TIDMAAL
RNS Number : 5279D
Anglo American PLC
20 February 2020
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/5279D_1-2020-2-19.pdf
YEAR FINANCIAL REPORT
for the year ended 31 December 2019
20 February 2020
Anglo American Preliminary Results 2019
Continuing delivery underpins 9% increase in underlying EBITDA
to $10.0 billion
Mark Cutifani, Chief Executive of Anglo American , said: "We
continue building on the fundamental structural and operational
improvements we have embedded across our business. The result is
founded on high quality, low cost, world class assets. We have also
benefited from product and market diversification, with strong
precious metals and iron ore prices offsetting weakness in diamonds
and coal, generating a 9% increase in underlying EBITDA to $10.0
billion, a 19% ROCE and a Total Shareholder Return of 31% for the
year.
"We continue to invest in high quality, value-adding growth
projects across the business, including in copper, diamonds and
metallurgical coal, which will drive our volume, margin and cash
flow growth over the medium and longer term. Combined with our
share buyback of $0.8 billion during the second half of the year,
net debt at year end was less than 0.5x EBITDA and we continue to
maintain a strong balance sheet through the cycle.
"The safety of our people is always front of mind. It is tragic
that we continue to experience serious safety incidents, in which
four of our employees died at managed operations in 2019. And while
2019 was our best safety performance in our history, our progress
strengthens our determination to deliver on our commitment to zero
harm. Across the business, we recorded another all-time low injury
frequency rate, representing a 17% improvement compared to 2018 and
a 59% improvement over the last six years.
"At the heart of our operational performance is the improving
stability and predictability provided by our Operating Model. We
are also starting to see considerable further efficiency and
productivity benefits through our P101 programme to deliver
additional value from our equipment, our key processes, and our
FutureSmart Mining(TM) approach to technology, digitalisation and
sustainability. Compared to 2012, our productivity(1) has more than
doubled and unit costs have decreased by 29% (nominal basis),
driving a 12 point increase in Mining EBITDA margin(2) to 42%.
"Underlying cost and volume benefits were $0.4 billion --
adjusted to $0.1 billion on a net basis to reflect external
factors, including the drought in Chile and Eskom power disruptions
in South Africa. Since 2012, we have delivered $4.7 billion of
annual underlying EBITDA improvement and have the plans in place to
add $3-4 billion of annual underlying EBITDA improvement by 2022,
relative to 2017.
"Consistent delivery of underlying improvements continues to
enhance Anglo American's competitive position. We have transformed
our operations and delivered significant financial uplift, while
building our broad sustainability performance. Guided by our
Purpose, we are continuing to reposition our business responsibly
for a cleaner, greener, more sustainable world."
Financial highlights - year ended 31 December 2019
-- Generated underlying EBITDA* of $10.0 billion, a 9% increase,
and $2.3 billion of attributable free cash flow*
-- Delivered profit attributable to equity shareholders of $3.5 billion, in line with prior year
-- Net debt* increased to $4.6 billion, equal to <0.5x
underlying EBITDA, due to investment in growth opportunities
-- Proposed final dividend of $0.47 per share, consistent with our 40% payout policy
-- Previously announced share buyback of up to $1 billion: $0.8 billion completed by year end
31 December 31 December
Year ended 2019 2018 Change
US$ million, unless otherwise stated
Revenue 29,870 27,610 8%
-------------------------------------------- --------- --------- ----
Underlying EBITDA* 10,006 9,161 9%
Mining EBITDA margin* 42% 42%
--------- --------- --------
Attributable free cash flow* 2,324 3,157 (26)%
--------- --------- ----
Profit attributable to equity shareholders
of the Company 3,547 3,549 0%
-------------------------------------------- --------- --------- ----
Underlying earnings per share* ($) 2.75 2.55 8%
Earnings per share ($) 2.81 2.80 0%
Dividend per share ($) 1.09 1.00
Group attributable ROCE* 19% 19%
-------------------------------------------- --------- --------- --------
Terms with this symbol * are defined as Alternative Performance
Measures (APMs). For more information on the APMs used by the
Group, including definitions, please refer to page 68.
SUSTAINABILITY PERFORMANCE
Safety
The safety of our people is always front of mind. Making sure
every employee returns home at the end of each day, better for
having worked at Anglo American, is our vision for safety and
health across the business. In this context, it is tragic that we
continue to experience serious safety incidents, in which four of
our employees died in work-related incidents at managed operations
in 2019, in our Copper and Coal businesses.
Taking into account a number of other incidents, including two
off-site commuting road accidents, we lost a total of 18 colleagues
in 2019. These losses highlight how important it is for us to
continue to improve the safety of everyone associated with Anglo
American, including our contractors, and influencing safety good
practice beyond the mine gate, including at our suppliers and
non-managed joint arrangements. Each of these tragic events is
devastating and we extend our deepest sympathies to our colleagues'
families, friends and co-workers.
Every individual who works at Anglo American must be
unconditional about safety, no ifs and no buts. The Elimination of
Fatalities Taskforce that we launched during 2018 has now covered
all our managed operations, interrogating the key reasons behind
fatal incidents, and is now prioritising actions to better identify
and manage critical hazards to remove and reduce potential for
serious and fatal incidents.
Across safety as a whole, we recorded another all-time low total
recordable case frequency rate, representing a 17% improvement
since 2018 and a 59% improvement at our managed operations over the
last six years. By being unconditional about safety, major safety
incidents will be consigned to history, as we have shown to be
possible in the majority of our working locations. The delivery of
zero harm is about delivering this type of performance at every
location and with every individual in the business. And while 2019
was our best overall safety performance in our history, our
progress strengthens our determination to deliver on that clear
commitment to zero harm.
Environment
Our environmental performance improved significantly in 2019. We
recorded one Level 3 environmental incident (2018: one Level 4 and
five Level 3), at the Unki PGMs mine in Zimbabwe, relating to
discharge into a river. Appropriate and timely containment and
remedial actions were taken.
Our sustainability goals include our commitment to be a leader
in environmental stewardship. By 2030, we aim to: reduce GHG
emissions by 30% against a 2016 baseline and improve energy
efficiency by 30%; achieve a 50% net reduction in freshwater
abstraction; and deliver net-positive impacts in biodiversity
wherever we operate.
Sustainable mining
Anglo American has a long track record as a leader in
sustainable, responsible mining. Our far-reaching Sustainable
Mining Plan, launched in 2018 as part of the FutureSmart Mining(TM)
programme, commits us to a series of ambitious medium and longer
term goals. These relate to three major areas of sustainability
aligned to the UN's 2030 Sustainable Development Goals: trusted
corporate leader (i.e. advocating for the highest standards of
governance to drive transparency and trust in mining and mined
products); healthy environment; and thriving communities. While our
environmental goals will rely on many of the technologies we are
deploying, we are also thinking innovatively to create regional
ecosystems of sustainable economic activity, collaborating with
appropriate development partners.
(1) Productivity indexed to 2012 benchmark.
(2) The Mining EBITDA margin is derived from the Group's
Underlying EBITDA as a percentage of Group Revenue, adjusted to
exclude certain items to better reflect the performance of the
Group's mining business. The Mining EBITDA margin reflects Debswana
accounting treatment as a 50/50 joint operation, excludes
third-party sales, purchases and trading and excludes Platinum
Group Metals' purchase of concentrate.
Operational and financial review of Group results for the year
ended 31 December 2019
OPERATIONAL PERFORMANCE
Production increased by 1% on a copper equivalent basis, driven
by increases at Metallurgical Coal and Minas-Rio (iron ore), which
restarted operations in December 2018. These increases were partly
offset by a combination of lower production at Los Bronces (copper)
owing to restricted water availability due to drought conditions
and De Beers (diamonds), where production was reduced in line with
demand. Production was also affected by the impact of Eskom power
outages on some of our South African operations.
De Beers' rough diamond production decreased by 13% to 30.8
million carats (2018: 35.3 million carats), primarily driven by a
reduction in South Africa as Venetia transitions from open pit to
underground and in response to demand.
Copper production decreased by 5% to 638,000 tonnes (2018:
668,300 tonnes), with higher planned grades at Los Bronces offset
by production losses owing to lower water availability due to
drought conditions. Attributable production from Collahuasi
increased by 1% to 248,800 tonnes (2018: 246,000 tonnes), despite
planned lower grades, owing to a solid plant performance.
At our PGMs business, total platinum and palladium production
(metal in concentrate) increased by 1% to 2,050,600 ounces (2018:
2,020,500 ounces), and 1,385,900 ounces (2018: 1,379,000 ounces)
respectively. The increase in production was primarily due to
higher grades and throughput at Mogalakwena and the continued
ramp-up of the Dishaba Lower section at Amandelbult, partially
offset by Eskom power disruptions.
