Anglo American Annual Report 2012

OPERATING AND FINANCIAL REVIEW IRON ORE AND MANGANESEFollowing successful commissioningin 2011, Kolomela continued its rampup ahead of schedule and delivered anoutstanding performance in 2012,producing 8.5 Mt. Production hasexceeded monthly design capacitysince July 2012, and reached recordlevels during the second half of theyear. Total tonnage mined increasedby 26% to 43.5 Mt (2011: 34.6 Mt),of which waste mined was 33.5 Mt,11% higher than the prior year figureof 30.3 Mt.Kumba’s sales volumes were 2%higher at 44.4 Mt (2011: 43.5 Mt).Export sales volumes for the yearincreased by 7% to 39.7 Mt(2011: 37.1 Mt) as production lossesat Sishen were offset by productionfrom Kolomela and by sales fromstock. The production losses causedby the unprotected strike reducedexport stock levels across the valuechain and impacted export spot salesvolumes. Notwithstanding the impactof the strike, Kumba met all its exportcustomer sales commitments for2012. Domestic sales volumes toAMSA reduced by 27% to 4.7 Mt(2011: 6.4 Mt). Export sales volumesto China accounted for 69% of thecompany’s total export volumes forthe year, compared to 68% in 2011.Iron Ore BrazilIron Ore Brazil generated an underlyingoperating loss of $5 million, reflectingthe pre-operational state of theMinas-Rio project.SamancorUnderlying operating profitdeclined by 38% to $103 million(2011: $165 million), driven by lowerprices and lower alloy volumes, partlyoffset by lower costs and strong oresales volumes. A slowdown in steelproduction weighed heavily on oreand alloy prices.Production of ore increased by20% from 2.8 Mt to a record 3.3 Mt(attributable basis) owing to aconsistently strong operatingperformance and improved plantavailability at both GEMCO in Australiaand Hotazel in South Africa. Alloyproduction, however, decreased by34% to 198,400 tonnes (attributablebasis) following the termination ofenergy-intensive silica-manganeseproduction at the Metalloys plant inSouth Africa and the temporarysuspension of production at TEMCOin Australia during the first half of theyear. TEMCO subsequently returnedto full capacity during the third quarter.ProjectsThe components of Kumba’sgrowth include new developments,expansions at existing operations, andgrowth though technological advancesthat will allow the processing of lowergrade ore.Kumba is currently studyingopportunities to expand Kolomela’sproduction through a beneficiationprocess, which could add a further6 Mtpa to its output. The project hasprogressed to pre-feasibility study andfurther decisions will be made in duecourse, depending on prevailingmarket conditions.The SEP 1B commenced constructionduring the year, and is expected tobe commissioned in 2013, within the$48 million capex budget.The growth portfolio is constantlybeing reviewed taking into account themacroeconomic environment, theoutcome of project studies and thestatus of the IOEC expansion study.Construction is under way at the firstphase of the 26.5 Mtpa Minas-Rioiron ore project, with optimisationto 29.8 Mtpa. Anglo Americanannounced in December 2012 that allthree injunctions that had disrupted theproject in the year, contributing to thedelay of first ore on ship (FOOS)to the end of 2014, had been lifted.We announcedin December2012 thatall threeinjunctions thathad disruptedthe Minas-Rioproject duringthe year,contributingto the delayof first ore onship to the endof 2014, hadbeen lifted.Construction progress is in line withthe revised construction scheduleannounced in July 2012, namely:• The mine and beneficiation plantare on track – 92% of the earthworkshave been completed at thebeneficiation plant, the first of twogrinding mills has been installed andthe civil works for the secondarycrusher are complete;• At the 525 kilometre slurry pipeline,almost 50% of the pipeline has beenlaid (approximately 247 kilometres),with 76% of the land cleared forearthworks and pipe installation totake place;• The filtration plant is on schedulefor completion by June 2013;• The port’s two stackers andreclaimer have been erected and theshiploader installation is under way.010258 Anglo American plc Annual Report 2012