2009 Preliminary Results

RNS Number : 3794H

Anglo American PLC

19 February 2010

News Release

19 February 2010

Anglo American announces operating profit of $5.0 billion

Financial results

· Group operating profit⁽²⁾ of $5.0 billion ($4.5 billion from core operations⁽³⁾)

· Underlying earnings⁽⁴⁾ of $2.6 billion and underlying earnings per share of $2.14

· Profit attributable to equity shareholders of $2.4 billion

· Net debt⁽⁶⁾ maintained at $11 billion at 31 December 2009

· Committed undrawn bank facilities and cash of over $12 billion at 31 December 2009

Delivering operational efficiencies

· Asset optimisation and procurement delivered more than $1.6 billion of benefits in 2009
($1.4 billion from core operations), exceeding target

- Asset optimisation and procurement target of $2 billion now to be delivered from core businesses alone by 2011

· Anglo Platinum - significant restructuring achieved, flat cash operating costs target met, 3 high cost shafts on care and maintenance, labour productivity up 21% in 2 years

· Significant cash cost reduction of $712 million (5%) and productivity improvements achieved across the Group - headcount reduced by 23,400⁽⁷⁾

Creating a more effective, focused business

· Major Group reorganisation completed, creating new generation of leadership within a leaner, more effective structure

· Board strengthened and refreshed - new chairman and 3 new non-executive directors to bring further mining, commercial and financial expertise

· Divestment programme under way - running businesses to maximise value; sales of Tarmac's European aggregates and Polish concrete products businesses agreed with expected proceeds of approximately $400 million; Zinc sale process initiated with significant buyer interest

Clear strategy driving targeted, high quality growth of selected commodities

· $17 billion of approved projects in most attractive commodities to drive organic production growth of more than one third by 2013:

- Copper to grow by 33%; iron ore by 82%; nickel by 139%

- Development of four key strategic projects on track: Minas Rio, Los Bronces, Barro Alto and Kolomela (previously Sishen South)

- New growth projects: Quellaveco (copper) and Grosvenor (metallurgical coal) - first stage approvals expected in 2010

Step change in safety performance

· New safety practices embedded and delivering further improved results:

- 57% reduction in fatalities since January 2007

- 52% improvement in lost time injury rates since January 2007, on a like-for-like basis

- Anglo Platinum achieved 4 consecutive fatality-free months through to January 2010

Dividend

· Resumption of dividend expected in respect of 2010

HIGHLIGHTS FOR THE YEAR ENDED 31 DECEMBER 2009 US$ million, except per share amounts	Year ended 31 Dec 2009	Year ended 31 Dec 2008	Change
Group revenue including associates⁽¹⁾	24,637	32,964	(25.3)%

Operating profit including associates before special items and remeasurements - core operations⁽²⁾⁽³⁾	4,451	9,003	(50.6)%

Operating profit including associates before special items and remeasurements⁽²⁾	4,957	10,085	(50.8)%

Underlying earnings⁽⁴⁾	2,569	5,237	(50.9)%

EBITDA⁽⁵⁾	6,930	11,847	(41.5)%

Net cash inflows from operating activities	4,087	8,065	(49.3)%

Profit for the financial year attributable to equity shareholders	2,425	5,215	(53.5)%

Earnings per share (US$):
Basic earnings per share	2.02	4.34	(53.5)%
Underlying earnings per share⁽⁴⁾	2.14	4.36	(50.9)%

⁽¹⁾ Includes the Group's attributable share of associates' revenue of $3,779 million (2008: $6,653 million). See note 3 to the Condensed financial statements.

⁽²⁾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.

⁽³⁾Operations considered core to the Group are Platinum, Diamonds, Copper, Nickel, Iron Ore and Manganese (Kumba Iron Ore, Iron Ore Brazil and Samancor), Metallurgical Coal, Thermal Coal, Exploration and Corporate Activities. See page 12 in the Financial review of Group results section for a reconciliation of operating profit from core operations to total operating profit. Due to the portfolio and management structure changes announced in October 2009, operations considered core have changed from those reported at 31 December 2008. The comparative has been updated to reflect this.

⁽⁴⁾ See note 9 to the Condensed financial statements for basis of calculation of underlying earnings.

⁽⁵⁾ 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 13 to the Condensed financial statements.

⁽⁶⁾Net debt excludes hedges, but includes the net debt in disposals groups. See note 11 to the Condensed financial statements.

⁽⁷⁾Headcount reduction includes contractors and 100% of De Beers.

Cynthia Carroll, Chief Executive, said, "Anglo American is now a more focused and performance-oriented international mining company. We have a clear strategy in place and are driving harder than ever in pursuit of being the investment, partner and employer of choice in the mining industry. In 2009, we made significant progress on several fronts, delivering on and exceeding our targets - achieving a step change in safety performance, restructuring the Group and laying the foundation for significant cultural change. We have continued our highly successful cost and efficiency initiatives, taking Anglo American into a new, more dynamic era of value delivery. Against what has been an unpredictable economic background, Anglo American delivered a solid operating performance, with operating profit of $5.0 billion and underlying earnings of $2.6 billion, with strong performances across our businesses.

In October, we announced a major corporate reorganisation to ensure the delivery of our clear corporate strategy. We have created a more streamlined and efficient management structure and have further focused the Group on its core mining businesses. