2009 Interim Results

RNS Number : 6186W

Anglo American PLC

31 July 2009

News Release

Half year financial report

31 July 2009

Anglo American announces further progress on delivery of value

Financial results

Group operating profit(1) from core operations(2) of $2.1 billion
Underlying earnings(3) of $1.1 billion and underlying earnings per share of $0.91
Profit attributable to equity shareholders down 31% at $3.0 billion
Net debt(4) of $11.3 billion at 30 June 2009
Committed undrawn bank facilities and cash(5) of over $9 billion at 30 June 2009

Driving operational performance and delivering significant value

Asset optimisation and procurement programmes delivered more than $450 million of benefits in H1 - expected to deliver over $1 billion in 2009 towards the $2 billion target in 2011
Significant cost reductions achieved across the Group and global headcount reduction ahead of target
Anglo Platinum - major restructuring completed, one shaft on care and maintenance and two other high cost shafts under review - 140koz of high cost production may be removed
Delivery focused on high quality growth in most attractive commodities
- Development of three key strategic projects on track - Minas-Rio, Los Bronces and Barro Alto
- Major new discoveries at Los Sulfatos and San Enrique Monolito increase copper resources(6) by approximately 50%
- Minas-Rio iron ore resource increased to 4.6 billion tonnes
Near term liquidity addressed - $6.5 billion raised through new financing and proceeds from sale of residual shareholding in AngloGold Ashanti
Sale of Hulamin shareholding for approximately $148 million

Further progress on safety

Safety - further good progress, with changes to safety practices delivering results:
- Further 19% improvement in Lost Time Injury rates compared to 2008

Appointment of Chairman

Sir John Parker appointed as Chairman from 1 August 2009, to succeed Sir Mark Moody-Stuart

HIGHLIGHTS FOR THE SIX MONTHS ENDED 30 JUNE 2009 US$ million, except per share amounts	6 months ended 30 June 2009	6 months ended 30 June 2008	Change
Group revenue including associates(7)	11,132	17,915	(37.9)%

Operating profit including associates before special items and remeasurements - core operations(1)(2)	2,054	5,974	(65.6)%

Operating profit including associates before special items and remeasurements(1)	2,136	6,181	(65.4)%

Underlying earnings(3)	1,096	3,483	(68.5)%

EBITDA(8)	2,985	7,038	(57.6)%

Net cash inflows from operating activities	1,520	3,822	(60.2)%

Profit for the financial period attributable to equity shareholders	2,970	4,281	(30.6)%

Earnings per share (US$):
Basic earnings per share	2.47	3.56	(30.6)%
Underlying earnings per share(3)	0.91	2.90	(68.6)%

(1) Operating profit includes attributable share of associates' operating profit (before attributable share of associates' interest, tax and minority interests) and is before special items and remeasurements, unless otherwise stated, see notes 3 and 4 to the Condensed financial statements. For the definition of special items and remeasurements see note 6 to the Condensed financial statements.

(2) Operations considered core to the Group are Base Metals, Platinum, Ferrous Metals' core businesses (Kumba Iron Ore, Scaw Metals, Samancor and Anglo Ferrous Brazil), Coal, Diamonds, Exploration and Corporate Activities. See page 13 in the Financial review of Group results for a reconciliation of operating profit from core operations to total operating profit.

(3) See note 9 to the Condensed financial statements for basis of calculation of underlying earnings.

(4) Net debt excludes hedges but includes the net debt in disposal groups. See note 12 to the condensed financial statements.

(5) After taking account of commercial paper maturing throughout 2009 of $0.4 billion.

(6) Resources excluding reserves.

(7) Includes the Group's attributable share of associates' revenue of $1,840 million (six months ended 30 June 2008: $3,384 million). See note 3 to the Condensed financial statements.

(8) EBITDA is operating profit before special items, remeasurements, depreciation and amortisation in subsidiaries and joint ventures and includes attributable share of EBITDA of associates. See note 14 to the Condensed financial statements.

Cynthia Carroll, Chief Executive, said, "We took early and decisive action in order to respond effectively to the global economic downturn; we have focused on driving operational performance, preserved capital through halving our planned capital expenditure for the year, scaled back higher cost production and growth plans in platinum and coal and suspended dividend payments. As expected, the market environment has been challenging in the first half of 2009 and Anglo American's performance was impacted by the sharp declines in commodity prices against the prior year and anticipated reductions in volumes, partially offset by exchange rate benefits compared to the first half of 2008. The Group achieved operating profit for the first half year of $2.1 billion and underlying earnings of $1.1 billion, with good operational performances delivered by the businesses.

During this period we have also continued to make significant progress on the delivery of all our key strategic initiatives. I am pleased that we are on track with our asset optimisation and procurement programmes, generating combined benefits of over $450 million in the first half and we are now expecting to deliver over $1 billion for the full year, towards our target of $2 billion by 2011. We are now well advanced through both efficiency programmes and have greater visibility on the significant improvements being embedded across the organisation. We are also ahead of plan towards our global headcount reduction, with a reduction of 15,405 already achieved out of a total reduction of 19,000 planned for the year.

At Anglo Platinum, we have made excellent progress with our major restructuring of the business, creating a management and operating structure which enables far greater production flexibility and scope for cost control and improved productivity. As a result, we have taken the decision to place one shaft on care and maintenance and are reviewing two further high cost shafts. We are also already seeing the early benefits of the restructuring, with cash operating costs per equivalent refined platinum ounce falling by 6.4% compared to the second half of 2008 and mining productivity improved by 12%. Cost reductions have been achieved across the Group, including cash costs at our Australian coal business down 14% and operating and production costs savings at De Beers in excess of 50%.

Anglo American has established a portfolio of world class operating assets and development projects. Our clear strategy is to deploy capital towards those commodities that deliver long term, through-the-cycle returns. Our world class, multi-billion tonne Minas-Rio iron ore project in Brazil is progressing well and is on track for first production in the second quarter of 2012 to produce 26.5 Mtpa of high quality product in the first phase, transforming Anglo American's position in the highly attractive seaborne iron ore market, with a unique footprint in South Africa and Brazil. Minas-Rio is expected to be amongst the lowest cost iron ore mines in the industry, generating a substantial cash margin and, with a dedicated logistics infrastructure, there is potential to further develop the ore body into one of the largest iron ore mines in the world.

Our two other major projects are also progressing well; once it reaches full capacity, the Tier 1 Los Bronces mine in Chile is expected to be the fifth largest copper mine in the world following its expansion in 2011; and our low cost nickel project in Brazil, Barro Alto, is on track for first production in early 2011. These well timed projects exemplify the high quality and low cost position of our organic growth pipeline that we are in the process of delivering for the benefit of our shareholders. In terms of production, our $17 billion pipeline of approved projects is expected to deliver organic growth of one third by 2013. Furthermore, we have today announced two very significant and high quality new discoveries at Los Sulfatos and San Enrique Monolito in our Los Bronces district in Chile, which together have increased our copper resources (excluding reserves) by approximately 50%.

We also successfully addressed our near term liquidity in the first half, raising $6.5 billion of funding, including two over-subscribed bond issues and the sale of our residual shareholding in AngloGold Ashanti. In combination with the tough but necessary decisions we took around capital expenditure, production scheduling and dividends, this positions the Group well to carry us through the downturn and enables us to preserve the development of our key strategic growth projects, a key value driver for shareholders.

Over the last two years, our safety record has been transformed. We have had a major improvement in our lost time injury (LTI) frequency rate, with a 19% improvement on our 2008 level which itself showed a 17% improvement. Around the Group, there have been some outstanding safety achievements that we should recognise; Kumba's Thabazimbi iron ore mine has not had an LTI since 2007 and has been fatality free for seven years, while the Isibonelo colliery has seen over 600 days without a single lost time incident and has been fatality free since 2005. In terms of fatalities, 83% of our operations were fatality free in the first half of the year, though any loss of life is totally unacceptable and we continue to make Zero Harm a priority.

Looking forward, after a rate of market decline that has been unprecedented, we expect demand to remain soft in the near term until OECD countries begin to recover materially. China continues to grow strongly and is key to demand, particularly for iron ore, copper and platinum. While we have seen some recovery in metals prices, macro economic indicators are mixed and the economic outlook remains uncertain in the near term; however, the fundamentals for the medium to longer term remain highly attractive.

Finally, I am delighted that the Board has appointed Sir John Parker as the new Chairman of Anglo American. Sir John succeeds Sir Mark Moody-Stuart who has chaired the Group for seven years. On behalf of the Board and all our employees around the world, I would like to thank Sir Mark for his invaluable leadership and tireless contribution over the past seven years and we wish him well. I welcome Sir John and look forward to sharing the benefits of his expertise as we enter a period of significant value creation for Anglo American's shareholders. Anglo is a focused and responsible global mining company with a portfolio of high quality assets in the most attractive commodity markets, with significant cost-advantaged projects in development. Through the actions we have taken across the Group, Anglo is well positioned to capitalise on the next phase of economic growth."