At Kumba, iron ore production decreased by 2% to 42.4 Mt (2018:
43.1 Mt), mainly due to the infrastructure upgrade of Kolomela's
dense media separation (DMS) plant, with improved plant performance
at Sishen in the second half of the year compensating for
operational challenges earlier in the year.
Following the restart of operations at Minas-Rio in December
2018, iron ore production for the year was 23.1 Mt (2018: 3.4 Mt),
reflecting the optimisation work undertaken while operations were
suspended, the benefit from P101 productivity initiatives and
access to the Step 3 mining area higher grade ore.
Metallurgical coal production increased by 5% to 22.9 Mt (2018:
21.8 Mt), driven by a 1.0 Mt increase at Grosvenor and a strong
performance at Dawson, which offset the impact of an extended
longwall move at Moranbah.
At Thermal Coal, total export production decreased by 8% to 26.4
Mt (2018: 28.6 Mt), while Nickel's production increased by 1% to
42,600 tonnes (2018: 42,300 tonnes) and manganese ore production
decreased by 3% to 3.5 Mt (2018: 3.6 Mt).
Group copper equivalent unit costs were 6% lower in US dollar
terms, largely due to favourable exchange rates and the benefit of
the strong performance at Minas-Rio, partially offset by lower
production at De Beers and Kumba.
FINANCIAL PERFORMANCE
Anglo American's profit attributable to equity shareholders was
in line with the prior year at $3.5 billion (2018: $3.5 billion).
Underlying earnings were $3.5 billion (2018: $3.2 billion).
UNDERLYING EBITDA*
Group underlying EBITDA increased by 9% to $10.0 billion (2018:
$9.2 billion). The Group Mining EBITDA margin* was in line with the
prior year at 42%, reflecting the strong performance at Minas-Rio,
offset by diamond midstream weakness. 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
Year ended Year ended
$ million 31 December 31 December
2019 2018
---------------------- ----------- -------------
De Beers 558 1,245
Copper 1,618 1,856
PGMs 2,000 1,062
Iron Ore 3,407 1,177
Coal 1,832 3,196
Nickel and Manganese 634 844
Corporate and other (43) (219)
----------
Total 10,006 9,161
---------------------- ---------- ----------
Underlying EBITDA* reconciliation for the year ended 31 December
2018 to year ended 31 December 2019
The reconciliation of underlying EBITDA from $9.2 billion in the
year ended 31 December 2018, to $10.0 billion in the year ended 31
December 2019, shows the 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.
$ billion
---------------------------- -------
FY 2018 underlying EBITDA* 9.2
Price 0.4
Diamond midstream weakness (0.5)
Foreign exchange 0.8
Inflation (0.5)
Net cost and volume 0.1
Minas-Rio 0.6
Other (0.1)
----
FY 2019 underlying EBITDA* 10.0
---------------------------- ----
Price
Average market prices for the Group's basket of commodities and
products increased by 1%, contributing $0.4 billion of improvement
to underlying EBITDA. The average realised FOB iron ore price for
Kumba's iron ore increased by 35%, outperforming the market index
owing to its higher iron content and relatively high proportion of
lump ore. The price achieved for the PGMs basket increased by 27%,
largely due to palladium and rhodium, which recorded increases of
48% and 73% respectively. The positive impact was partly offset by
decreases in the realised prices for export thermal coal (30%),
metallurgical coal (12%), and copper (4%).
Diamond midstream weakness
In 2019, overall demand for rough diamonds was lower owing to
challenges in the midstream, as a result of closure of some US
'bricks and mortar' retail outlets and an increase in online
purchasing. The negative price and volume impact in the year was
$0.5 billion, compared with 2018.
Foreign exchange
The positive foreign exchange impact on underlying EBITDA of
$0.8 billion was largely due to the weaker South African rand,
Australian dollar and Brazilian real.
Inflation
The Group's weighted average CPI for the year was 3%, compared
with 4% in 2018. This was principally influenced by a decrease in
inflation in South Africa. The impact of inflation on costs reduced
underlying EBITDA by $0.5 billion.
Net cost and volume
Underlying cost and volume benefits were $0.4 billion. These
were offset, however, by external headwinds, including the drought
in Chile restricting copper production, lower sales at Kumba owing
to lower domestic sales and logistics challenges, and the impact of
Eskom power outages on production at PGMs. The cost and volume
benefit, net of these headwinds, was $0.1 billion.
The underlying $0.4 billion cost and volume benefits were driven
by a strong performance at Minas-Rio, with production significantly
outperforming 2017 levels, and significant cost saving initiatives
at Copper. This was partly offset by expected lower production
volumes at De Beers, as Venetia transitions from open pit to
underground.
Minas-Rio
The increase of $0.6 billion in the Group's underlying EBITDA
reflects the recovery to 2017 performance levels from the impact of
the suspension of operations at Minas-Rio for nine months in
2018.
Other
The $0.1 billion decrease in underlying EBITDA was driven by
lower volumes in response to weaker demand at the Group's
associate, Cerrejón, as well as Voorspoed and Victor mines (De
Beers) ceasing operations. Also included are charges to the income
statement in respect of environmental restoration provisions. These
were broadly consistent with 2018 at $0.2 billion, and primarily
relate to increases at Copper and De Beers.
UNDERLYING EARNINGS*
Profit for the financial year increased by 5% to $4.6 billion
(2018: $4.4 billion). Group underlying earnings increased to $3.5
billion (2018: $3.2 billion), owing to a 9% increase in underlying
EBITDA, offset by an increase in the profit attributable to
non-controlling interests.
Reconciliation from underlying EBITDA* to underlying
earnings*
Year ended Year ended
$ million 31 December 31 December
2019 2018
------------------------------------------ ----------- -------------
Underlying EBITDA* 10,006 9,161
Depreciation and amortisation (2,996) (2,784)
Net finance costs and income tax expense (2,469) (2,265)
Non-controlling interests (1,073) (875)
Underlying earnings* 3,468 3,237
------------------------------------------ ---------- ----------
Depreciation and amortisation
Depreciation and amortisation increased by 8% to $3.0 billion
(2018: $2.8 billion), owing to the impact of higher production at
Minas-Rio and underground development at Metallurgical Coal, as
well as the implementation of IFRS 16 Leases.
Net finance costs and income tax expense
Net finance costs, before special items and remeasurements, were
$0.4 billion (2018: $0.4 billion).
The underlying effective tax rate was 30.8% (2018: 31.3%). The
effective tax rate in 2019 was impacted by the relative levels of
profits arising in the Group's operating jurisdictions. In future
periods, it is expected that the underlying effective tax rate will
remain above the UK statutory tax rate. The tax charge for the
year, before special items and remeasurements, was $1.8 billion
(2018: $1.5 billion).
Non-controlling interests
The share of underlying earnings attributable to non-controlling
interests of $1.1 billion (2018: $0.9 billion) principally relates
to minority shareholdings in Kumba, PGMs and Copper.
SPECIAL ITEMS AND REMEASUREMENTS
Special items and remeasurements are a net gain of $0.1 billion
(2018: net gain of $0.3 billion) and include impairment reversals
of $1.0 billion at Minas-Rio (Iron Ore), offset by impairments of
$0.3 billion at Cerrejón (Coal) and $0.6 billion at the export
thermal coal mines in South Africa. The balance remaining
principally relates to operating remeasurements and contract
termination costs.
Full details of the special items and remeasurements recorded
are included in note 9 to the Condensed financial statements.
CASH FLOW
Cash flows from operations
Cash flows from operations increased to $9.3 billion (2018: $7.8
billion), reflecting an increase in underlying EBITDA from
subsidiaries and joint operations.
Cash outflows on working capital were $50 million (2018:
outflows of $30 million). Inventory increased by $434 million,
reflecting planned increases at Copper and Nickel, as well as
subdued sales at De Beers, particularly in the third quarter.
Receivables increased by $170 million, owing to stronger product
prices and the restart of operations at Minas-Rio. An increase in a
customer pre-payment within PGMs, reflecting increased metal
prices, and the restart of operations at Minas-Rio contributed to
an offsetting increase in payables of $554 million.
Capital expenditure*
Year ended Year ended
31 December 31 December
$ million 2019 2018
------------------------------------------- ----------- -------------
Stay-in-business 1,656 1,617
Development and stripping 976 796
Life-extension projects(1) 358 245
Proceeds from disposal of property, plant
and equipment (8) (162)
------------------------------------------- ---------- ----------
Sustaining capital 2,982 2,496
Growth projects(1) 847 340
------------------------------------------- ---------- ----------
Total 3,829 2,836
Capitalised operating cash flows 11 (18)
------------------------------------------- ---------- ----------
Total capital expenditure 3,840 2,818
------------------------------------------- ---------- ----------
(1) Life-extension projects and growth projects are collectively
referred to as expansionary capital expenditure.
Capital expenditure increased to $3.8 billion (2018: $2.8
billion), with rigorous capital discipline continuing to underpin
the planning and execution of all projects.
Sustaining capital expenditure increased to $3.0 billion (2018:
$2.5 billion), driven by increased stripping and development
expenditure at Kumba and De Beers and a life-extension investment
in Khwezela thermal coal mine in South Africa.
Growth capital expenditure increased to $0.8 billion (2018: $0.3
billion), largely due to expenditure on Quellaveco of $0.5 billion,
net of Mitsubishi funding (gross expenditure at Quellaveco was $1.3
billion).
Attributable free cash flow*
The Group generated attributable free cash flow of $2.3 billion
(2018: $3.2 billion). Growth in cash flows from operations to $9.3
billion (2018: $7.8 billion) was offset by increased capital
expenditure of $3.8 billion (2018: $2.8 billion) and higher tax
payments of $2.1 billion (2018: $1.4 billion), principally at Kumba
Iron Ore, Copper and Metallurgical Coal. Following adoption of IFRS
16 Leases, repayments of lease obligations are excluded from
underlying EBITDA but remain within attributable free cash
flow.
Dividends
In line with the Group's established dividend policy to pay out
40% of underlying earnings, the Board has proposed a dividend of
$0.47 per share, bringing the total dividends paid and proposed in
respect of 2019 to $1.09 per share (2018: $1.00 per share).
Share buyback
In July 2019, the Board approved an additional return of up to
$1 billion to shareholders via an on-market share buyback
programme. This additional return recognises the resilience of our
balance sheet, and our confidence in funding our portfolio of
highly attractive near and medium term growth opportunities. The
programme will end no later than 31 March 2020 and had returned
$0.8 billion to shareholders as at 31 December 2019.
NET DEBT*
$ million 2019 2018
----------------------------------------------------------- ------- ---------
Opening net debt* at 1 January (2,848) (4,501)
----------------------------------------------------------- ------ ------
Underlying EBITDA* from subsidiaries and joint operations 9,139 7,827
Working capital movements (50) (30)
Other cash flows from operations 171 (15)
----------------------------------------------------------- ------ ------
Cash flows from operations 9,260 7,782
Capital expenditure* (3,840) (2,818)
Capital repayments of lease obligations (272) -
Cash tax paid (2,116) (1,393)
Dividends from associates, joint ventures and financial
asset investments 520 738
Net interest(1) (334) (315)
Dividends paid to non-controlling interests (894) (837)
----------------------------------------------------------- ------ ------
Attributable free cash flow* 2,324 3,157
Dividends to Anglo American plc shareholders (1,422) (1,291)
Disposals 24 193
Foreign exchange and fair value movements (34) (248)
Other net debt movements(2) (2,670) (158)
----------------------------------------------------------- ------ ------
Total movement in net debt*(3) (1,778) 1,653
----------------------------------------------------------- ------ ------
Closing net debt* at 31 December (4,626) (2,848)
----------------------------------------------------------- ------ ------
(1) Includes cash outflows of $124 million (2018: outflows of
$41 million), relating to interest payments on derivatives hedging
net debt, which are included in cash flows from derivatives related
to financing activities.
(2) Includes the IFRS 16 Leases transition adjustment of $469
million; capital expenditure on the Quellaveco project funded from
the 2018 syndication transaction of $515 million; Mitsubishi's
subsequent share of Quellaveco capital expenditure of $329 million;
the purchase of shares under the buyback of $777 million; and the
purchase of shares for other purposes (including for employee share
schemes) of $266 million.
(3) Net debt excludes the own credit risk fair value adjustment
on derivatives of $1 million (2018: $15 million).
Net debt (including related derivatives) of $4.6 billion has
increased by $1.8 billion, representing gearing of 13% (2018: 9%).
Net debt at 31 December 2019 comprised cash and cash equivalents of
$6.3 billion (2018: $6.5 billion) and gross debt, including related
derivatives, of $11.0 billion (2018: $9.4 billion). The increase in
net debt since 31 December 2018 was driven by $0.5 billion of
additional debt arising on adoption of IFRS 16 Leases on 1 January
2019, the purchase of $0.8 billion of ordinary shares under the
share buyback scheme announced in July 2019, and incorporation of
Mitsubishi debt for the development of Quellaveco offsetting
attributable free cash flow of $2.3 billion.
BALANCE SHEET
Net assets of the Group increased by $1.6 billion to $31.4
billion (2018: $29.8 billion), reflecting the increased profit in
the year and the effect of foreign exchange on operating assets
denominated in local currency, offset by dividend payments to
Company shareholders and non-controlling interests. Capital
expenditure of $3.8 billion was partly offset by depreciation and
amortisation of $3.0 billion.
ATTRIBUTABLE ROCE*
Attributable ROCE was flat at 19% (2018: 19%). Attributable
underlying EBIT was $5.5 billion (2018: $5.2 billion), reflecting
higher prices, favourable exchange movements and the restart of
operations at Minas-Rio, offset by cost and volume headwinds and
inflationary pressures. Average attributable capital employed
increased to $28.4 billion (2018: $27.4 billion) due to increased
capital expenditure, foreign exchange movements and changes in
accounting treatment arising from the adoption of IFRS 16
Leases.
LIQUIDITY AND FUNDING
Group liquidity remains conservative at $15.0 billion (2018:
$13.9 billion), made up of $6.3 billion of cash (2018: $6.5
billion) and $8.7 billion of undrawn committed facilities (2018:
$7.3 billion). On 1 January 2019, a committed shareholder loan
facility of $1.8 billion from Mitsubishi Corporation became
available to Anglo American Quellaveco S.A. to meet Mitsubishi's
commitment to fund 40% of the remaining capital expenditure on the
Quellaveco copper project in Peru.
In March 2019, the Group issued bonds for a US dollar equivalent
value of $1.0 billion. The issuances consisted of a 7-year EUR500
million bond and a 10-year GBP300 million bond. These issuances
pre-funded the $0.4 billion equivalent bond maturity in June 2019.
The weighted average maturity on the bonds has reduced slightly to
4.5 years (2018: 5.0 years).
The Group received an upgrade to BBB/Baa2 (stable outlook) in
March 2019 from S&P Global Ratings and Moody's Investors
Service respectively.
PORTFOLIO UPGRADE
In 2019, our portfolio management strategy remained focused on
continuously improving asset quality and our competitive position
to ensure that we have a business that delivers sustainable free
cash flows and returns to our shareholders. In this regard, we
commenced or completed a number of transactions. We entered into a
transaction, expected to complete in 2020, to provide for the
equalisation of ownership across our integrated metallurgical coal
operations at Moranbah North and Grosvenor through the sale of 12%
in Grosvenor mine to the minority shareholders in Moranbah North.
The Grosvenor mine uses Moranbah North's coal processing
infrastructure, where numerous debottlenecking, expansion and
product blending options offer considerable cost, productivity and
margin benefits for the integrated operation.
We also completed the two-phased restructuring plan of Atlatsa
(PGMs), which entailed, amongst others, the acquisition of the
exploration properties adjacent to Mogalakwena mine. Namdeb
Holdings, a joint operation between the Namibian government and De
Beers, also announced the sale of Elizabeth Bay in September
2019.
In January 2020, Anglo American announced that an agreement has
been reached with the board of Sirius Minerals Plc ('Sirius') on
the terms of a recommended cash acquisition for the entire issued
and to be issued share capital of Sirius. Anglo American identified
Sirius's Woodsmith polyhalite project in North Yorkshire (the
'Project') as being of potential interest given the quality of the
underlying asset in terms of scale, resource life, operating cost
profile and the nature and quality of its product. The Project has
the potential to fit well with our established strategy of focusing
on world-class assets, particularly in the context of Anglo
American's portfolio trajectory towards later cycle products that
support a fast-growing global population and a cleaner, greener,
more sustainable world. The proposed transaction is subject to
regulatory and Sirius shareholder approval.
THE BOARD
Changes during 2019 to the composition of the Board are set out
below.
On 1 January, Byron Grote assumed the role of senior independent
director, and Anne Stevens took over as chair of the Remuneration
Committee.
On 1 April, Marcelo Bastos joined the Board as a non-executive
director.
Following conclusion of the Annual General Meeting on 30 April,
Jack Thompson stepped down from the Board as a non-executive
director and as chairman of the Sustainability Committee. Ian Ashby
took over as chairman of the Sustainability Committee with effect
from the same date.
As announced in July:
-- Nolitha Fakude, a non-executive director since 2017, stepped
down from the Board on 31 August to take up an executive role for
the Group as chair of Anglo American's management board in South
Africa. Ms Fakude joined Anglo American's Group Management
Committee as Group Director - South Africa on 1 September;
-- Hixonia Nyasulu joined the Board as a non-executive director on 1 November; and
-- Nonkululeko Nyembezi joined the Board as a non-executive director on 1 January 2020.
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/board
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 at the
2019 year end are set out in detail in the strategic report section
of the Integrated Annual Report 2019. The principal risks relate to
the following:
-- Catastrophic risks
-- Product prices
-- Safety
-- Political and regulatory
-- Corruption
-- Cyber security
-- Future demand for diamonds
-- Operational performance
-- Water
-- Future demand for PGMs
-- Evolving stakeholder requirements and expectations.
The Group is exposed to changes in the economic environment, as
with any other business. Details of any key risks and uncertainties
specific to the period are covered in the Operations review
section.
The Integrated Annual Report 2019 is available on the Group's
website www.angloamerican.com .
DE BEERS
Financial and operational metrics(1)
Production Sales Unit Group Underlying EBITDA Underlying
volume volume Price cost* revenue* EBITDA* margin(6) EBIT* Capex* ROCE*
'000 '000
cts cts(2) $/ct(3) $/ct(4) $m(5) $m $m $m(7)
---------- ------ ------- ------- -------- ------------ ------------ ------ -------
De Beers 30,776 29,186 137 63 4,605 558 43% 168 567 2%
Prior
year 35,297 31,656 171 60 6,082 1,245 53% 694 417 8%
Botswana 23,254 - 139 29 - 385 - 325 88 -
Prior
year 24,132 - 155 28 - 495 - 441 97 -
Namibia 1,700 - 534 303 - 121 - 86 55 -
Prior
year 2,008 - 550 274 - 176 - 140 38 -
South
Africa 1,922 - 108 73 - 57 - 28 275 -
Prior
year 4,682 - 109 54 - 163 - 58 177 -
Canada 3,900 - 119 44 - 138 - 66 31 -
Prior
year 4,475 - 144 52 - 231 - 78 127 -
Trading - - - - - 133 3% 126 4 -
Prior
year - - - - - 413 8% 407 2 -
Other(8) - - - - - (276) - (463) 114 -
Prior
year - - - - - (233) - (430) (24) -
---------- ---------- ------ ------- ------- -------- ------- ----- ----- ------- ----- ---
(1) Prepared on a consolidated accounting basis, except for
production, which is stated on a 100% basis except for the Gahcho
Kué joint operation in Canada, which is on an attributable 51%
basis.
(2) Total sales volumes on a 100% basis were 30.9 million carats
(2018: 33.7 million carats). Total sales volumes (100%) include De
Beers Group's joint arrangement partners' 50% proportionate share
of sales to entities outside De Beers Group from Diamond Trading
Company Botswana and Namibia Diamond Trading Company.
(3) Pricing for the mining business units is based on 100%
selling value post-aggregation of goods. The De Beers realised
price includes the price impact of the sale of non-equity product
and, as a result, is not directly comparable to De Beers unit
costs, which relate to equity production only.
(4) Unit cost is based on consolidated production and operating
costs, excluding depreciation and operating special items, divided
by carats recovered.
(5) Includes rough diamond sales of $4.0 billion (2018: $5.4 billion).
(6) Total De Beers EBITDA margin shows Mining EBITDA Margin,
which excludes the impact of third-party sales, purchases and
trading.
(7) In 2018, includes the acquisition of Peregrine Diamonds
Limited for a consideration of $87 million.
(8) Other includes Element Six, downstream, acquisition accounting adjustments and corporate.
Markets
A range of factors created significant challenges for rough
diamond demand in 2019: in late 2018, stock market volatility and
US-China trade tensions resulted in lower than expected holiday
retail sales, which led to higher than anticipated stock levels in
the industry's midstream at the start of 2019. Throughout the
course of 2019, the midstream inventory position was under further
pressure due to the closure of some US 'bricks and mortar' retail
outlets, an increase in online purchasing (where inventory levels
are lower), and retailers increasing their stock held on
consignment. Tighter financing also affected the midstream's
ability to hold stock, all of which resulted in lower demand for
rough diamonds.
In US dollar terms, global consumer demand for diamond jewellery
was broadly flat in 2019. This was despite the challenges of
increased uncertainty around the economic outlook owing to the
continued US-China trade tensions, as well as the impact of the
Hong Kong protests and certain macro-economic issues affecting
consumer confidence in India. US consumer demand remained
reasonably strong, but growth in local currency terms in China and
Japan was offset by the strength of the US dollar, while demand
from India and the Gulf declined.
Financial and operational overview
Total revenue decreased by 24% to $4.6 billion (2018: $6.1
billion), with rough diamond sales falling by 26% to $4.0 billion
(2018: $5.4 billion). This was due to an 8% decrease in
consolidated rough diamond sales volumes to 29.2 million carats
(2018: 31.7 million carats) and a 20% reduction in average realised
price to $137/ct (2018: $171/ct). The reduction in realised price
was driven by a 6% decline in the average rough price index and
from a lower value mix of diamonds sold, in response to the weaker
demand for higher value diamonds.
In response to the challenging midstream trading environment, De
Beers offered increased supply flexibility to Sightholders and sold
a lower value and volume of rough diamonds to the midstream, while
increasing marketing expenditure to $178 million (2018: $166
million) to further drive consumer demand for diamond
jewellery.
Underlying EBITDA decreased by 55% to $558 million (2018: $1,245
million) owing to lower sales volumes, a lower value sales mix
which curtailed mining margins, and the lower rough price index
which reduced margins in the trading business. Profitability in the
mining business was supported by improved efficiencies and cost
savings; so, although there was a 13% decline in production in
response to weaker demand, with the business being impacted by
mining cost inflation in southern Africa, unit cost increases were
limited to 5%.
Operational performance
Mining and manufacturing
Rough diamond production decreased by 13% to 30.8 million carats
(2018: 35.3 million carats), primarily driven by a reduction in
South Africa. While trading conditions have improved somewhat since
the third quarter of the year, production was lower in response to
softer rough diamond demand conditions compared with 2018.
In Botswana, production was 4% lower at 23.3 million carats
(2018: 24.1 million carats). Production at Jwaneng increased by 5%
to 12.5 million carats (2018: 11.9 million carats) as throughput
rose to partly offset a 12% decrease at Orapa to 10.8 million
carats (2018: 12.2 million carats), owing to a delay in an
infrastructure project and expected lower grades.
In Namibia, production decreased by 15% to 1.7 million carats
(2018: 2.0 million carats). Output from the marine operation
declined by 10% owing to routine planned maintenance for the Mafuta
vessel. Production at the land operations decreased by 29% to 0.4
million carats (2018: 0.6 million carats) as a result of placing
Elizabeth Bay onto care and maintenance in December 2018. In
September 2019, the sale of Elizabeth Bay was announced.
In South Africa, production decreased by 59% to 1.9 million
carats (2018: 4.7 million carats) as the mining sequence at the
Venetia open pit had a higher waste to ore ratio as it moves into
its final years, prior to the transition to underground. Production
at Voorspoed ceased following the operation being placed onto care
and maintenance in the final quarter of 2018.
In Canada, production decreased by 13% to 3.9 million carats
(2018: 4.5 million carats) as Victor reached the end of its life
during the second quarter of 2019, resulting in a 55% decrease in
output to 0.4 million carats (2018: 0.9 million carats). Gahcho Kué
maintained output at 3.5 million carats (2018: 3.5 million carats),
with a planned grade reduction offset by strong plant
performance.
Brands
In 2019, De Beers continued to invest in its downstream brands
to support the long term growth of consumer demand for natural
diamonds.
De Beers Jewellers continued to upgrade and expand its retail
network during 2019, as well as integrating its online and store
presence into an improved combined offering.
Forevermark(TM) continues to grow its presence and sales
worldwide. It is now available in around 2,500 retail outlets
globally, with the brand being launched in Italy, Austria and
Belgium during 2019. Dedicated Forevermark(TM)-only stores are now
operating in China, the US and India.
Operational and market outlook
Preliminary data following the holiday retail season in 2019
indicates that stock levels in the industry's midstream are
returning to a more balanced position following stable consumer
demand, especially in the US. However, risks remain to the
downside, with further increases in online purchasing causing
additional retailer destocking, developments in US-China trade
tensions, the coronavirus which originated in China over Chinese
New Year, geo-political escalation in the Middle East and the
effect those may have on economic growth and consumer
sentiment.
2020 production guidance is 32-34 million carats, subject to
trading conditions. The higher production is driven by an expected
increase in ore from the final open-pit cut at Venetia, supported
by a currently anticipated improvement in trading conditions
compared with 2019.
