Anglo American Annual Report 2012

BUSINESS OVERVIEWOur Nickel business unit comprisestwo Brazilian operating assets:Codemin and Barro Alto, bothferronickel producers in the state ofGoiás. Within the portfolio there arealso two promising growth projects,Jacaré and Morro Sem Boné, bothlaterite deposits which are also locatedin Brazil.In Venezuela, despite attempts byMinera Loma de Níquel to obtainconcession and permit renewal toenable a continuation of ouroperations, the application for renewalwas refused and the concessions andpermits granted by the governmentexpired on 10 November 2012.As of 10 November 2012, therefore,Anglo American’s mining andproduction activities at Loma de Níquelceased permanently and, in light ofthis, Anglo American has taken actionto end its working relationship withthe majority of its Loma de Níquelemployees and is seeking to wind upthe operations in an orderly fashion.INDUSTRY OVERVIEWNickel demand is linked to the stateof the stainless steel industry, whichconsumes two-thirds of the metaland all ferronickel production. Nickelused in the manufacture of alloy steeland other non-ferrous alloys accountsfor a further 17% of output.China is the largest stainless steelproducing country, with more than44% of world production in 2012, with70% of the related nickel requirementproduced domestically. Of this, nickelpig iron (NPI) accounted for around60% in 2012. The next most importantproducer is Europe, which accountsfor 22% of world output, while the USproduces 6%.Nickel can be produced from twodifferent ore types: sulphides andlaterites. This has resulted in a largenumber of processing technologiesthat have made the industry a verycomplex one, with high processingcosts and capital intensity. Productionis concentrated among the biggestfive producers, which between themare responsible for almost half ofglobal output.The nickel industry faced a varietyof challenges in 2012. Demand wasaffected by the European debt crisisand the slowdown in the Chineseeconomy, while the supply sidecontinued to face increased capitalexpenditure pressure and technicalissues that delayed the ramp up ofmany projects in the industry.STRATEGYOur Nickel business focuses on thesafe and responsible operation ofworld class assets that have long lifeof mine and competitive productioncosts. We leverage our expertise inoperating ferronickel plants to ensurewe have optimal processes in placeacross our operations; our Codeminplant celebrated 30 years of operationsin 2012.Delivery of efficient production issupported by our asset optimisationinitiatives which are driving improvedoutput, reduced costs and revenueenhancements, and will extend thelives of both our operations.At full production, both Barro Alto andCodemin are positioned in the first halfof the industry’s cash cost curve.In addition to driving value fromexisting operations, Nickel continuesto assess its portfolio of expansionaryand exploration projects.Our strategy and growth ambitionsrely on attracting and retaining asuitably qualified workforce. Themining industry in Brazil continuesto face a difficult labour market, witha shortage of qualified people withspecific knowledge of the miningindustry. Only by addressing andovercoming this challenge will we beable to deliver on our strategy. One ofthe ways we are doing so is through ourtailored trainee programme designedto develop engineers and otherprofessionals capable of meeting ourfuture needs.Our Nickelbusinessfocuses onthe safe andresponsibleoperation ofworld classassets thathave long lifeof mine andcompetitiveproductioncosts.EMPLOYINGTRAINING OURFUTUREPROFESSIONALSOne of the ways we areaddressing the shortage ofqualified people at our Nickeloperations in Brazil is throughour tailored trainee programmeto develop engineers intofuture leaders.The selection process for theinaugural intake in 2012 tookplace during the preceding year,with 11,649 graduates competingfor 31 vacancies. Those selectedwere knowledgeable in suchareas as: supply chain, sustainabledevelopment, geology,production and maintenance,human resources andinformation management.In early 2012, the trainees weresent to gain hands-on workexperience at Barro Alto,Niquelândia, our São Paulocorporate office and Nickel’sproject office in Belo Horizonte.The trainees are working, on arotation basis, at the various sites,until the programme ends in mid-2013. On successful completionof the programme, the traineeswill be considered completelyprepared professionals, readyto meet the challenges of theircareer in Anglo American.ImagePart of the inaugural intake of graduatetrainees at our Nickel business in Brazil.Operating and financial reviewAnglo American plc Annual Report 2012 73