Review of 2009

Financial results

Anglo American's first half underlying earnings were $1.1 billion, down from $3.5 billion in the first half of 2008 with operating profit of $2.1 billion, down from $6.2 billion, due to a significant decline in realised prices and lower global demand. Kumba Iron Ore reported higher operating profit than the first six months of 2008, although Ferrous Metals' profit declined due to price and demand constraints at Samancor and Scaw Metals. Platinum operating profit declined despite higher sales volumes, due to higher than normal refined stocks at the start of the period and higher production levels following the disruptions to production in the comparable period of 2008, the benefit of which is offset by price decline. Higher prices and cost saving initiatives in Coal partially offset the expected fall in sales volumes driven by weak customer demand. Base Metals' operating profit was impacted by lower prices and Industrial Minerals suffered from falling demand in the UK and European construction sectors.

Base Metals generated an operating profit of $695 million, down 72% due to lower metal prices, partially offset by lower input costs.

Ferrous Metals reported an operating profit from core operations of $802 million, down 36%. Kumba Iron Ore reported operating profit of $742 million, a 10% increase on the first half of 2008 due to strong sales volumes to China, despite lower prices. This was offset by Samancor, down 84% to $79 million, due to lower manganese ore and alloy sales volumes and prices and Scaw Metals' operating profit of $71 million, down 41% due to a fall in global steel demand.

Coal reported an operating profit of $720 million, down 2%, with higher realised metallurgical coal prices, benefits from asset optimisation and a cost reduction programme in Australia, offset by lower sales volumes.

Platinum reported an operating profit of $8 million, down 99%, due to significantly lower platinum group metal and nickel prices, partially offset by higher production and sales volumes as well as a weaker rand than the first half of 2008.

Diamonds recorded an attributable profit of $4 million, down 99%, due to total revenues being 54% lower than the first half of 2008 with reduced demand for rough diamonds from Sightholders reducing DTC sales by 57%, partially offset by significant cost reductions.

Industrial Minerals' operating profit fell 83% to $27 million, with continued difficult trading in the UK and, increasingly, in its international markets.

Production

Record production at Kumba Iron Ore was achieved due to additional production from the Sishen Mine jig plant. Platinum production volumes from equivalent refined production have increased due to the commissioning of a new concentrator at Mogalakwena in 2008, normalisation of production at Rustenburg following the rehabilitation of the Turffontein shaft and at Amandelbult, following the January 2008 flooding. Nickel production increased despite a run-out at Loma, as the period was free from industrial action. Copper production was down in total despite higher production at Collahuasi due to additional pipeline capacity, as this was more than offset by lower ore grades and recoveries, and hardness of ore bodies. Coal production increased in South Africa due to improved water management at the opencast operations and improved electricity supply compared with Eskom load shedding experienced in 2008. Australian production was reduced in response to falling demand from global steel producers.

Capital structure

Net debt, excluding hedges, increased by $292 million since 31 December 2008 to $11,335 million at 30 June 2009. This reflects the proceeds from the disposal of the Group's residual interest in the shares of AngloGold Ashanti for $1,770 million and cash inflows from operations of $1,676 million, offset by $2,140 million of capital investment in the Group's long life assets, shareholder loans to De Beers of $225 million, income tax paid of $510 million, as well as exchange losses on rand denominated debt.

Dividends

The resumption of the payment of a dividend to shareholders remains a key priority for the board. This will be considered against the background of the overall market environment, the Group's capital requirements, as well as the future earnings and cash performance of the business as a whole.

Delivering value through operational excellence

Anglo American has made significant progress towards its $2 billion target from its asset optimisation and supply chain initiatives, already delivering more than $450 million in the first half of the year and is expected to deliver over $1 billion for the full year 2009.

Asset optimisation is expected to deliver approximately $700 million of value for the full year 2009, towards its $1 billion target in 2011, of which $335 million was delivered in the first half. Asset optimisation is a formalised process across the Group, with nominated representatives in all mines, rigorous internal and external benchmarking and specific targets for every mine and business, all directed towards unlocking value from existing assets through cost and productivity improvements. Specific improvements have included a doubling of first hour tonnage at the Sishen iron ore mine, achieved through improved shift transitions and reducing coal losses at the Dawson coal mine in Australia. There is a multitude of such improvements across Anglo American's businesses which are already generating significant value.

The implementation of Anglo American's global supply chain and shared services initiatives has delivered savings of $131 million in the first half of the year, with $330 million expected to be delivered in the full year, towards a targeted $1 billion of savings in 2011. The Group is leveraging its global scale to deliver cost savings across the supply chain, taking a holistic approach and forming strategic global partnerships with key suppliers, such as BP and Shell for fuels and lubricants, on which Anglo American spends some $800 million annually. By consolidating the number of different suppliers, significant savings are being achieved; for example through consolidating the number of conveyor system suppliers from over 100 to six.

In February, the Group announced a global headcount reduction of 19,000 to be achieved by the end of 2009. Reductions are ahead of plan and have reached 15,405.

Anglo Platinum has the leading resource position in the platinum industry, with a 37% share of global production. The global downturn in the automotive sector has particularly impacted the platinum industry, with jewellery sales to China providing relief, and, following the completion of the business' restructuring, Anglo Platinum is focused on driving value from its operations through a series of decisive cost and efficiency initiatives. The Rustenburg and Amandelbult mines have been divided into smaller operating units of five and two operations respectively to enable greater operational flexibility, resulting in Rustenburg's Bleskop shaft having been put on care and maintenance, with two other high cost shafts under review. These efforts will improve the cost of our Rustenburg mines and effectively move them from the fourth quartile to third quartile on the cost curve. It should be noted that although a total of 140,000oz of high cost production is under review and is likely to be stopped, the intention is to make up this shortfall by increasing production from more efficient mines. Early benefits have already been noted, with headcount reduced by 8,903 against a target for the full year of 10,000 and cash operating costs per equivalent refined platinum ounce reduced by 6.4% against the second half of 2008.

At De Beers, which experienced extremely difficult trading conditions in the fourth quarter of 2008 and the first quarter of 2009, a successful restructuring has taken place with aggressive cost reductions achieved, with operating costs reduced by over 50% following a number of production holidays in the first half, and a 23% reduction in the workforce implemented as production was brought in line with demand. Diamond Sight sales have improved steadily during the first half of the year and production has increased to keep pace with demand. Anglo American's leading positions in the platinum and diamond markets point to a leveraged recovery with attractive returns when the global economy returns to more normalised conditions.

Driving high quality growth

The most attractive commodities

Anglo American has a clear strategy of deploying its capital in those commodities that deliver long term, through-the-cycle returns for its shareholders, and which have strong fundamentals with the tightest demand and supply balances and most attractive risk-return profiles.

Demand fundamentals for Anglo American's core commodities are very favourable. For instance, China has a structural deficit of Anglo American's core commodities, particularly for iron ore and copper.

Anglo American has leading positions in commodities where there is limited availability of new supply sources, given the scarcity of attractive, large scale projects and capital constraints. Such characteristics are typical of the platinum, diamond and iron ore industries, for example.

Anglo American benefits from being positioned in commodities that have attractive industry cost structures, which drive both profitability and stability of production.

Anglo American has developed a portfolio of world-class operating assets and development projects focused on those commodities with the most attractive risk-return profile. The majority of Anglo American's capital is employed in platinum, iron ore and copper, commodities that have generated the most attractive average returns on invested capital for companies focused on those commodities.

A world class asset portfolio

Anglo American has a world-class portfolio of assets in terms of scale, expansion potential and cost position.

Within its portfolio of world-class assets, Anglo American owns seven Tier 1(a) assets, being among the largest and highest quality producing mines of their respective commodities, characterised by expandable resource bases and attractive industry cost positions.

Anglo American has an extensive resource base concentrated in established mining jurisdictions, which is expected to continue to deliver attractive growth options from mine life extensions, brownfield expansions and greenfield projects. Across its core mining portfolio, comprising platinum, iron ore, copper, coal and nickel, Anglo American mines have sufficient resources to support current production levels for at least 20 years.

Furthermore, Anglo American's attractive cost curve position allows for stable production and sustainable margins, as the marginal supply reaction to price variation is minimal for first and second quartile producers. This attractive cost position enhances Anglo American's profitability over the cycle in its core commodity markets.

(a): A Tier 1 asset is defined as a large, expandable, long life mine (>20 years) with favourable mineralogy and geographic location and in the lower half of the cost curve.