COPPER
Financial and operational metrics
Mining
Production Sales Unit Group Underlying EBITDA Underlying
volume volume Price cost* revenue* EBITDA* margin(2) EBIT* Capex* ROCE*
---------- ------------
kt kt(1) c/lb(2) c/lb(3) $m(4) $m $m $m
--------------- ---------- ------ ------- ------- -------- ------------ ------------ ------ -------
Copper 638 644 273 126 5,840 1,618 44% 960 1,078 16%
Prior year 668 672 283 134 5,168 1,856 48% 1,234 703 22%
Los Bronces(5) 335 336 - 135 1,872 745 40% 378 239 -
Prior year 370 376 - 145 2,175 969 45% 625 217 -
Collahuasi(6) 249 254 - 100 1,414 916 65% 691 275 -
Prior year 246 243 - 105 1,460 960 66% 736 295 -
Quellaveco(7) - - - - - - - - 494 -
Prior year - - - - - - - - 131 -
Other
operations(8) 54 54 - - 2,554 (43) 7% (109) 70 -
Prior year 53 53 - - 1,533 (73) 26% (127) 60 -
--------------- ---------- ------ ------- ------- -------- ------- ----- ---- ------- ------ ---
(1) Excludes 349 kt third-party sales (2018: 178 kt).
(2) Realised price, excludes impact of third-party sales.
(3) C1 unit cost includes by-product credits.
(4) Group revenue is shown after deduction of treatment and refining charges (TC/RCs).
(5) Figures on a 100% basis (Group's share: 50.1%).
(6) 44% share of Collahuasi production, sales and financials.
(7) Figures on a 100% basis (Group's share: 60%), except capex
which represents the Group's share after deducting direct funding
from non-controlling interests. 2019 capex on a 100% basis was
$1,338 million, of which $515 million was funded by cash from the
Mitsubishi syndication transaction in 2018. Of the remaining $823
million, the Group and Mitsubishi funded their respective 60% and
40% shares via shareholder loans.
(8) Other operations includes El Soldado and Chagres (figures on
a 100% basis, Group's share: 50.1%), third-party sales and
purchases.
Financial and operational overview
Underlying EBITDA decreased by 13% to $1,618 million (2018:
$1,856 million), driven by a decrease in the average LME copper
price and a 4% reduction in sales volumes. The lower sales reflect
a 5% decrease in production, driven by the ongoing severe drought
conditions in Chile, mitigated to some extent by productivity
improvements, including record copper in concentrate production at
Collahuasi. Unit costs decreased by 6%, to 126 c/lb (2018: 134
c/lb), the lowest since 2010, reflecting sustainable cost savings
coupled with favourable movements in the Chilean peso, which fully
offset the impact of inflation and lower production. At 31 December
2019, 111,213 tonnes of copper were provisionally priced at 273
c/lb (2018: 179,100 tonnes provisionally priced at 271 c/lb).
Markets
31 December 31 December
2019 2018
----------- -----------
Average market price (c/lb) 272 296
Average realised price (c/lb) 273 283
------------------------------- ----------- -----------
The differences between the market price and realised price are
largely a function of the timing of sales across the period and
provisional pricing adjustments.
The average LME cash copper price in 2019 was 8% lower at 272
c/lb (2018: 296 c/lb). Trade tensions between the US and China and
measures to restrict shadow lending by the Chinese authorities
contributed to slower economic growth in China, adversely affecting
key copper-consuming sectors. As a result, investors were risk
averse through most of the year and the weaker US dollar/Chinese
renminbi exchange rate also put pressure on the copper price.
However, a decrease in reported warehouse stocks and stagnant
growth in global copper mine supply provided some support.
Operational performance
Total production decreased by 5%, to 638,000 tonnes (2018:
668,300 tonnes).
At Los Bronces, production decreased by 9% to 335,000 tonnes
(2018: 369,500 tonnes), with planned higher grades (0.83% vs. 2018:
0.76%) offset by production losses owing to lower water
availability. Chile's central zone, where the operation is located,
continues to face unprecedented climate conditions, with 2019 being
the driest year since the start of the current decade-long drought,
and one of the driest years on record. Despite the lower
production, C1 unit costs decreased by 7% to 135 c/lb (2018: 145
c/lb), reflecting a series of initiatives to reduce costs.
At Collahuasi, Anglo American's attributable share of copper
production increased by 1% to 248,800 tonnes (2018: 246,000
tonnes), another copper in concentrate production record, with
planned lower grade (1.19% vs. 2018: 1.29%) fully compensated by a
solid plant performance following the successful completion of
planned three-month maintenance of Line 3 (responsible for 60% of
plant throughput) during the first half of the year. C1 unit costs
decreased by 5% to 100 c/lb (2018: 105 c/lb) on the back of strong
production performance and lower waste stripping expensed.
The Copper business has continued to progress trials for new
technology as part of the FutureSmart Mining(TM) programme, working
towards a more sustainable future for mining. Following a
successful bulk ore sorting pilot at El Soldado in Chile, units
were constructed and on trial in Brazil at Barro Alto (Nickel), and
in South Africa at Mogalakwena (PGMs), with plans to roll-out to
more sites over the next few years. The focus for early 2020 is the
completion of the El Soldado coarse particle recovery demonstration
plant.
Production at El Soldado increased by 3% to 54,200 tonnes (2018:
52,700 tonnes) as a result of planned higher grades (0.93% vs.
2018: 0.85%). C1 unit costs were broadly in line with 2018 at 205
c/lb (2018: 206 c/lb).
Operational outlook
Production guidance for 2020 is 620,000-670,000 tonnes, subject
to water availability.
Quellaveco update
Project execution is on track at around 40% completion, with all
key milestones for 2019 achieved on schedule.
The construction of Vizcachas dam, part of the water source
infrastructure located approximately 90 kilometres north-east of
the plant, is progressing to plan, with water impoundment expected
to begin during the rainy season in early 2020. Once built, the
Vizcachas reservoir will bring substantial benefits to local
agriculture, in addition to providing an annual average of around
20% of the water needed to sustain Quellaveco's operations.
Construction of the water pipeline from the water source to the
Quellaveco site is a key activity for 2020.
In the mine area, earthworks are significantly progressed and
concrete work for the primary crusher has commenced. Preparations
are under way for the start of pre-stripping, to remove surface
waste material, in the first half of 2020.
At the processing plant area, earthworks are complete, concrete
placement is advancing to plan, and structural steel and mechanical
equipment installation has commenced. Assembly of the mills is
scheduled to start in 2020.
The project remains on track to deliver first production in
2022, within the $5.0-$5.3 billion capital expenditure estimate
(100% basis; Anglo American share: $2.5-$2.7 billion), with ramp-up
in 2023. Quellaveco expects to deliver around 300,000 tonnes per
annum of copper equivalent production (100% basis) on average in
the first 10 years of operation.
In 2019, capital expenditure (100% basis) totalled $1,338
million, of which $515 million was funded using the remaining
proceeds from the syndication transaction with Mitsubishi in 2018,
and hence is not included in reported capital expenditure. Of the
remaining $823 million, the Group and Mitsubishi funded their
respective 60% and 40% shares of capital expenditure via
shareholder loans. Capital expenditure guidance (100% basis) for
2020 is $1.5-$1.7 billion, of which the Group's share is $0.9-$1.0
billion.
PLATINUM GROUP METALS
Financial and operational metrics
Production Production Sales Mining
volume volume volume Basket Unit Group Underlying EBITDA Underlying
platinum palladium platinum price cost* revenue* EBITDA* margin(5) EBIT* Capex* ROCE*
---------- -----------
$/Pt $/Pt
koz(1) koz(1) koz(2) oz(3) oz(4) $m $m $m $m
--------------- ---------- -------- ------ -------- ---------- ------------ ------ -------
PGMs 2,051 1,386 2,215 2,819 1,543 6,866 2,000 40% 1,672 569 38%
Prior year 2,021 1,379 2,424 2,219 1,561 5,680 1,062 29% 705 496 15%
Mogalakwena 518 558 519 3,433 1,329 1,789 995 56% 863 264 -
Prior year 495 541 492 2,759 1,398 1,367 623 46% 478 210 -
Amandelbult 454 209 458 2,624 1,725 1,206 355 29% 298 84 -
Prior year 443 205 445 2,222 1,717 996 153 15% 96 74 -
Other
operations(6) 407 282 425 2,879 1,621 1,202 329 27% 216 221 -
Prior year 386 268 367 2,272 1,600 889 68 8% (56) 212 -
Processing
and
trading(7) 672 337 813 - - 2,669 321 12% 295 - -
Prior year 697 365 1,120 - - 2,428 218 9% 187 - -
--------------- ---------- ---------- -------- ------ ----- -------- ---------- ---- ---- ------- --- ------ ---
(1) Production reflects own-mined production and purchase of
metal in concentrate. Comparative excludes purchase of concentrate
volumes now treated under tolling arrangement.
