Anglo American Annual Report 2012

Overview01 At Thermal coal’s 02 Cleaning copperHighveld hospital inanodes in the tank houseMpumalanga province in at Los Bronces in Chile.South Africa, Sister EvahMolefe takes a sputumsample to test forTB from Kleinkopjecolliery plant operatorSipho Mhlabane.03 As part of the Board’svisit to Minas-Rio inOctober, the directorsvisited the CRCA(Cultural andEnvironment Centre),which houses specialistinformation in the fieldsof archaeology,biodiversity and water.04 Specialist asset strategyengineer SylvesterHennessy monitoringdata at MetallurgicalCoal’s offices inBrisbane, Australia.increase. This reflects our confidencein the underlying business andcompletes the reinstatement journeyto rebase our dividends to becompetitive with our diversified peers.We recorded impairmentstotalling $4.6 billion (post-tax) inrelation to Minas-Rio and a numberof platinum projects that areuneconomical, which is disappointing.In Platinum, we completed our reviewin January 2013 and have put forwardproposals to create a sustainable,competitive and profitable business.We, of course, regret the potentialimpact on jobs and communities andhave designed an extensive social planto more than offset any such impact. InBrazil, Minas-Rio is a world class ironore project of rare magnitude andquality, representing one of the world’slargest undeveloped resources. Thepublished resource has increasedmore than fourfold since acquisition,of which we have subsequentlyconverted 1.45 billion tonnes to OreReserves; we anticipate increases inthe resource confidence and furtherconversion of resources to reservesthrough our ongoing infill drillingprogramme. Despite the difficultieswe have faced that have caused asignificant increase in capital02expenditure, we continue to beconfident of the medium and longterm attractiveness and strategicpositioning of Minas-Rio and weremain committed to the project.The first phase of the project will beginits ramp up at the end of 2014, withoperating costs expected to be highlycompetitive in the first quartile of theFOB cash cost curve, generatingsignificant free cash flow for manydecades to come.We continue to sequence investmentby prioritising capital to commoditieswith the most attractive marketdynamics and projects with the lowestexecution risks. The 5 Mtpa Grosvenormetallurgical coal project in Australiais under way and on schedule while,in Peru, successful completion of ourcommunity dialogue process at theQuellaveco copper project will allow usto target submission to the Board forapproval in 2013.Managing the social, economicand environmental impacts of ouroperations is essential to our success.Our approach to sustainability is akey differentiator for Anglo American,is fundamental to the way we dobusiness and is embedded ineverything we do.In Platinum,we completedour reviewand haveput forwardproposalsto create asustainable,competitiveand profitablebusiness.0304Together with the safety andwell-being of employees, our primarysustainability issues are adapting toclimate change, securing access towater and energy, and managingrelationships with stakeholders,particularly communities. During 2012,we made good progress implementingour long term water and energystrategies. To date, more than 70% ofour operational water requirementsare met by recycling/re-using water.In support of our commitments toprotect and enhance the health of ourpeople, contractors and communities,we are extending our industry-leadinghealth and wellness programmes,which include HIV/AIDS and TBtreatment and care, to long termcontract employees in South Africa.Looking ahead, recent months havebrought a degree of renewed optimismto the economic prospects. WhileEuropean and Japanese economicactivity remains weak, recent policychanges ought to stimulate growth in2013. Alongside a continuing recoveryin the US, we expect robust growth inthe major emerging economies –especially China and India – as theybenefit from continuing urbanisation.Rising living standards and anexpanding middle class should supportdemand for our products across ourdiversified mix.I step down from my role as chiefexecutive after six years knowing thatAnglo American is a safer place towork, with a clear strategy and a muchchanged culture of performance.There is no doubt in my mind thatAnglo American’s people and assetbase are unmatched in the industryand I wish my successor, Mark Cutifani,every success in leading this greatcompany. I sincerely thank theBoard of directors, my executivemanagement team and all ouremployees for their support andrelentless effort since 2007.Cynthia CarrollChief ExecutiveAnglo American plc Annual Report 2012 11