Developing three world class projects

Anglo American has a $17 billion pipeline of approved projects across the most structurally attractive commodities of platinum, iron ore and copper, in addition to making targeted high quality investments in nickel. The decision to preserve the development of its three key near term strategic growth projects during the economic downturn positions the Group to capitalise on the next phase of global economic growth. The three projects are all well placed on their respective industry cost curves, have long resource lives and are on track to enter production from 2011 onwards, in what is expected to be a growing commodity demand environment.

The acquisition of the Minas-Rio iron ore project in Brazil represented a unique opportunity to gain control of a multi-billion tonne resource in the highly attractive seaborne iron ore market with the benefit of an integrated logistics system. The first phase of the project has progressed significantly. Anglo American has obtained a series of important licences since acquisition in August 2008 and the overall licensing process is on track. The construction of the port at Açu is well advanced and the earthworks for the beneficiation plant and pipeline are progressing towards first production in the second quarter of 2012, with ramp-up to 26.5 Mtpa. Due to the size of the ore body and the dedicated logistics infrastructure, Minas-Rio has considerable expansion potential, with planning underway to increase production in a second phase to 80 Mtpa. Since the acquisition of Minas-Rio, Anglo American has undertaken considerable geological work to increase confidence in the resource estimates, resulting in the increase of resources from 1.2 billion tonnes at the time of acquisition in 2007 to 4.6 billion tonnes, a nearly fourfold increase, with further resource potential. The beneficiation test work performed to date has produced excellent results, with pilot sample iron grade (Fe) above 69%. The anticipated product Fe grade over the life of the mine is expected to be above 68%, with extremely low alumina, silica and phosphorus contaminants. With such quality characteristics, Minas-Rio pellet feed will rank as a top quality product. Across Anglo American's iron ore interests, the Group has the potential to increase iron ore production to in excess of 150 Mtpa within 10 years.

Anglo American's 100% owned Los Bronces copper mine is well advanced with its expansion project with first production in the fourth quarter of 2011 and is expected to increase production from the fourth quarter of 2012 to an average of 400ktpa over the first ten years of full production. At peak production levels, Los Bronces is expected to be the fifth largest producing copper mine in the world, with reserves that support a mine life of 30 years. Resource and mineralisation studies carried out by Anglo American's technical teams support further potential expansion. In addition to the Group's attractive copper growth options in other established mining jurisdictions, in Peru and the US, Anglo American has announced two very significant and high quality new discoveries at Los Sulfatos and San Enrique Monolito close to its Los Bronces mine in Chile. These two new copper prospects together increase the Group's copper resources (excluding reserves) by approximately 50%.

The Barro Alto nickel project is on track, with the overall development two thirds complete, towards start up in the first quarter of 2011. This project, which has further potential from an extensive resource base, leverages an existing operation and proven technology and will produce an average 36 ktpa of nickel in full production with a cost position in the lower half of the curve.

Unlocking further value from the portfolio

Since the beginning of the year, further progress has been made to focus the Group on its core mining portfolio. Anglo American disposed of its residual 16.2% shareholding in AngloGold Ashanti during the first quarter of the year, realising total proceeds of $1,770 million.

In line with Anglo American's strategic commitment to focus on its core mining operations, Anglo American sold its 44.9% shareholding in Hulamin in July, realising a total consideration of approximately $148 million.

The Tarmac group remains non-core to Anglo American, it continues to be managed to maximise shareholder value, though a sale is not expected in the current economic conditions. Following completion of the company's restructuring, Tarmac has accelerated existing cost savings programmes and is well positioned to reap the benefits of investments made in recent years in the growth economies of Oman and Qatar.

Outlook

The global economic downturn had a profound effect on all commodity prices in the second half of 2008 and early 2009. In the second quarter of 2009, prices for a number of commodities strengthened, particularly for copper, nickel and spot iron ore, recovering from their low points and providing some signs of an improvement in demand. While such price recovery offers grounds for increased optimism, the overall economic situation remains fragile. Global GDP growth is forecast by the IMF to decline by 1.4% in 2009, with major contractions in industrialised countries being partly offset by growth in the emerging and developing economies, with China forecast to grow at above 7.5%.

The long term fundamentals for the mining industry remain very robust from both the demand and supply sides. The industry has seen curtailment of many high cost operations in nickel, iron ore and coking coal, while the difficult financing conditions are expected to continue to impact the funding and timing of many potential new mines and expansions, constraining supply as economic growth returns. In terms of demand, whilst China is expected to support both near and long term demand growth for bulk commodities and base metals, the recovery of the OECD countries, stimulated further by government spending programmes in many major economies, will be an important factor, with particular upside for platinum group metals.

For further information, please contact:

United Kingdom

James Wyatt-Tilby, Media Relations

Tel: +44 (0)20 7968 8759

Caroline Metcalfe, Investor Relations

Tel: +44 (0)20 7968 2192

Leisha Wemyss, Investor Relations

Tel: +44 (0)20 7968 8607

South Africa

Anna Poulter, Investor Relations

Tel: +27 (0)11 638 2079

Pranill Ramchander, Media Relations

Tel: +27 (0)11 638 2592

Anglo American plc is one of the world's largest mining groups. With its subsidiaries, joint ventures and associates, it is a global leader in platinum group metals and diamonds, with significant interests in coal, base and ferrous metals, as well as an industrial minerals business. The Group is geographically diverse, with operations in Africa, Europe, South and North America, Australia and Asia. (www.angloamerican.co.uk)

Webcast of presentation:

A live webcast of the interim results presentation, starting at 10.00am UK time on 31 July, can be accessed through the Anglo American website at www.angloamerican.co.uk.

Note: Throughout this results announcement, '$' denotes United States dollars and 'cents' refers to United States cents; operating profit includes attributable share of associates' operating profit, is before special items and remeasurements, unless otherwise stated; special items and remeasurements are defined in note 6. Underlying earnings unless otherwise stated is calculated as set out in note 9 to the Condensed financial statements. EBITDA is operating profit before special items and remeasurements, depreciation and amortisation in subsidiaries and joint ventures and includes attributable share of EBITDA of associates. EBITDA is reconciled to 'Total profit from operations and associates' in note 14 to the Condensed financial statements and to 'Cash inflows from operations' in note 14. Tonnes are metric tons, 'Mt' denotes million tonnes and 'kt' denotes thousand tonnes unless otherwise stated.

Dealing disclosure requirements

Under the provisions of Rule 8.3 of the Takeover Code (the "Code"), if any person is, or becomes, "interested" (directly or indirectly) in 1% or more of any class of "relevant securities" of Anglo American or Xstrata plc ("Xstrata"), all "dealings" in any "relevant securities" of that company (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of Anglo American or Xstrata, they will be deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" of either Anglo American or Xstrata by Anglo American or Xstrata, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel's website at www.thetakeoverpanel.org.uk.

"Interests in securities" arise, in summary, when a person has long economic exposure, whether absolute or conditional, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Code, which can also be found on the Takeover Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, you should consult the Panel.

Forward-looking statements

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 and acquisition strategy, plans and objectives of management for future operations (including development plans and objectives relating to Anglo American's products, production forecasts and reserve and resource positions), are forward-looking statements. 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 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 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 Services Authority, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SWX 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 presents the views of those third parties, but may not necessarily correspond to the views held by Anglo American.

Financial review of Group results

Group operating profit was $2,136 million, with operating profit from core operations of $2,054 million, 66% lower than 2008. The decrease in operating profit was driven by a significant decline in realised prices compared to the first six months of 2008. The average platinum market price in the first six months of 2009 was 43% lower than the same period of 2008, with copper declining 50%, nickel by 57% and zinc by 42%. Iron ore and manganese ore and alloy prices have also fallen in 2009, with realised metallurgical coal and Industrial Minerals' products prices offsetting this trend. Dollar exchange rates have been favourable against the rand, Australian dollar, Brazilian real and Chilean peso.

Kumba Iron Ore achieved higher operating profit than the first six months of 2008 due to increased export sales volumes to China, although Ferrous Metals profit declined due to falling manganese ore and alloy volumes and prices impacting Samancor's results and lower demand for Scaw Metals products. At Platinum, higher sales volumes, due to higher production, reduced the impact of lower prices. As planned, Coal sales volumes were lower and there was a shift in market demand in Australia to thermal coal, with falling demand from steel producers for metallurgical coal. In the Base Metals division, significant metal price reductions resulted in a fall in profits and lower demand for fertiliser in the Brazilian agricultural sector had a negative impact on the results of Copebrás.

Group underlying earnings were $1,096 million, 69% lower than the first six months of 2008. Underlying earnings reflect the operational results discussed above, an increase in net finance costs due to higher interest as the result of an increase in debt levels. The effective tax rate before special items and remeasurements, including attributable share of associates tax, of 32% is in line with prior year.

Group underlying earnings per share were $0.91 compared with $2.90 in 2008. The weighted average number of shares was in line with 2008.

