2.8 million carats), with higher throughput offset by planned treatment of lower grade ore.

Financial performance

Due to the downturn in industry conditions from 2022 to 2023, total revenue decreased to $4.3 billion (2022: $6.6 billion), with rough diamond sales decreasing to $3.6 billion (2022: $6.0 billion). Total rough diamond sales volumes decreased by 19% to 24.7 million carats (2022: 30.4 million carats). The average realised price decreased by 25% to $147/ct (2022: $197/ct), reflecting a larger proportion of lower value rough diamonds being sold, as well as a 6%, decrease in the average rough price index.

Underlying EBITDA decreased to $72 million (2022: $1,417 million) as a result of significantly lower sales volumes, coupled with a lower average realised price (impacted by both the mix of products sold and a lower average rough price index) which negatively impacted margins in the trading business. The current year results incorporate an inventory write-down of $0.2 billion on rough stock. The increase in unit cost to $71/ct (2022: $59/ct), was primarily driven by lower production volumes from Venetia as the underground operations ramp up.

Capital expenditure increased by 5% to $623 million (2022: $593 million), due to the ramp-up of the Venetia underground project as well as the continued execution of other life-extension projects, including Jwaneng Cut-9.

An impairment of $1.6 billion (before tax and non-controlling interests) to the carrying value of De Beers has been recognised within special items and remeasurements, reflecting the near term adverse macro-economic outlook and industry-specific challenges. Please refer to note 9 in the financial statements for further details.

De Beers and the Government of the Republic of Botswana have signed Heads of Terms setting out the key terms for a new 10-year sales agreement for Debswana's rough diamond production (through to 2034) and the new 25-year Debswana mining licences (through to 2054). De Beers and the Government of Botswana are working together to progress and then implement the formal new sales agreement and related documents including the mining licences. In the interim, the terms of the most recent sales agreement remain in place. The new arrangements 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.

De Beers Jewellers delivered a stable sales performance given the global macro-economic headwinds and challenging Chinese sector.

Market outlook

Industry conditions are expected to remain challenging in the short term, but the long term outlook is favourable. Midstream and retail demand stabilised towards the end of 2023, but inventories of rough diamonds reportedly grew at producers globally. Over the course of 2024, assuming a measured approach from producers to the

These impacts are reflected in the three-year guidance provided on pages 35-36, which is unchanged from the December 2023 Investor Update presentation. Production guidance for 2024 is 23-25 Mt and 2024 unit cost guidance is c.$35/tonne.

Steelmaking Coal

Operational and financial metrics

(1) Production volumes are saleable tonnes, excluding thermal coal production of 1.1 Mt (2022: 1.6 Mt). Includes production relating to third-party product purchased and processed at Anglo American's operations, and may include some product sold as thermal coal.

(2) Sales volumes exclude thermal coal sales of 1.7 Mt (2022: 1.7 Mt). Includes sales relating to third-party product purchased 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 unit cost comprises managed operations and excludes royalties. 

Operational performance

Production increased to 16.0 Mt (2022: 15.0 Mt), reflecting a steady step-up in performance from the Aquila underground operation due to its largely automated longwall, and increased production at Dawson and Capcoal open cut operations which were impacted by unseasonal wet weather in 2022.

The increased production was partly offset by challenging operating conditions at the Moranbah and Grosvenor longwall operations. 

Markets

(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 91% of average benchmark price (2022: 85%), as a result of the timing of sales.

The average benchmark price for Australian HCC was $296/tonne (2022: $364/tonne). At the start of 2023, steelmaking coal prices rose in response to supply impacts in Queensland arising from flooding and a rail outage. Prices declined during the second quarter amid supply recovery, but increased in the second half of 2023 following low spot availability of premium HCC as labour strikes and production issues impacted Australian supply. Seaborne supply from Australia was further reduced by a cyclone event affecting Queensland port operations in December. Strong demand from Indian steelmakers for imported steelmaking coal was driven by a healthy domestic steel industry that resulted in a substantial year-on-year increase in crude steel production.

Financial performance

Underlying EBITDA decreased to $1,320 million (2022: $2,749 million), as a result of a 14% decrease in the weighted average realised price for steelmaking coal and a 13% increase in unit costs to $121/tonne (2022: $107/tonne), reflecting the impact of high inflation and additional operating activity. Furthermore, 2022 included a $343 million receipt from the Group's self-insurance entity.

Capital expenditure decreased to $619 million (2022: $648 million), reflecting lower life-extension expenditure following the completion of the Aquila project in 2022.

Operational outlook

Following an extensive review during the course of 2023 on realistic opportunities to improve productivity, debottleneck the operations and leverage technology, a downwardly revised pathway has been developed to progressively ramp-up towards 20 Mtpa of steelmaking coal production. This pathway also incorporates the more stringent safety operating protocols implemented by the Queensland regulator in recent years, as well as the more complex geotechnical strata conditions that the Moranbah and Grosvenor underground longwall operations are navigating.

These impacts are reflected in the three-year guidance provided on pages 35-36, which is unchanged from the December 2023 Investor Update presentation. Export steelmaking coal production guidance for 2024 is 15-17 Mt and 2024 unit cost guidance is c.$115/tonne. The next longwall moves scheduled at Moranbah and Grosvenor are both in the third quarter of 2024. A walk-on/walk-off longwall move is scheduled at Aquila during the second quarter with the impact on production expected to be minimal.

Manganese

Operational and financial metrics

Operational performance

Attributable manganese ore production was flat at 3.7 Mt (2022: 3.7 Mt).

Financial performance

Underlying EBITDA decreased by 39% to $231 million (2022: $378 million), primarily driven 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 22% to $4.75/dmtu (2022: $6.06/dmtu). Prices were on a declining trend throughout much of the year as supply improved, while demand continued to soften in the second half of 2023. Prices stabilised during December, however, ending the year at $4.17/dmtu.

Crop Nutrients

Operational and financial metrics

(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 Woodsmith, a large scale, long-life Tier 1 asset 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.

Progress update

Woodsmith project

Throughout 2023, we saw continued good progress on the core infrastructure, with capital expenditure of $641 million (2022: $522 million). Sinking activities at the two deep shafts continue to progress well. The service shaft is now c.745 metres deep, having reached the expected depth for the year. Sinking activities on the production shaft began in January 2023 as planned, at 120 metres below the surface, and following a successful ramp-up to planned sinking rates, is now at a depth of c.510 metres.

Excavation of the three shallow shafts that will provide both ventilation and additional access to the Mineral Transport System (MTS) tunnel is complete. The MTS tunnel is also progressing to plan and has now reached c.27.5 km of the total 37 km length.

During 2024, a key focus area for shaft sinking will be on progress through a strata called the Sherwood sandstone, where we expect sink rates to decrease due to the expected hardness of the rock and potential water fissures. This is planned for in progress rates, and the intersection of the strata is expected around mid-2024. On the tunnel boring machine, there is a planned 3-4 month maintenance pause from the second quarter of 2024, during which the tunnel will be connected to the final intermediate shaft, providing further tunnel access and ventilation.

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 for this are progressing well and will ensure that additional infrastructure is optimally designed to enable future optionality and maximise long term value over the expected multi-decade asset life.

The project is planned to be submitted for a Board approval decision on Full Notice to Proceed in the first half of 2025, following conclusion of the study programme.

Capital expenditure of $0.9 billion is approved for 2024, the bulk of which will continue to be invested on shaft sinking and tunnel boring activities. 

The project is expected to deliver first product to market in 2027, with a final design capacity of 13 Mtpa, subject to studies and approval.

Market development - POLY4

POLY4 provides farmers, through one core product, with a fertiliser solution to tackle the three key challenges facing the food industry today - the increasing demand for food from less available land; the need to reduce the environmental impact of farming; and the deteriorating health of soils.

In tackling these challenges, the fertiliser industry will evolve and need new solutions. POLY4 represents a new solution, helping farmers to deliver balanced, nutrient-efficient and environmentally responsible crop nutrition practices that are required at scale. 

POLY4 offers farmers superior performance compared to existing fertiliser products: demonstrated crop yield improvement of 3-5% across a wide variety of crops and soil types, improved crop quality and resilience to drought and disease, and help in preserving the health of a farmer's greatest asset - their soil. The use of POLY4 can also help minimise the nutrients lost to the environment by improving the ability of crops to take up and utilise available nutrients - i.e. improving a plant's nutrient-use efficiency. Furthermore, its granular form offers a more flexible and convenient in-field application for farmers, compared with common existing fertilisers. All this, while also being low carbon relative to comparable products, and certified for organic agriculture.

Through our global agronomy programme, we have conducted over 1,800 field demonstrations to date, on over 80 crops, and our research continues to reinforce these superior qualities and characteristics of POLY4. 

The ongoing focus of 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 distribution partners, and also engaging deeper into the value chain to ensure we deliver what is needed at the farm gate. Through our ongoing engagements with some 350 value chain partners to date - including top retailers in the United States, large distributors and co-operatives in Europe, and major blenders and mega farms in Brazil - we are working across the full value chain to introduce POLY4 to the market. We have also already engaged more than 570 influencers in the industry, including major universities, farming associations, and academic research institutes, to ensure that the industry recognises the benefits that POLY4 will bring at scale into the marketplace.

POLY4 has significant value beyond its multi-nutrient content, and our innovative marketing strategy will ensure that we unlock the full potential of our product.

Corporate and Other

Financial metrics

(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

Underlying EBITDA was a $107 million loss (2022: $155 million loss) following a decrease in other expenses due to timing differences in copper. Exploration expenditure across the Group was broadly in line with the prior year.

Corporate activities and unallocated costs

Underlying EBITDA was a $86 million loss (2022: $285 million loss), this improved result was driven primarily by the Group's self-insurance entity and corporate cost savings. The positive year-on-year variance reflects the finalisation of the Grosvenor gas ignition claim and the Moranbah overpressure event claim in 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 year. Corporate cost savings of $0.3 bn were realised and are partially recognised in the overheads of the underlying businesses.

Guidance summary

Production and unit costs

Further commentary on the operational outlook at each business is included within the respective business reviews on pages 15-34.

Note: Unit costs exclude royalties, depreciation and include direct support costs only. FX rates used for 2024F unit costs: c.850 CLP:USD, c.3.7 PEN:USD, c.5.0 BRL:USD, c.19 ZAR:USD, c.1.5 AUD: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. 2024 Chile: 430-460 kt; Peru 300-330 kt. 2025 Chile: 380-410 kt; Peru: 310-340 kt. 2026 Chile: 440-470 kt; Peru 320-350 kt. Chile production guidance is lower for the next three years impacted by Los Bronces due to lower grades and continued ore hardness, with the smaller and less efficient of the two processing plants being put on care & maintenance in 2024, as well as the impact of a revised mine plan at El Soldado. In 2025, grades decline at all operations in Chile. In 2026, production benefits from improved grades at Collahuasi. Production guidance in Chile for 2024 and 2025 is subject to water availability. Peru production in 2024 will be weighted to the second half of the year, primarily as a result of the grades temporarily declining to between 0.6-0.7% TCu in the first half of the year as the geotechnical fault requires changes to be made to the angle of the slope in the mining pit wall. Chile 2024 unit cost is c.190 c/lb. Peru 2024 unit cost is c.110 c/lb.

(2) Nickel operations in Brazil only. The Group also produces approximately 20 kt of nickel on an annual basis from the PGM operations. Nickel production is impacted by declining grades.

(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 and purchased concentrate volumes - please see split in above table. The average metal in concentrate split by metal is Platinum: c.45%; Palladium: c.35% and Other: c.20%. Metal in conc entrate production from own mined remains broadly at 2023 levels (excluding Kroondal), but POC volumes will be lower as POC agreements reach their contractual conclusion. Kroondal is expected to move from 100% third-party POC to a toll arrangement (4E metals) at the end of H1 2024. In 2025, the Siyanda POC agreement will transition to a tolling arrangement (4E metals). At the end of 2026, the Sibanye-Stillwater toll agreement concludes (impacting POC due to the minor metal volumes retained). Production remains subject to the impact of Eskom load-curtailment.