(2) Sales volumes exclude the sale of refined metal purchased
from third parties and toll material. Comparatives include purchase
of concentrate volumes now transitioned to tolling.
(3) Average US$ realised basket price. 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.
(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, Union (prior to disposal), Mototolo
(post-acquisition on 1 November 2018), PGMs' share of joint
operations.
(7) Purchase of concentrate from joint operations, associates
and third parties for processing into refined metals, tolling and
trading activities.
Financial and operational overview
Underlying EBITDA increased by 88% to $2,000 million (2018:
$1,062 million), largely as a result of a 27% increase in the
dollar basket price, driven primarily by stronger prices for
palladium and rhodium, and a solid operational performance.
Markets
31 December 31 December
2019 2018
--------------------------------------- ----------- -------------
Average platinum market price ($/oz) 864 880
Average palladium market price ($/oz) 1,539 1,029
Average rhodium market price ($/oz) 3,914 2,214
US$ realised basket price ($/Pt oz) 2,819 2,219
Rand realised basket price (R/Pt oz) 40,862 29,601
--------------------------------------- ----------- -----------
The basket price increased by 27% in dollar terms and 38% in
South African rand terms. The average platinum price decreased by
2%, recovering well in the second half owing to strong investor
demand, following weaker sentiment earlier in the year. In
contrast, average palladium and rhodium prices strengthened by 50%
and 77% respectively, despite a fall in global light duty vehicle
sales, due to strong automotive demand driven by tighter emissions
regulations in key markets.
Operational performance
Total platinum production (metal in concentrate) increased by 1%
to 2,050,600 ounces, with total palladium output also improving by
1% to 1,385,900 ounces. This excludes the effect of the transition
of Rustenburg material to a tolling arrangement in the year (2018:
464,200 platinum ounces, 231,800 palladium ounces). This result was
achieved despite the impact of Eskom power outages on production,
which led to a loss of approximately 17,000 platinum ounces and
13,000 palladium ounces.
Own-mined production
Own-mined platinum and palladium production both increased by 4%
to 1,378,200 ounces and 1,049,200 ounces respectively. This was
largely driven by increased production across the portfolio, as
well as the acquisition of the remaining 50% of Mototolo in
November 2018.
Mogalakwena's platinum production increased by 5% to 517,500
ounces, and palladium production by 3% to 557,900 ounces, owing to
an increase in grade and throughput. Ore stockpiles were drawn down
to supplement production, as maintenance was carried out on the
North concentrator in the second quarter of 2019, and the rope
shovel in the fourth quarter of 2019.
Amandelbult platinum and palladium production both increased by
2% to 453,600 ounces and 208,900 ounces respectively.
Infrastructure upgrades, exacerbated by power disruptions in both
the first quarter and December, were offset by an increase in
mining efficiencies as the ramp-up of Dishaba Lower accelerated in
the second half.
Production of both platinum and palladium from other operations
increased by 5% to 407,100 and 282,400 ounces respectively. This
performance reflected record production levels at Unki and
increased volumes from Mototolo which was wholly owned for the full
year (acquisition of the remaining 50% of Mototolo was concluded on
1 November 2018, from which date 100% of production became
own-mined production). On a 100% basis, platinum and palladium
production decreased at Mototolo by 15% to 112,000 ounces and by
17% to 68,700 ounces respectively, owing to a one-off benefit in
2018 from stockpiled material that was toll-concentrated at Bokoni,
as well as a decline in grade, and unprotected industrial action in
May 2019.
Joint operation platinum and palladium production (split equally
between own-mined and purchase of concentrate), excluding Mototolo,
both decreased by 4% to 411,400 ounces and 269,000 ounces
respectively, due to safety-related stoppages at Modikwa and Eskom
power disruptions affecting production at Kroondal in December
2019.
Purchase of concentrate
Purchase of concentrate, excluding Sibanye material which
transitioned to a tolling arrangement from 1 January 2019,
decreased by 4% to 672,400 ounces in the case of platinum and by 8%
to 336,700 ounces for palladium, reflecting the lower production
from joint operations.
Refined production and sales volumes
Refined platinum production (excluding Sibanye toll-treated
metal and concentrate purchased from Sibanye) increased by 8% to
2,112,300 ounces, while refined palladium output rose by 12% to
1,428,200 ounces. The improved operational performance was partly
offset by the impact of Eskom's power disruptions during the year,
including an outage at the Rustenburg refinery in December, which
led to a loss of refined platinum production of 69,000 ounces and
palladium production of 44,000 ounces, of which around 45,000
platinum ounces and 25,000 palladium ounces should be recovered in
refined production in 2020.
Platinum sales volumes increased by 7% to 2,100,300 ounces,
while palladium sales increased by 13% to 1,453,500 ounces
(excluding concentrate purchased from Sibanye prior to the
transition to a tolling agreement and refined metals purchased from
third parties). The increase was a result of the higher comparable
refined production and some drawdown in refined inventory.
Operational outlook
Metal in concentrate production for 2020 is expected to be
2.0-2.2 million ounces for platinum (of which approximately 65%
own-mined) and approximately 1.4 million ounces for palladium (of
which approximately 65% own-mined), subject to Eskom's power
performance.
IRON ORE
Financial and operational metrics
Mining
Production Sales Unit Group Underlying EBITDA Underlying
volume volume Price cost* revenue* EBITDA* margin EBIT* Capex* ROCE*
---------
Mt(1) Mt $/t(2) $/t(3) $m $m(4) $m(4) $m
-------
Iron Ore - - - - 6,758 3,407 50% 2,952 594 31%
Prior year - - - - 3,768 1,177 31% 747 415 3%
Kumba Iron
Ore (5) 42.4 42.0 97 33 4,445 2,243 50% 1,918 389 70%
Prior year 43.1 43.3 72 32 3,440 1,489 43% 1,158 309 42%
Iron Ore
Brazil
(Minas-Rio) 23.1 22.9 79 21 2,313 1,164 50% 1,034 205 20%
Prior year 3.4 3.2 70 - 328 (312) - (411) 106 (9)%
------------- ---------- ------- ------ ------ -------- -------- ---- --- -------- ------ ---
(1) Minas-Rio production is Mt (wet basis).
(2) Prices for Kumba Iron Ore are the average realised export
basket price (FOB Saldanha). Prices for Minas-Rio are the average
realised export basket price (FOB Açu) (wet basis).
(3) Unit costs for Kumba Iron Ore are on an FOB (dry) basis.
Unit costs for Minas-Rio are on an FOB (wet) basis and were not
disclosed for 2018, due to the suspension of operations.
(4) Kumba Iron Ore segment includes $66 million projects and
corporate costs (2018: $55 million). Iron Ore Brazil segment
includes $55 million projects and corporate costs (2018: $40
million).
(5) Sales volumes, stock and realised price for 2019 differ to
Kumba's stand-alone reported results due to sales to other Group
companies.
Financial and operational overview
Kumba
Underlying EBITDA increased by 51% to $2,243 million (2018:
$1,489 million), driven by a 35% increase in the average realised
iron ore price to $97/tonne (2018: $72/tonne). FOB unit costs
increased marginally to $33/tonne
(2018: $32/tonne) primarily due to higher maintenance costs and
mining in a more geologically challenging area of the mine. These
factors were partly offset by the weaker South African rand,
operational efficiency improvements and cost savings.
Total sales volumes decreased by 3% to 42.0 Mt (2018: 43.3 Mt)
due to lower domestic sales of 2.2 Mt (2018: 3.3 Mt) following the
winding down of the Saldanha Steel plant. Export sales of 39.8 Mt
(2018: 40.0 Mt) were marginally lower due to the scheduled
refurbishment of the second ship loader at Saldanha port.
Consequently, total finished stock increased to 6.6 Mt(5) (2018:
5.3 Mt). Rail performance improved significantly in 2019, with port
stock levels well set for the first quarter of 2020.
Minas-Rio
Minas-Rio recorded an underlying EBITDA of $1,164 million (2018:
$312 million loss), reflecting the solid ramp-up following approval
to restart the operation in December 2018, as well as cost
efficiencies and strong price realisation. Unit costs of $21/tonne,
lower than the original guidance of $28-31/tonne, were driven by
the higher production, P101 initiatives to improve productivity,
and lower energy and consumables prices.