Underlying earnings $ million	6 months ended 30 June 2009	6 months ended 30 June 2008
Profit for the financial period attributable to equity shareholders of the Company	2,970	4,281
Operating special items including associates	87	26
Operating remeasurements including associates	(544)	(8)
Net profit on disposals including associates	(1,441)	(643)
Financing remeasurements including associates:
Foreign exchange loss/(gain) on De Beers preference shares	17	(18)
Unrealised net loss/(gain) on non-hedge derivatives related to net debt	60	(182)
Tax remeasurements	(309)	-
Tax on special items and remeasurements including associates	178	8
Minority interests on special items and remeasurements including associates	78	19
Underlying earnings	1,096	3,483
Underlying earnings per share ($)	0.91	2.90

Profit for the financial period after special items and remeasurements decreased by 31% to $2,970 million, compared to $4,281 million in the comparable period. The decrease reflects the results discussed above offset by a gain on operating remeasurements, principally a net unrealised gain on non-hedge derivatives relating to capital expenditure by Anglo Ferrous Brazil and Base Metals and a $309 million tax gain in Brazil. Net profit on disposals including associates were $1,441 million, of which $1,139 million related to the disposal of the residual holding in AngloGold Ashanti, $247 million for Anglo Platinum's disposal of its 50% interest in Booysendal and $42 million on the sale of 51% of Anglo Platinum's holding in Lebowa Platinum Mines. This was offset by a $60 million loss on non-hedge derivatives relating to net debt, principally losses on embedded interest rate derivatives.

The Group's results were influenced by a variety of currencies owing to the geographic diversity of the Group's operations. In the six months to 30 June 2009, there was a positive exchange variance in underlying earnings of $409 million. Results benefited from all the key exchange rates to which the Group is exposed weakening against the dollar in the six months to 30 June 2009 compared to the same period in 2008. The six month average exchange rate of the South African rand of R9.20 compared with R7.66 in 2008, the Australian dollar was 1.40 compared to 1.08 in 2008, the Brazilian real 2.19 versus 1.70 and the Chilean peso 586 compared to 467. There was a negative price impact on underlying earnings of $2,235 million with lower prices across all key products in the Group with the exception of metallurgical coal and Tarmac's product portfolio.

Summary income statement $ million	6 months ended 30 June 2009	6 months ended 30 June 2008
Operating profit before special items and remeasurements	1,824	5,121
Operating special items	(87)	(22)
Operating remeasurements	456	25
Operating profit from subsidiaries and joint ventures	2,193	5,124
Net profit on disposals	1,442	640
Share of net income from associates(1)	266	658
Total profit from operations and associates	3,901	6,422
Net finance costs before remeasurements	(198)	(159)
Financing remeasurements	(77)	205
Profit before tax	3,626	6,468
Income tax expense	(355)	(1,590)
Profit for the financial period	3,271	4,878
Minority interests	(301)	(597)
Profit for the financial period attributable to equity shareholders	2,970	4,281
Basic earnings per share ($)	2.47	3.56
Group operating profit including associates before special items and remeasurements	2,136	6,181


(1) Operating profit from associates before special items and remeasurements	312	1,060
Operating special items and remeasurements(2)	88	(21)
Net (loss)/profit on disposals(2)	(1)	3
Net finance income/(costs) (before remeasurements)	23	(41)
Financing remeasurements(2)	-	(5)
Income tax expense (after special items and remeasurements)	(137)	(313)
Minority interests (after special items and remeasurements)	(19)	(25)
Share of net income from associates	266	658

(2) See note 6 to the Condensed financial statements.

Towards the beginning of this document, reference has been made to core operations. Operations considered core to the Group are Base Metals, Platinum, Ferrous Metals' core businesses (Kumba Iron Ore, Scaw Metals, Samancor and Anglo Ferrous Brazil), Coal, Diamonds, Exploration and Corporate Activities. The table below reconciles operating profit from core operations to Group operating profit.

Operating profit $ million	6 months ended 30 June 2009	6 months ended 30 June 2008
Base Metals	695	2,454
Ferrous Metals - core businesses(1)	802	1,252
Coal	720	731
Platinum	8	1,467
Diamonds	4	328
Corporate Activities and Exploration	(175)	(258)
Operating profit including associates before special items and remeasurements - core operations	2,054	5,974
Industrial Minerals	27	163
Ferrous Metals - other businesses(1)	55	44
Operating profit including associates before special items and remeasurements	2,136	6,181
Underlying earnings - core operations	1,050	3,314

(1) See the Ferrous Metals and Industries operations review.

Special items and remeasurements

	6 months ended 30 June 2009			6 months ended 30 June 2008
$ million	Excluding associates	Associates	Total	Excluding associates	Associates	Total
Operating special items	(87)	-	(87)	(22)	(4)	(26)
Operating remeasurements	456	88	544	25	(17)	8
Operating special items and remeasurements	369	88	457	3	(21)	(18)

Operating special items, including associates, amounted to a charge of $87 million. This includes Coal and Tarmac restructuring costs and exceptional costs associated with 'One Anglo' initiatives.

Operating remeasurements, including associates, are made up of a net gain of $625 million on non-hedge derivatives principally related to a net unrealised gain on derivatives relating to capital expenditure in Anglo Ferrous Brazil and Los Bronces as well as an unrealised gain on an embedded derivative at Minera Loma de Níquel. A net loss of $169 million was realised in the period in respect of these Anglo Ferrous Brazil and Los Bronces derivative portfolios.

Financing remeasurements of $77 million comprise an unrealised net loss of $60 million of non-hedge derivatives related to net debt and a $17 million foreign exchange loss on retranslating De Beers US dollar preference shares held by a rand denominated entity.

Net profit on disposals of $1,441 million, including associates, comprises a profit on the disposal of the residual investment in AngloGold Ashanti of $1,139 million, $247 million on Anglo Platinum's disposal of its 50% share in Booysendal and $42 million relating to the disposal of 51% of Anglo Platinum's 100% share in Lebowa Platinum Mines.

Net finance costs

Net finance costs excluding net remeasurement loss of $77 million (in the six months ended 30 June 2008: gain of $205 million), increased to $198 million (in the six months ended 30 June 2008: $159 million). The increase reflects higher interest costs due to the increase in debt, offset by an increase in the amount of interest capitalised.

Tax

	6 months ended 30 June 2009			6 months ended 30 June 2008
$ million (unless otherwise stated)	Before special items and remeasurements	Associates' tax and minority interests	Including associates	Before special items and remeasurements	Associates' tax and minority interests	Including associates
Profit before tax	1,819	142	1,961	5,643	338	5,981
Tax	(493)	(130)	(623)	(1,582)	(313)	(1,895)
Profit for the financial period	1,326	12	1,338	4,061	25	4,086
Effective tax rate including associates (%)			31.8			31.7

IAS 1 Presentation of Financial Statements requires income from associates to be presented net of tax on the face of the income statement. Associates' tax is therefore not included within the Group's total tax charge on the face of the income statement. Associates' tax before special items and remeasurements included within 'Share of net income from associates' for the six months ended 30 June 2009 was $130 million (six months ended 30 June 2008: $313 million).

The effective rate of tax before special items and remeasurements, including share of associates' tax was 31.8%. This was broadly in line with the equivalent effective tax rate of 31.7% in the six months ended 30 June 2008.

Balance sheet

Equity attributable to equity shareholders of the Company was $25,081 million compared with $23,250 million at 31 December 2008. This reflects Group profits, exchange benefit, an increase in tangible assets from investment in long life assets in Ferrous Metals and Base Metals, offset by an increase in medium and long term borrowings.

Cash flow

Net cash inflows from operating activities were $1,520 million compared with $3,822 million in 2008. EBITDA was $2,985 million, a decrease of 58%.

Proceeds from disposals of financial asset investments totalled $1,988 million, which included the disposal of the Group's residual interest in the shares of AngloGold Ashanti.

Purchases of tangible assets amounted to $2,140 million, an increase of $142 million. The increase is due to investment in the Los Bronces and Barro Alto projects in Base Metals and the Minas-Rio project in Ferrous Metals, offset by reductions in Platinum, Coal and Tarmac.

There was a net cash outflow from financing activities of $1,252 million compared to a cash outflow in 2008 of $933 million. This primarily arose from the repayment of $4,150 million of short term borrowings offset by receipt of medium and long term borrowings of $3,636 million.

Liquidity and funding

Net debt, excluding hedges, increased $292 million from 31 December 2008 to $11,335 million. The increase reflects planned capital expenditure on key long life projects in Base Metals and Ferrous Metals, shareholder loans to De Beers and tax paid. This was partly offset by operating cash inflows of $1,676 million and proceeds from the disposal of the investment in AngloGold Ashanti.

