Anglo American Annual Report 2012

Operating performanceAttributableproduction (tonnes) 2012 2011Copper 659,700 599,000Total copper production (includingour share of the Collahuasi jointventure) of 659,700 tonnes was 10%higher than in 2011. This was mainlydue to the increased contribution fromthe Los Bronces expansion, offset bylower production at the establishedLos Bronces operation and atCollahuasi and Mantos Blancos.Production at Los Bronces was 65%higher at 365,300 tonnes, with themine benefiting from the 196,100tonnes (2011: 19,000 tonnes) achievedfrom the expansion as it ramped up tofull production. The new processingplant reached throughput designcapacity ahead of expectations inAugust 2012. This increase in outputwas partially offset by lower gradesaccessed during the year. Productionat the established Los Broncesoperation was impacted by reduced pitflexibility, lower stockpiles and safetydriven reductions in slope angles.Production at El Soldado increasedby 15% to 53,800 tonnes, owingto improved plant performance,expected higher ore grades andbetter recoveries. Production atMantoverde also increased, by 6%,to 62,300 tonnes, driven by improvedLeading copper consumers(2012 estimated refined copper consumption)2012 estimated world total: 19.9MtMtChinaEurope3.88.2crushing performance. MantosBlancos’ production of 54,200 tonnesdecreased by 25%, affectedby an incident involving a loadernecessitating a change in mine plan,resulting in a lower ore grade areabeing mined.Our share of production at Collahuasifell by 38% to 124,100 tonnes, partlyowing to anticipated lower gradesbeing mined during the year. Thiswas exacerbated by lower recoveries,adverse weather conditions in theearly months, safety stoppages anda ball mill failure.In response to the performance issuesat Collahuasi, the joint venture partnersput in place a business improvementplan, with an Anglo American andXstrata joint management teamassuming leadership from July. Theteam has implemented a number ofimprovement plans aimed at deliveringimproved operating performancein 2013. A new CEO was appointedat Collahuasi with effect from19 December 2012.ProjectsIn Peru, the Quellaveco projectreceived three critical permits in thefourth quarter: an amendment to theenvironmental impact assessment,the beneficiation concession andthe key water permit. Communityengagement continued throughthe ‘dialogue table’ process, whereagreement was reached in July inrelation to water usage, environmentalresponsibility and Anglo American’ssocial contribution over the life of themine. Anglo American is targetingsubmission of the project to its Boardfor approval in 2013. The concept levelstudy for the Michiquillay project wascompleted and is under review.Activity at the Pebble project inAlaska continues, with the focus oncompleting a pre-feasibility studyand preparing to commencepermitting. The draft Bristol BayWatershed Assessment was releasedby the Environmental ProtectionAgency (EPA) in May 2012. TheEPA has announced that it has revisedthe draft watershed assessmentreport to take account of feedbackand it intends to have the revisedassessment peer reviewed andcommented on publicly with a viewto finalising the assessment in 2013.In Peru, theQuellavecoproject receivedthree criticalpermits in thefourth quarter:an amendmentto theenvironmentalimpactassessment, thebeneficiationconcessionand the keywater permit.At Collahuasi, the project to increaseconcentrator plant throughput to160,000 tonnes of ore per daywas reduced in scope and thepre-feasibility study on the furtherexpansion potential was put on hold,both pending restoring operationalstability of current operations.OutlookProduction levels in 2013 areexpected to benefit from theexpanded Los Bronces operationrunning at full capacity for the full year.Mine development and improvingmine flexibility will be a continued focusat Los Bronces, which will also impactcosts. Increased production is alsoexpected at Collahuasi followingimplementation of the improvementplans put in place during 2012, as wellas the No. 3 ball mill coming back into operation from November 2012,and planned mining of higher oregrade phases.Challenges remain in managingcontinuing industry-wide input costpressures, and this will be a keyfocus for the business in 2013.Ongoing market concerns arisingfrom uncertainties over the near termoutlook for the global economy maylead to short term volatility in thecopper price. The medium to long termfundamentals for copper, however,remain strong, predominantly drivenby robust demand from the emergingeconomies and supply constraintsowing to ageing mines and steadilydeclining average grades.Operating and financial reviewRest of worldN. America1.9JapanSouth KoreaIndiaBrazil0.60.41.00.73.3Source: Brook Hunt – a Wood Mackenzie companyAnglo American plc Annual Report 2012 71