Markets
31 December 31 December
2019 2018
------------------------------------------------- ----------- -----------
Average market price (IODEX 62% Fe CFR China
- $/tonne) 93 69
Average market price (MB 66% Fe Concentrate
CFR - $/tonne) 104 95
Average realised price (Kumba export - $/tonne)
(FOB Saldanha) 97 72
Average realised price (Minas-Rio - $/tonne)
(FOB wet basis) 79 70
------------------------------------------------- ----------- -----------
Kumba's outperformance over the IODEX (Platts) 62% Fe CFR China
index was primarily due to the higher iron content at 64.2% and the
relatively high proportion (approximately 67%) of lump in its
product portfolio.
Minas-Rio's pellet feed product is also higher grade (higher
iron content of 67% and lower gangue) than the reference product
used for the IODEX 62% Fe CFR China index. The Metal Bulletin (MB)
66 index, therefore, is used when referring to Minas-Rio
product.
Operational performance
Kumba
Total production decreased by 2% to 42.4 Mt (2018: 43.1 Mt),
driven by a 5% decrease at Kolomela to 13.2 Mt (2018: 13.9 Mt) as a
result of the infrastructure upgrade of the DMS plant. Production
volumes at Sishen were flat at 29.2 Mt, with improved plant
performance in the second half of the year compensating for the
operational challenges earlier in the year.
Sishen's waste stripping decreased marginally to 181 Mt (2018:
182 Mt), while Kolomela's waste stripping increased by 13% to 63 Mt
(2018: 56 Mt). Progress continues to be made towards P101 benchmark
efficiency, with Kumba's operating efficiency increasing to 68%
(2018: 65%). The efficiency improvement projects included:
improving truck efficiency and payloads, payload management and
smart roads.
Minas-Rio
Production of 23.1 Mt (2018: 3.4 Mt) was driven by strong
operational performance, reflecting the optimisation work
undertaken during 2018 while operations were suspended, the impact
of P101 productivity initiatives and access to the Step 3 mining
area higher grade ore. The construction of the scheduled tailings
dam raise was completed in August 2019, and approval for the
conversion of the installation licence to an operating licence was
granted in December 2019.
Operational outlook
Kumba
Kumba's production guidance for 2020 is 41.5-42.5 Mt.
Minas-Rio
Production guidance for 2020 is 22-24 Mt, which allows for a
one-month production stoppage in the second quarter to carry out
routine internal scanning of the pipeline.
COAL
Financial and operational metrics
Mining
Production Sales Unit Group Underlying EBITDA Underlying
volume volume Price cost* revenue* EBITDA* margin(6) EBIT* Capex* ROCE*
------------
Mt(1) Mt(2) $/t(3) $/t(4) $m $m(5) $m(5) $m
Coal - - - - 6,137 1,832 33% 1,010 934 26%
Prior year - - - - 7,788 3,196 46% 2,538 722 67%
Metallurgical
Coal 22.9 22.4 165 63 3,756 1,707 45% 1,079 670 39%
Prior year 21.8 22.0 190 64 4,231 2,158 51% 1,722 574 80%
Thermal Coal -
South
Africa 17.8 18.1 61 45 1,887 (5) (3)% (94) 264 (19)%
Prior year 18.4 18.3 87 44 2,719 650 34% 521 148 68%
Thermal Coal -
Colombia(7) 8.6 8.8 56 33 494 130 26% 25 - 4%
Prior year 10.2 10.1 83 36 838 388 46% 295 - 35%
--------------- ---------- ------ ------ ------ -------- ------- --- ----- ---- ------- --- ------ ---
(1) Production volumes are saleable tonnes. South African
production volumes include export primary production, secondary
production sold into export markets, production sold domestically
at export parity pricing and pre-commercial production volumes from
Navigation section of Khwezela and excludes other domestic
production of 10.0 Mt (2018: 13.7 Mt). Included in other domestic
production in 2018 is 2.8 Mt from the Eskom-tied operations, which
were sold on 1 March 2018. Metallurgical Coal production volumes
exclude thermal coal production of 1.4 Mt (2018: 1.4 Mt).
(2) South African sales volumes include export primary
production, secondary production sold into export markets and
production sold domestically at export parity pricing and
pre-commercial production volumes from Navigation section of
Khwezela and exclude domestic sales of 9.8 Mt (2018: 13.1 Mt) and
non-equity traded sales of 10.9 Mt (2018: 9.5 Mt). Included in 2018
is domestic sales of 2.8 Mt from the Eskom-tied operations, which
were sold on 1 March 2018. Metallurgical Coal sales volumes exclude
thermal coal sales of 1.8 Mt (2018: 1.6 Mt).
(3) Metallurgical Coal realised price is the weighted average
hard coking coal and PCI sales price achieved. Thermal Coal - South
Africa realised price is the weighted average export thermal coal
price achieved. Excludes third-party sales.
(4) FOB cost per saleable tonne, excluding royalties.
Metallurgical Coal excludes study costs. Thermal Coal - South
Africa unit cost is for the trade operations.
(5) Metallurgical Coal segment includes $69 million projects and
corporate costs (2018: $52 million). Thermal Coal - South Africa
segment includes $59 million projects and corporate costs (2018:
$45 million).
(6) Excludes impact of third-party sales and, in 2018, Eskom-tied operations.
(7) Represents the Group's attributable share from its 33.3% interest in Cerrejón.
Financial and operational overview
Metallurgical Coal
Underlying EBITDA decreased by 21% to $1,707 million (2018:
$2,158 million), with a 2% increase in sales volumes and a 2%
decrease in US dollar unit costs to $63/tonne (2018: $64/tonne),
being offset by a 13% reduction in the realised price for
metallurgical coal.
Thermal Coal - South Africa
Underlying EBITDA fell to a $5 million loss (2018: $650 million
profit), driven by a 30% decrease in the realised export thermal
coal price and marginally lower export sales volumes at 18.1 Mt
(2018: 18.3 Mt). Unit costs were in line with the prior year at
$45/tonne (2018: $44/tonne) as productivity improvements, cost
savings and the favourable impact of the weaker South African rand
offset the effects of inflation and lower production volumes.
Thermal Coal - Colombia
Underlying EBITDA decreased by 66% to $130 million (2018: $388
million), reflecting a 33% decrease in average realised price and a
13% reduction in sales volumes as a result of weaker market demand,
as well as dust restrictions in the first half of the year. In
response to the lower demand, Cerrejón reduced unit costs by 8% to
$33/tonne through optimisation of the mine plan to exclude higher
cost volumes that were not economic at current prices.
Revenue for thermal coal includes amounts earned from the sale
of volumes purchased from third parties (non-equity traded sales)
that were not mined by the Group. Excluding these volumes, revenue
from the mining of thermal coal (including thermal coal volumes
from South Africa, Colombia and the Metallurgical Coal business) is
$1,783 million (or 6% of the Group's revenue).
Markets
Metallurgical coal
31 December 31 December
2019 2018
-------------
Average benchmark price hard coking coal ($/tonne)(1) 177 207
Average benchmark price PCI ($/tonne)(1) 110 136
Average realised price for premium low-volatile
hard coking coal ($/tonne) 171 194
Average realised price for PCI ($/tonne) 110 128
------------------------------------------------------- ----------- -------------
(1) Represents average spot prices.
Average realised prices differ from the average market price
owing to differences in material grade and timing of contracts.
Market prices decreased in line with demand through the second
half of the year. Demand was affected by increasingly stringent
coal import policies at ports in China and a slowdown in the Indian
economy, as well as lower production at east Asian steel mills in
response to weaker steel margins.
Thermal coal
31 December 31 December
2019 2018
-------------------------------------------------- ----------- -------------
Average market price ($/tonne, FOB South Africa) 72 98
Average market price ($/tonne, FOB Colombia) 54 85
Average realised price - Export South Africa
($/tonne, FOB) 61 87
Average realised price - Domestic South Africa
($/tonne) 14 19
Average realised price - Colombia ($/tonne,
FOB) 56 83
-------------------------------------------------- ----------- -------------
The average realised price for export thermal coal differs from
the average market price owing to timing differences and quality
discounts relative to the industry benchmark.
Thermal coal prices fell sharply as lower gas and higher carbon
prices encouraged a switch from coal to gas-generated power in
Europe. Indian imports, however, remained strong, supported by
local steelmaking demand. Delays to customs clearances at Chinese
ports and various restrictions in Korea and Taiwan kept pressure on
Pacific pricing towards the end of the year.
Operational performance
Metallurgical Coal
Production increased by 5% to 22.9 Mt (2018: 21.8 Mt), owing to
a 1.0 Mt production increase at Grosvenor, operational improvements
leading to a 10% increase in wash plant throughput partially offset
by the impact of an extended longwall move at Moranbah. In
addition, there was a strong performance at Dawson where P101
productivity improvements drove an increase in shovel and dragline
performance.