Net debt at 30 June 2009 comprised $13,938 million of debt, and $2,603 million of cash and cash equivalents (net of bank overdrafts). Net debt to total capital(1) at 30 June 2009 was 33.1%, compared with 37.8% at 31 December 2008.

In April 2009 the Group issued a US bond raising $1.25 billion repayable in 2014 and $0.75 billion in 2019 as well as a convertible bond of $1.7 billion repayable in 2014.

At 30 June 2009, the Group had undrawn bank facilities of $7.9 billion, cash deposits of $2.6 billion and Commercial Paper maturing throughout 2009 of $0.4 billion.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance show that the Group will be able to operate within the level of its current facilities.

(1) Net debt to total capital is calculated as net debt divided by total capital less investments in associates. Total capital is net assets excluding net debt.

Dividends

Related party transactions

Related party transactions are disclosed in note 19 to the Condensed financial statements.

Principal risks and uncertainties

Anglo American is exposed to a variety of risks and uncertainties which may have a financial or reputation impact on the Group and which may also impact the achievement of social, economic and environmental objectives.

The principal risks and uncertainties facing the Group at the year end were set out in detail in the Operating and financial review section of the Annual Report 2008, and remain appropriate in 2009. Key headline risks relate to the following:

Commodity prices
Liquidity and counterparty risk
Currency risk
Inflation
Safety, health and environment
Political, legal and regulatory
Supplier risk
Contractors
Reserves and resources
Exploration
Natural events and damage to assets by fire or machinery breakdown
Employees
Operational performance and project delivery
Acquisitions
Infrastructure
Community relations
Joint venture relationships
Critical accounting judgements and key sources of estimation and uncertainty

The Group is exposed to changes in the economic environment, as with any other business. This is discussed throughout the Principal risks and uncertainties section of the Annual Report 2008.

Details of any key risks and uncertainties specific to the period are covered in the Operations review section.

The Annual Report 2008 is available on the Group's website www.angloamerican.co.uk.

Forward looking statements

This half year financial report contains certain forward looking statements with respect to the financial condition, results, operations and businesses of the Group. These statements and forecasts involve risk and uncertainty because they relate to events that depend on circumstances in the future. There are a number of factors that could cause actual results or developments to differ from those expressed or implied by these forward looking statements.

Operations review for the six months ended 30 June 2009

In the operations review on the following pages, operating profit includes the attributable share of associates' operating profit and is before special items and remeasurements unless otherwise stated. Capital expenditure relates to cash expenditure on tangible assets.

BASE METALS

$ million (unless otherwise stated)		6 months ended 30 June 2009	6 months ended 30 June 2008
Operating profit		695	2,454
	Copper	651	1,941
	Nickel, Niobium, Mineral Sands and Phosphates	58	425
	Zinc	40	149
	Other	(54)	(61)
EBITDA		857	2,623
Net operating assets		6,871	5,666
Capital expenditure		840	554
Share of Group operating profit		33%	40%
Share of Group net operating assets		18%	19%

Anglo Base Metals generated operating profit of $695 million (2008: $2,454 million). This decline was driven by sharply lower metal prices in the first half of 2009 compared to the same period in 2008, as well as lower fertiliser prices. Cash cost reductions due to lower prices of key inputs, favourable exchange rates and cost saving measures have partially offset lower metal prices. Production of copper and zinc has reduced marginally, while nickel output has increased.

Markets

Average market prices (c/lb)	6 months ended 30 June 2009	6 months ended 30 June 2008
Copper	184	368
Nickel	531	1,237
Zinc	60	103
Lead	60	118

Following the sharp price declines across the basket of base metals in the second half of 2008, base metals prices increased strongly during the first half of 2009. Comparing 30 June 2009 to 31 December 2008 closing market prices, copper has increased by 76%, nickel 48% and zinc 39%.

Despite significant supply cutbacks, the extent of the global demand slowdown was such that base metals markets were in surplus during the first half. However, prices were driven upwards by increased imports into China, supply constraints and the dollar, which began to weaken in the second quarter. Expectations of an eventual renewal of global demand and increased fund flows have additionally aided prices. Phosphate fertiliser prices were sharply lower due to reduced demand for fertilisers.

Operating performance

Copper division	6 months ended 30 June 2009	6 months ended 30 June 2008
Operating profit ($m)	651	1,941
Attributable production (tonnes)	316,900	320,700

Collahuasi production on an attributable basis was 109,100 tonnes, 11% higher than in 2008. This was primarily due to additional concentrate produced at Patache port as a result of additional pipeline capacity allowing concentrate re-pumping from the concentrate ponds, partly offset by lower head grades.

Los Bronces production fell by 6% to 110,700 tonnes, as a result of lower sulphide ore grade. Production at Mantos Blancos was 44,700 tonnes, 7% higher than 2008, as a result of more mineral processed and marginally higher grades and recovery.

El Soldado production decreased 29% to 20,900 tonnes, mainly due to lower ore grades. Mantoverde production was 6% lower at 30,500 tonnes due to the positive benefit of an inventory drawdown in the prior year.

Chagres production was 63,200 tonnes, 16% lower as a result of lower average copper grade in concentrates smelted and a scheduled 16.5 days maintenance shutdown compared to 11.5 days in the same period in 2008.

Nickel, Niobium, Mineral Sands and Phosphates	6 months ended 30 June 2009	6 months ended 30 June 2008
Operating profit ($m)	58	425
Attributable nickel production (tonnes)	10,100	9,600

Reduced demand and falling prices in the fertiliser business coupled with lower nickel prices and operational problems at Loma de Níquel plant impacted results during the period.

Loma de Níquel's output in the first half of the year was interrupted on three occasions, although production of 5,600 tonnes was 19% higher than the 4,700 tonnes in the prior year. In January, most of the month's production was lost while new arrangements were made to deposit smelter slag. In early May, six days of production were lost following interruption to incoming electrical power as a result of earthquake damage to the supplier's sub-station. Electric furnace No. 2 was shut down in late May after a metal run-out and is not expected to resume production until rebuilding is completed in the first half of 2010. Sales of 4,800 tonnes reflected the poor market conditions, particularly in the first three months of the year, and some congestion at Venezuelan ports that impeded export revenues. By mid-year, both these restrictions had eased and sales contracts for the second half match material available.

Since the cancellation of 13 of its 16 concessions in January 2008, Minera Loma de Níquel (MLdN) has continued to work with the Venezuelan Ministry of Basic Industries and Mining to seek a basis for recovery of its rights through constructive dialogue. Anglo American and MLdN believe that there is a valid legal basis to reverse the notices of termination and will pursue all appropriate legal and other remedies and actions to protect their respective interests both under Venezuelan and international law.

At 30 June 2009, Anglo American's interest in the book value of MLdN, including its mineral rights, was $439 million. In the six months ended June 2009, MLdN's production and contribution to the Group's operating profits were respectively 5,600 tonnes of nickel in ferronickel and an operating loss of $5 million. The average price of nickel in the six months ended 30 June 2009 was 531 c/lb. At 30 June 2009, the price of nickel was 726 c/lb.

At Codemin, the planned maintenance closure in one reduction furnace was brought forward in light of weak market conditions thereby lowering production, but sales were in line with the prior period as finished goods inventory was reduced. A cost cutting programme reduced cash cost of production for nickel below $4/lb.

Niobium production was 13% higher than 2008 due to the start-up of the tailings project during the second half of 2008. Results were positively influenced by the higher prices obtained from spot sales to China.

Fertiliser demand dropped sharply in the last quarter of 2008 and first quarter of 2009. As a result, Copebrás scaled back production, but has since resumed fertilizer production at full capacity. Fertiliser demand in Brazil for the forthcoming planting season is expected to be high. Profitability in the first half of the year was impacted by lower prices (70% below peak 2008 levels) and lower sales volumes, which were partially offset by lower raw material costs as well as lower fixed costs, following cost reduction efforts at both operations.

Zinc division	6 months ended 30 June 2009	6 months ended 30 June 2008
Operating profit ($m)	40	149
Attributable zinc production (tonnes)	169,900	171,100
Attributable lead production (tonnes)	31,000	31,800

Skorpion produced 75,700 tonnes of zinc in the first half of 2009 (2008: 68,600 tonnes) as production rates exceeding design capacity were achieved and maintained.

Black Mountain produced 12,200 tonnes of zinc, and 22,100 tonnes of lead (15,300 tonnes and 23,600 tonnes respectively, in the first half of 2008). Ore production from the Deeps Shaft continues to ramp up towards design capacity as more stopes are developed. Plant throughput was slightly above that of the prior period despite a breakdown on the ball mill, which resulted in 15 days of downtime. The lower metal-in-concentrate production for the current period is primarily due to lower zinc and lead grades, with associated lower recoveries.