(4) 5E + gold produced refined ounces. Includes own mined production and purchased concentrate volumes. Refined production in 2024 is expected to be lower in the first quarter than the rest of the year, due to the annual stock count and planned processing maintenance. Production remains subject to the impact of Eskom load-curtailment.

(5) Production is on a 100% basis except for the Gahcho Kué joint operation, which is on an attributable 51% basis. De Beers will assess options to reduce production in response to prevailing market conditions. Venetia continues to transition to underground operations, it is expected to ramp-up to steady-state levels of c.4Mctpa production over the next few years. 2026 production benefits from an expansion at Gahcho Kué. Unit cost is based on De Beers' share of production. Near term unit cost will be impacted by a low carat profile from Venetia as the underground ramps up and is subsequently expected to reach a steady-state of c.$75/ct from 2026. 

(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. 2024 Kumba: 35-37 Mt; Minas-Rio: 23-25 Mt. 2025 Kumba: 35-37 Mt; Minas-Rio: 22-24 Mt (impacted by pipeline inspection). 2026 Kumba: 35-37 Mt; Minas-Rio: 23-25 Mt. Kumba production is subject to the third-party rail and port availability and performance. The UHDMS plant remains under review and is not captured in guidance. Kumba 2024 unit cost is c.$38/tonne. Minas-Rio 2024 unit cost is c.$35/tonne.

(7) Steelmaking Coal FOB/tonne unit cost comprises managed operations and excludes royalties. Production excludes thermal coal by-product and reflects the challenging operating environment of the longwalls due to the gas, depth and strata as well as the operating protocols. In 2024, the next longwall moves scheduled at Moranbah and Grosvenor are both in the third quarter, and a walk-on/walk-off longwall move is scheduled at Aquila during the second quarter with the impact on production expected to be minimal.

Capital expenditure(1)

Further details on Anglo American's high quality growth and life-extension projects, including details of the associated volumes benefit, are disclosed on pages 12-13.

Long term sustaining capital expenditure is expected to be $3.0-3.5 billion per annum(3), excluding life-extension projects.

Other guidance

-2024 depreciation: $3.0-3.2 billion

-2024 underlying effective tax rate: 40-42%(4)

-Long term underlying effective tax rate: 35-39%(4)

-Dividend payout ratio: 40% of underlying earnings

-Net debt:EBITDA:

(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. Guidance includes unapproved projects and is, therefore, subject to the progress of project studies, and unapproved Woodsmith capex of ?$1 billion per annum is included after 2024. Refer to the 2023 results presentation for further detail on the breakdown of the capex guidance at project level.

(2) Attributable share of Collahuasi desalination capex at 44%.

(3) Long term sustaining capex guidance is shown on a 2023 real basis.

(4) Underlying effective tax rate is highly dependent on a number of factors, including the mix of profits and any relevant tax reforms impacting the countries where we operate, and may vary from guidance.

For further information, please contact:

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 every day 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

Webcast of presentation:

A live webcast of the results presentation, starting at 9.00am UK time on 22 February 2024, can be accessed through the Anglo American website at www.angloamerican.com

Note: Throughout this results announcement, '$' denotes United States dollars and 'cents' refers to United States cents. 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.

Disclaimer

This document is for information purposes only and does not constitute, nor is to be construed as, an offer to sell or the recommendation, solicitation, inducement or offer to buy, subscribe for or sell shares in Anglo American or any other securities by Anglo American or any other party. Further, it should not be treated as giving investment, legal, accounting, regulatory, taxation or other advice and has no regard to the specific investment or other objectives, financial situation or particular needs of any recipient.

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 included in this document is sourced from third party sources (including, but not limited to, externally conducted studies and trials). 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.

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