Thermal Coal - South Africa
Export production decreased by 3% to 17.8 Mt (2018:18.4 Mt)
mainly due to mine sections reaching their end of life at Khwezela
and Goedehoop.
Thermal Coal - Colombia
Anglo American's attributable production from its 33.3%
ownership of Cerrejón decreased by 16% to 8.6 Mt (2018: 10.2 Mt) in
response to dust restrictions in the first half and a reduction in
market demand in the second half of 2019.
Operational outlook
Metallurgical coal
Export metallurgical coal production guidance for 2020 has been
revised to 19-21 Mt (previously 21-23 Mt), with unit costs of
around $70/tonne (previously around $65/tonne) following a roof
collapse at Moranbah North on 30 January 2020. The sale of a 12%
interest in the Grosvenor mine is expected to complete in 2020,
equalising the ownership across Moranbah-Grosvenor, which is
reflected in the guidance.
Export thermal coal
Export thermal coal production guidance for 2020 is around 26
Mt.
NICKEL AND MANGANESE
Financial and operational metrics
Mining
Production Sales Unit Group Underlying EBITDA Underlying
volume(1) volume(1) Price cost* revenue* EBITDA* margin EBIT* Capex* ROCE*
---------
c/lb(2) c/lb(3) $m $m(4) $m(4) $m
-------
Nickel and
Manganese - - - - 1,498 634 42% 477 42 20%
Prior year - - - - 1,707 844 49% 685 38 28%
Nickel 42,600 41,700 624 380 572 191 33% 89 42 4%
Prior year 42,300 43,100 588 361 560 181 32% 75 38 4%
Samancor(5) 3.7 3.7 - - 926 443 48% 388 - 109%
Prior year 3.8 3.7 - - 1,147 663 58% 610 - 159%
------------- ---------- --------- ------- ------- -------- ---------- ---- ---------- ------ ---
(1) Nickel production and sales are tonnes (t). Samancor
production and sales are million tonnes (Mt).
(2) Realised price.
(3) C1 unit cost.
(4) Nickel segment includes $12 million projects and corporate costs (2018: $8 million).
(5) Production, sales and financials include ore and alloy.
Financial and operational overview
Nickel
Underlying EBITDA increased by 6% to $191 million (2018: $181
million), benefiting from improved operational stability and a 6%
higher realised price, partly offset by a 3% decrease in sales
volumes and higher unit costs.
Unit costs increased by 5% to 380 c/lb (2018: 361 c/lb), driven
mainly by a rise in the consumption of coal as a reductant due to
higher iron content in ore, the impact of higher consumable prices,
and new local legislation that increased freight costs.
Samancor
Underlying EBITDA decreased by 33% to $443 million (2018: $663
million), mainly owing to the lower manganese ore price and, to a
lesser extent, an 18% decrease in attributable manganese alloy
sales, in line with reduced Australian and South African alloy
production.
Markets
Nickel
31 December 31 December
2019 2018
-----------
Average market price (c/lb) 632 595
Average realised price (c/lb) 624 588
------------------------------- ----------- -----------
Ferronickel is traded based on discounts or premiums to the LME
nickel price, depending on market conditions, supplier products and
consumer preferences. Differences between market prices and
realised prices are largely due to variances between the LME and
the ferronickel price.
The average nickel price increased by 6% to 632 c/Ib (2018: 595
c/lb), driven by strong growth in stainless steel production in
China and solid battery demand growth (principally, zero emission
vehicles and lithium-ion-based energy storage). Prices were also
supported by Indonesia bringing forward its ban on nickel ore
exports from January 2023 to January 2020, which is expected to
markedly reduce nickel ore supply to Chinese nickel pig iron
producers.
Samancor
The average benchmark price for manganese ore (Metal Bulletin
44% manganese ore CIF China) was $5.58/dmtu, a decrease of 23%
(2018: $7.24/dmtu). The effect of strong steel output and stricter
reinforcing steel standards in China was more than offset by an
increase in manganese ore supply from South Africa.
Operational performance
Nickel
Nickel output increased by 1% to 42,600 tonnes (2018: 42,300
tonnes), reflecting improved operational stability.
Samancor
Attributable manganese ore production decreased by 3% to 3.5 Mt
(2018: 3.6 Mt). Output from the Australian operations decreased by
6% owing to the impact of a major cyclone in March which, combined
with high clay content, adversely affected the quality of the feed
to the processing plant. This was partly offset by a 3% increase in
production from the South African operations as a result of
improved mining productivity.
Operational outlook
Nickel
Production guidance for 2020 is 42,000-44,000 tonnes.
CORPORATE AND OTHER
Financial metrics
Group Underlying Underlying
revenue* EBITDA* EBIT* Capex*
$m $m $m $m
Segment 121 (43) (229) 56
Prior year 3 (219) (226) 27
Exploration - (126) (128) 1
Prior year - (113) (113) -
Corporate activities and unallocated
costs 121 83 (101) 55
Prior year 3 (106) (113) 27
-------------------------------------- --------- -------- -------- ------
Financial overview
Corporate and other reported an underlying EBITDA loss of $43
million (2018: $219 million loss). Revenue increased to $121
million (2018: $3 million), predominantly due to a ramp-up of
third-party shipping activity.
Exploration
Exploration's underlying EBITDA loss increased to $126 million
(2018: $113 million loss), reflecting increased exploration
activities across most product groups, in particular, nickel, iron
ore and metallurgical coal.
Corporate activities and unallocated costs
Underlying EBITDA amounted to an $83 million gain (2018: $106
million loss), driven primarily by a benefit to EBITDA from the
adoption of IFRS 16 Leases as items previously recorded as
operating costs are now included within depreciation.
For further information, please contact:
Media Investors
UK UK
James Wyatt-Tilby Paul Galloway
james.wyatt-tilby@angloamerican.com paul.galloway@angloamerican.com
Tel: +44 (0)20 7968 8759 Tel: +44 (0)20 7968 8718
Marcelo Esquivel Robert Greenberg
marcelo.esquivel@angloamerican.com robert.greenberg@angloamerican.com
Tel: +44 (0)20 7968 8891 Tel: +44 (0)20 7968 2124
Katie Ryall Emma Waterworth
katie.ryall@angloamerican.com emma.waterworth@angloamerican.com
Tel: +44 (0)20 7968 8935 Tel: +44 (0)20 7968 8574
South Africa
Pranill Ramchander
pranill.ramchander@angloamerican.com
Tel: +27 (0)11 638 2592
Sibusiso Tshabalala
sibusiso.tshabalala@angloamerican.com
Tel: +27 (0)11 638 2175
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 mining
operations and undeveloped resources provides the metals and
minerals that enable a cleaner, greener, more sustainable world and
that meet the fast growing consumer-driven demands of the world's
developed and maturing economies. With our people at the heart of
our business, we use innovative practices and the latest
technologies to discover new resources and mine, process, move and
market our products to our customers around the world -- safely,
responsibly and sustainably.
As a responsible miner -- of diamonds (through De Beers),
copper, platinum group metals, iron ore, coal and nickel -- we are
the custodians of what are precious natural resources. We work
together with our business partners and diverse stakeholders to
unlock the sustainable value that those resources represent for our
shareholders, the communities and countries in which we operate,
and for society as a whole. 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 20 February 2020, 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.
Forward-looking statements and third-party information:
This announcement includes forward-looking statements. All
statements other than statements of historical facts included in
this announcement, 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 (including development plans and
objectives relating to Anglo American's products, production
forecasts and Ore Reserves and Mineral Resource estimates), 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, mineral resource exploration
and development capabilities, recovery rates and other operational
capabilities, the availability of mining and processing equipment,
the ability to produce and transport products profitably, the
availability of transportation infrastructure, the impact of
foreign currency exchange rates on market prices and operating
costs, the availability of sufficient credit, the effects of
inflation, political uncertainty and economic conditions in
relevant areas of the world, the actions of competitors, activities
by governmental authorities such as permitting 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 announcement. Anglo
American expressly disclaims any obligation or undertaking (except
as required by applicable law, the City Code on Takeovers and
Mergers (the "Takeover Code"), 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 announcement 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 about Anglo American
included in this announcement is sourced from publicly available
third-party sources. As such, it has not been independently
verified and presents the views of those third parties, though
these 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 third-party information.
Anglo American plc
20 Carlton House Terrace London SW1Y 5AN United Kingdom
Registered office as above. Incorporated in England and Wales
under the Companies Act 1985.
Registered Number: 3564138 Legal Entity Identifier:
549300S9XF92D1X8ME43
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR MZGMZRLLGGZM
(END) Dow Jones Newswires
February 20, 2020 02:00 ET (07:00 GMT)
Grafico Azioni Anglo American (LSE:AAL)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Anglo American (LSE:AAL)
Storico
Da Apr 2023 a Apr 2024