Lisheen produced 82,000 tonnes of zinc and 8,900 tonnes of lead in the period (87,200 tonnes and 8,200 tonnes respectively, in the first half of 2008). Ore production was negatively impacted by an increasing proportion of secondary and tertiary stopes in the mine plan, and a breakdown of the SAG mill for 9 days in January and early February reduced plant throughput.

Projects

The Barro Alto project to develop a 36,000 tpa (average for the life of mine) nickel operation in Brazil is on track to achieve first production in the first quarter of 2011 with full production scheduled for the third quarter of 2012. The project's safety performance continued strongly, with a LTIFR of 0.04 and LTISR of 14.0, based on 13.1 million worked man hours to date.

The Los Bronces copper expansion project is progressing according to schedule, with engineering design planned for completion by the end of 2009 and commissioning in late 2011. Construction work on the various sites has progressed according to plan, with bulk earthworks and large scale civil construction far advanced.

Collahuasi's expansion up to 170,000 tonnes throughput per day is being evaluated and commissioning should take place in 2011. As a result of the significant exploration success at Rosario Oeste, studies are continuing to target further expansions with the potential to increase production to around 1 million tpa.

The revised feasibility study for the more than 200,000 tpa Quellaveco copper project in Peru remains on target for completion during the year.

At Mantoverde, a pre-feasibility study is currently underway for a sulphide ore life extension.

Following the successful $403 million tender for Michiquillay in April 2007, the focus has been on developing a productive relationship with the local communities, culminating, in June 2008, in reaching formal agreements with those communities. As a result, exploration and conceptual studies have now commenced.

The 50% owned Pebble project is on target for completion of a pre-feasibility study in 2010. The objective remains to engineer, construct and operate a world class mine which operates to strict environmental standards and contributes to the long term development of the Alaskan economy. Engagement with local communities and a range of external stakeholders has been a priority for the Alaskan management team and will remain so through the development of the project into the regulatory permitting process. In addition, the Keystone Centre is working with Pebble and has established an independent stakeholder dialogue process. The objective of the process is to address a wide range of environmental, cultural and socio-economic issues associated with the development of a modern long life mine and ensure these issues and priorities are understood and addressed.

Outlook

Production of copper and zinc is forecast to increase marginally in the second half, with nickel remaining flat despite the closure of a furnace at Loma de Níquel. The outlook for prices is however still mixed. Stock levels of copper, nickel and zinc rose sharply early in the year, but strong demand from China, boosted by industrial and strategic re-stocking, and the effect of price induced capacity reductions have helped to offset the fall in demand in Europe and the US and started to bring more balance to the markets.

FERROUS METALS AND INDUSTRIES

$ million (unless otherwise stated)	6 months ended 30 June 2009	6 months ended 30 June 2008
Operating profit	857	1,296
Kumba Iron Ore	742	677
Anglo Ferrous Brazil	(82)	(16)
Scaw Metals	71	121
Samancor	79	485
Other	(8)	(15)
Core businesses	802	1,252
Tongaat-Hulett / Hulamin	55	44
EBITDA	914	1,359
Net operating assets	11,836	5,360
Capital expenditure	447	268
Share of Group operating profit	40%	21%
Share of Group net operating assets	31%	18%

Ferrous Metals generated an operating profit of $857 million, a decrease of 34% on the same period in 2008, with operating profit from core businesses decreasing by 36%, mainly due to lower manganese ore and alloy sales volumes and prices, as well as lower iron ore prices, partially offset by higher export iron ore sales volumes.

Markets

In the first half there were divergent markets, with steel production in China remaining at levels similar to the first half of 2008 while, in the rest of the world, steel production declined by 35% due to a sharp drop in steel demand. The resulting weaker iron ore demand outside China, mainly in Europe and Japan together with lower Chinese domestic iron ore production, resulted in a surge of iron ore imports into China.

Global steel producers, faced with significantly reduced capacity utilisation rates, have shifted to consuming lower quality iron ore to contain costs. This has resulted in a decrease in demand for quality lump and niche premium iron ore. However, there are signs that steel demand outside China may have stopped declining with recent increases in Purchasing Managers Index ('PMI') measures in Japan and Europe.

Operating performance

Kumba Iron Ore reported operating profit of $742 million, an increase of 10% on 2008, mainly due to higher export sales volumes into China and a weaker rand exchange rate in the first half of 2009 compared to 2008, partially offset by lower average prices from export sales volumes. Despite the lower average prices, Kumba Iron Ore maintained a strong operating profit margin of 56%, down 2%, through cost management and a weaker rand. Total iron ore production increased 12% to 19.1 million tonnes and export sales volumes from Sishen Mine increased 29% to 17.1 million tonnes. This was mainly due to the additional production delivered by the Sishen Mine's jig plant, which continues to ramp up. Kumba Iron Ore remains on schedule to achieve an annualised rate of 13 Mtpa from the jig plant during the fourth quarter of 2009. Finished product stockpiles decreased to 4.6 million tonnes, 1.2 million tonnes below the 2008 closing levels.

Export sales to long term contractual customers for the first three months of 2009 were based on an average 93% increase in the iron ore benchmark price for the 2008/2009 iron ore year, although it was predominately fine ore that was sold during this period. Final settlement for the 2009/2010 iron ore year between Kumba Iron Ore and all its customers has not yet been reached, with settlement anticipated in the next three months. Kumba Iron Ore was able to redirect lost export contract volumes from Europe and Japan into China, which were predominantly sold at spot prices. In preparing its financial results, Kumba Iron Ore has used a prudent estimate of the expected decrease in iron ore prices. The exposure is limited to 2.8 million tonnes, which remains subject to contractual settlement.

Anglo Ferrous Brazil comprises the Group's effective 100% interest in the Minas-Rio iron ore project, the effective 70% interest in the Amapá iron ore system and the 49% interest in LLX Minas-Rio, the owner of the Port of Açu. The Amapá iron ore system produced 1.2 million tonnes in the six month period compared to 0.4 million tonnes in the equivalent period 2008, which was prior to the Group's acquisition. It is still in pre-operational phase while ramping up to design capacity of 6.5 Mtpa. Anglo American, together with its partner at Amapá, Cliffs Natural Resources Inc., continues to study all aspects of the mine and ore transportation to achieve design capacity.

Scaw's operating profit was $71 million, down 41% on the comparative period in 2008. The downturn in the global economy caused a significant decline in demand for rolled steel products and steel and iron castings in the first half of 2009. Margins remained under pressure as the rate of decline in steel prices exceeded the decline in the price of key raw material inputs.

The Group's attributable share of Samancor's operating profit decreased to $79 million, 84% down on the comparative period, mainly due to lower manganese ore and alloy sales volumes and prices as a consequence of the decline in global steel demand.

The Tongaat-Hulett and Hulamin contribution to operating profit increased to $55 million, up 25% on the comparative period, with Tongaat-Hulett's Zimbabwean operations, which were previously accounted for on a dividend basis, now being consolidated.

Projects

The pace of construction and capex spend at Minas-Rio is dependent upon receiving a number of environmental licences and other permits. Anglo American has obtained 30 licences since acquisition in August 2008, up from the 18 licences obtained in the 20 months preceding the acquisition. The key licences and permits obtained in the first half of 2009 include certain earthmoving and road construction permits. A total of 16 licences have been issued for the Minas-Rio project in the six months to June. Key among these have been the federal permit for land clearance for the mine which allows this year's planned earthworks to be commenced and completed, and the approvals of specific licences for the Port road modifications which will allow the planned construction of the breakwater in the second half of this year. Anglo American continues to work with local, state and federal authorities and landowners to ensure that the timing of licence receipts and land acquisitions does not further impact the timing of the project, and ensure first iron ore production commences in the second quarter of 2012. Project development in 2009 to date has focused on the port and pipeline.

Planned annual capacity of the first phase will be 26.5 Mtpa of iron ore pellet feed at an anticipated capital cost of $3.6 billion. The pre-feasibility study for the second phase of the Minas-Rio iron ore project has continued during the first half of 2009.

The Sishen South project is progressing well with $192 million of capital expenditure incurred to date, of which $115 million was incurred in the first six months of 2009. The capital expenditure to date is in line with the plan and first production remains scheduled for the first half of 2012, ramping up to full capacity of 9 Mtpa in 2013.

Outlook

The second half of 2009 is expected to remain a challenging period for sales volumes of iron ore and manganese ore and alloys.

At Kumba Iron Ore, sales volumes to Europe, Japan and South Korea are expected to remain weak in the short term. The Chinese market remains uncertain, but Kumba Iron Ore remains cautiously optimistic on its ability to redirect export sales volumes into China.

At Samancor, the demand outlook for manganese alloys varies between products, with overall conditions remaining subdued. Samancor will therefore continue to produce at reduced levels and use stockpiles to meet demand. The demand outlook for manganese ore remains uncertain, masked by de-stock and stocking activities.

Demand for Scaw Metals' products is forecast to remain soft in 2009. Increased demand may be experienced in the latter part of the year as the effects of customer de-stocking flow through to increased sales.

COAL

$ million (unless otherwise stated)	6 months ended 30 June 2009	6 months ended 30 June 2008
Operating profit	720	731
South Africa	233	369
Australia	334	225
South America	165	157
Canada	2	3
Projects and corporate	(14)	(23)
EBITDA	898	900
Net operating assets	4,693	5,071
Capital expenditure	228	352
Share of Group operating profit	34%	12%
Share of Group net operating assets	12%	17%

Coal delivered an operating profit of $720 million, 2% down on the prior year with higher realised metallurgical coal prices reflecting the benefit of high priced contract sales carried over from 2008, more favourable producer country currencies, benefits from asset optimisation and cost reduction programme in Australia, offset by lower sales volumes and weaker thermal coal sales prices from South Africa.

Markets

Metallurgical coal

The global economic slowdown led to a rapid decline in demand for steel, from the construction and automotive sectors in particular. The steel industry responded by cutting production of steel and coke, idling blast furnaces and slowing coke ovens. In response to weak demand, metallurgical coal suppliers adjusted production.

The price negotiations for 2009 were conducted against this backdrop with the added complication of carryover tonnage at higher 2008 contract prices. Anglo Coal has been successful in maintaining the value inherent in the 2008 contract settlement, although there has been some deferral of carryover tonnage.

Metallurgical coal sales improved in the latter half of the first quarter. Volumes were maintained through April and May, with growth in sales of all metallurgical coal products achieved in June as steel mills re-stocked ahead of anticipated demand recovery. The Japanese, European, Turkish and South American markets remained subdued during the second quarter, but this was more than offset by increased metallurgical coal sales into China.

Thermal coal

In Europe the market fundamentals for thermal coal remained strong in early 2009 driven by the cold European winter and gas supply interruptions from Russia. Subsequently, in response to the global economic downturn, sales into Europe and North America weakened. This was partially offset by increased sales of South African thermal coal into India.

In Asia Pacific, the market fundamentals for thermal coal also remained strong at the beginning of 2009. Driven by the weakness in the metallurgical coal market, significant volumes of metallurgical coal moved, however, into the thermal market in the first quarter, depressing seaborne thermal coal pricing. In the second quarter, thermal coal pricing improved as a result of strengthening metallurgical coal markets, increasing thermal coal demand, particularly from China, and rising oil prices.

Prices

Anglo Coal's weighted average received FOB prices for its metallurgical and trade thermal coal, from major production areas, are set out in the table below:

US$ / tonne	6 months ended 30 June 2009	6 months ended 30 June 2008	Year ended 31 December 2008
Metallurgical coal	176	148	195
Thermal coal - Australia(1)	49	40	45
Trade thermal coal - South Africa(2)	50	61	65
Thermal coal - South America(3)	77	72	81

Includes domestic thermal coal.
Excludes Eskom domestic thermal coal.
Derived from financial information supplied by the relevant associates.

Operating performance

South Africa

South Africa delivered operating profit of $233 million, 37% down on the prior year, despite improve production. This was due to significantly lower export thermal coal prices, partially offset by the weaker rand. Production of 28.6 million tonnes was 2% higher than the prior year, largely as a result of improved opencast production and asset optimisation.

Australia

Australia delivered operating profit of $334 million, 48% up on the prior year. This was mainly due to higher metallurgical coal prices and the weaker Australian dollar, partially offset by lower sales volumes. In the first quarter of 2009, a significant restructuring was implemented to reduce costs by closing high cost mines, reducing the workforce, renegotiating critical supply contracts, focusing on maintenance practices and restructuring business support activities. This restructuring has started to deliver significant, sustainable cost reductions.

Metallurgical coal production of 5.7 million tonnes was 14% lower than the prior year, in response to significant demand constriction from steel customers. Thermal coal production at 7.0 million tonnes was 6% lower than the prior period, also due to weaker demand.

South America

In South America, operating profit of $165 million was 5% higher than the prior year. Cerrejón increased its first half attributable operating profit by 13% to $171 million, principally through the achievement of higher thermal coal prices and lower input costs arising from the fall in fuel prices. Cerrejón's strong performance was partially offset by Carbones del Guasare where operational, foreign exchange and labour related issues significantly affected the mining operations. Attributable coal production in South America of 5.7 million tonnes was lower by 0.1 million tonnes as a result of the drop in coal production from Carbones del Guasare's Paso Diablo mine.

Canada

Peace River Coal completed its transition to Owner Operated Mining in the first quarter of 2009. Metallurgical coal production of 0.3 million tonnes was marginally higher than the prior comparative period. Although waste mining volumes were much improved, mine phasing and geotechnical issues constrained coal release, negatively impacting unit costs. This, together with sharply reduced offtake in the first quarter due to global steel market cutbacks, contributed to a marginal operating profit of $2 million for the period.

Projects

In South Africa the Zondagsfontein thermal coal project continues to progress well against budget and schedule. The $473 million project will produce 6.6 Mtpa of export and Eskom coal, with first production from the Phola Plant in June 2009 and first production from the opencast mine expected in the third quarter of 2009. The MacWest project achieved full production of 2.7 Mtpa in the first half of 2009.

Outlook

In the near term, thermal and metallurgical coal markets are expected to remain challenging, with underlying demand trends for metallurgical coal still being masked by de-stocking and stocking activities. Anglo Coal continues to focus on improving operational performance, with a particular emphasis on cost reduction programmes in Australia and South Africa, asset optimisation, capital management and procurement. Operating margins in the second half of 2009 are expected to be significantly impacted by weaker realised coal prices and continue to be sensitive to movements in the rand and Australian dollar.

PLATINUM

$ million (unless otherwise stated)	6 months ended 30 June 2009	6 months ended 30 June 2008
Operating profit	8	1,467
EBITDA	284	1,714
Net operating assets	11,658	9,369
Capital expenditure	579	697
Share of Group operating profit	0.4%	24%
Share of Group net operating assets	30%	31%

Anglo Platinum's earnings were lower for the six months ended 30 June 2009, in line with significantly lower metal prices achieved on all products with the exception of gold, offset by higher sales volumes, proceeds from the Amandelbult business interruption insurance claim and a weaker rand against the dollar.

The average dollar price achieved for platinum was $1,085 per ounce for the period, 43% down compared to $1,906 in the first half of 2008. The average prices achieved for palladium and nickel sales for the half year were $212 per ounce and $5.14 per pound, respectively. The average price achieved on rhodium sales in the first six months of 2009 was $1,255 per ounce. The overall basket price achieved was 51% lower at $1,522 per platinum ounce sold.

Markets

The platinum market remained in balance during the first six months of 2009 as jewellery and investment metal offtake increased, as expected, at lower price levels and as investor sentiment improved. These increases in demand offset the depressed autocatalyst and other industrial demand.

The decline in global vehicle production appears to have reached a 'floor', with vehicle stocks approaching levels deemed appropriate by the automotive sector for the reduced rate of sales. However, rates of new vehicle sales, supported by a number of highly successful scrap and tax incentive schemes, appear higher than initial auto manufacturers forecasts. Vehicle inventories are expected to reduce below acceptable operating levels during the second half of 2009, resulting in a probable rebound in vehicle production. The increase in PGM demand from the automotive segment is likely to be higher than the increase in vehicle production as Anglo Platinum believes that automaker PGM pipeline stocks are at or below levels that match anticipated production volumes.

Platinum jewellery sales in China increased by over 400,000 ounces when compared to the first half of 2008 largely in response to lower platinum prices but also given the reduced premium over gold. This response highlights the strength of platinum jewellery branding and the fundamentally different nature of Chinese platinum jewellery demand as global economic conditions continue to depress jewellery sales in most western markets.

Operating performance

Equivalent refined platinum production (equivalent ounces are mined ounces expressed as refined ounces) from the mines managed by Anglo Platinum and its joint venture partners for the first half of 2009 was 1.244 million ounces, an increase of 10% when compared to the first half of 2008. While production in the first half of 2008 was impacted by numerous abnormal events such as flooding and electricity constraints, production in the first half of 2009 was managed, in line with our lower annual production target as planned. Anglo Platinum is pleased with the strong production performance, while implementing the restructuring, productivity and cost improvement plans. Higher output was achieved from the new concentrator at Mogalakwena mine, as well as increased production from the Kroondal and Mototolo mines.

Furnace maintenance at the Polokwane and Waterval smelters was carried out during the first quarter of 2009. The complete set of furnace lower copper coolers, in service since 2005, was replaced at the Polokwane smelter. Furnace number two at Waterval, was shut down for a complete re-build. Both smelters resumed normal operations during the second quarter of 2009, contributing to tonnes smelted being 22% higher in the first half of 2009 compared to the first half of 2008. Higher than normal refined metal stocks at the start of the period provided the flexibility to carry out furnace maintenance.

Refined platinum production at 1.056 million ounces for the first half of 2009 represents an increase of 6% when compared to the same period in 2008. The target of 2.4 million ounces of refined platinum production for the full year remains in place.

The cash operating cost per equivalent refined platinum ounce increased marginally by 2% compared to the first half of 2008. When compared to the second half of 2008, the cash operating cost per equivalent refined platinum ounce reduced by 6.4%.

Projects

The Amandelbult Mainstream Inert Grind projects were successfully handed over to operations in April 2009. The $80 million MC Plant capacity expansion to increase the current capacity from 64ktpa Waterval Converter Matte to 75ktpa remains on schedule for completion in the last quarter of 2009. The $224 million Amandelbult East Upper UG2 project, which will contribute 100,000 ounces of refined platinum per annum by 2012 is on schedule to complete the planned ore reserve development at the end of 2009. The development of the Unki mine in Zimbabwe, the Rustenburg Paardekraal 2 shaft replacement project, the Mainstream Inert Grind projects and the Townlands ore replacement project continue without delay.

A review of projects as a result of the global economic downturn resulted in the delay of a number of projects. The $1.6 billion Amandelbult Number 4 Shaft project has since been delayed by four years and the $1.6 billion Styldrift Merensky Phase 1 Project has been delayed by 18 months. The Twickenham Platinum Mine project has been slowed down with completion delayed by two years. At steady state, the project will contribute an additional 180,000 ounces of refined platinum from 2018. Both the Number 2 Slag Cleaning Furnace and the Base Metals Refinery projects have been delayed by 12 months.

Outlook

Given a continuation of robust platinum jewellery sales in China, firm platinum investment demand and an anticipated increase in demand for platinum from the autocatalyst sector, Anglo Platinum believes that the platinum price should find support above $1,200 per ounce during the remainder of the year, and that the current strength of the rand, which is depressing the rand revenue basket at present, is of concern. Anglo Platinum continues to target refined platinum production of 2.4 million ounces but will utilise pipeline inventory as required to meet market demand. Based on Anglo Platinum's mining production forecast, process pipeline stocks and high smelter availability it is likely that Anglo Platinum could supply up to 2.6 million ounces should market demand increase during the second half of 2009.

Anglo Platinum will continue to manage costs as a priority by improving productivity, increasing efficiency and managing the supply chain and procurement costs. Anglo Platinum expects cost improvements achieved so far to be sustained and aims to keep the unit cash costs per equivalent refined platinum ounce for the year at R11,096 per platinum ounce, the same level as in 2008.

DIAMONDS

$ million (unless otherwise stated)	6 months ended 30 June 2009	6 months ended 30 June 2008
Share of associate's operating profit	4	328
EBITDA	75	397
Group's aggregate investment in De Beers	1,640	1,844
Share of Group operating profit	0.2%	5%

The Group's share of operating profit from De Beers declined to $4 million due to attributable revenue of $770 million being 54% lower than the first half of 2008 with reduced purchases from Sightholders as they worked to correct inventory levels and increase liquidity in the face of the world economic downturn. This has been offset by cost reductions of over 50% compared to the first half of 2008 as management focuses on cash management and conservation as well as the benefit of a weaker rand.

Markets

The industry has been severely impacted by the global economic environment being the most difficult in decades. A result of lower client demand, inventories of rough diamonds in the cutting centres have been reduced by some 30% from their peaks in 2008, and debt levels associated with these inventories have reduced to more sustainable levels. In the second quarter De Beers has seen industry sentiment improve significantly, while the price of rough diamonds has begun to trend upward. These are translating into improving sales trends for the DTC. Average Sight revenue in the second quarter has more than doubled that of the first quarter.

Operating performance

De Beers forecast significantly lower sales for 2009 and took decisive steps to ensure the long term sustainability of the business. In response to lower revenues, De Beers continue to focus on five key elements being cost savings, production in line with client demand, operating efficiencies, debt management and stimulating demand.

De Beers aggressively reduced costs with production and operating cost reductions of over 50% and lower capital expenditure. In the future reduced expenditure will position the group to withstand the economic downturn, and emerge from the recession cash generative, creating the conditions necessary for recovery.

Carat production on a 100% basis of 6.591 million was 73% lower than the first half of 2008 as De Beers responded to decreasing demand. As planned, this reduction was focused in the first quarter, which saw a 91% decrease in production, achieved by temporary production holidays at De Beers mines in South Africa and Canada as well as by Joint Venture partners in Botswana. Second quarter production increased 409% quarter-on-quarter to 5.509 million carats. Full year production rates are expected to be 50% of 2008 levels.

De Beers has identified efficiencies which have enabled a reduction in the global workforce (including contractors) by 23% during the first half. These efficiencies were primarily achieved through a de-layering of the organisation and a reduction in the activities of the corporate centres. It is anticipated that the majority of these efficiencies will be permanent even as the market trends upwards.

During the first half of 2009 the shareholders provided $500 million in additional loan funding to De Beers (the Group's share being $225 million). Anglo American also reinvested $24 million of dividends received from De Beers. De Beers has begun discussions with the lending banks regarding the renewal of its $1.5 billion loan facility, which expires in March 2010. These discussions are ongoing and management expects to conclude on the outcome during the second half of 2009.

De Beers is investing in three separate initiatives to turn continued consumer sentiment into sales. Forevermark has continued to expand in Hong Kong, Macau, China and Japan. In the US, De Beers is developing its latest Big Idea with Sightholders and retailers. De Beers is a founder member of a new industry marketing initiative, the International Diamond Board.

Outlook

Retail demand in the US market remains subdued. As the rate of decline in demand has slowed however, the second half should see improvement and demand from emerging markets, mainly China and India, remains positive. De Beers will continue to take a cautious approach in terms of production, sales and cost management, while anticipating the continued steady recovery of the industry.

Looking to the medium term, diamonds have historically performed well in periods following recessions, with significant price growth seen in almost every recovery period dating back to before the 1970s. In the long-term, the fundamentals of the diamond industry remain strong. With no major new diamond discoveries in more than a decade and worldwide reserves at an all time low, diamonds are likely to become more scarce. As demand grows in emerging markets, it is expected that sales will outpace forecast diamond supply for many years to come.

INDUSTRIAL MINERALS

$ million (unless otherwise stated)	6 months ended 30 June 2009	6 months ended 30 June 2008
Operating profit	27	163
EBITDA	122	291
Net operating assets	3,560	4,574
Capital expenditure	40	118
Share of Group operating profit	1%	3%
Share of Group net operating assets	9%	15%

Tarmac Group operating profit decreased by $136 million compared to the first half of 2008, with equivalent falls in EBITDA of $169 million and free cash flow before tax of $41 million.

Markets

This profit decline reflects the continued difficult trading conditions in key markets such as the UK where demand has fallen by 20-50% and, to a lesser extent, in the international businesses. Despite these external challenges, Tarmac maintained its leadership positions in most key products, and accelerated existing cost saving programmes, particularly in the UK business, which underwent a significant restructuring in May 2009. Despite a reduction in activity levels, total cost savings of $48 million were 16% higher, on a comparable basis, than the first half of 2008. A focus on capital demands and working capital contributed to a relatively strong cash flow.

Operating performance

UK Quarry Materials(1) proved to be relatively resilient in the face of a marked decline in demand across its product portfolio. There was no evidence of any pick-up in UK infrastructure spend. Quarry Materials also focused on optimising its supply chain and is now also largely self-sufficient in cement.

The decline in the UK housing market, which began in the second quarter of 2008, led to a significant deterioration in volumes of products such as mortar, blocks and flooring. As a result, the UK Building Products Division saw sales fall by over 20% compared to the first half of 2008. This is being mitigated by a vigorous programme of cost base reduction and business improvement. The business is focused on leveraging the breadth of its product portfolio within its customer base, now that the restructuring has been completed.

After a strong performance in 2008, the markets in which Tarmac International operates were markedly weaker than in the first half of 2008. However, Tarmac is well positioned to reap the benefits of investments made in recent years in economies that continue to grow, such as Oman and Qatar.

Outlook

The outlook for demand from the construction market in the UK and Europe remains weak, with no recovery expected in the short term. However, in the longer term, the fundamental supply and demand outlook remains favourable in the markets in which Tarmac operates.

(1) Post the UK restructuring, the Lime and Cement business is now included with the Aggregates business to form UK Quarry Materials.

For the full Half Year Financial Report, please see attached PDF document

http://www.rns-pdf.londonstockexchange.com/rns/6186W_-2009-7-30.pdf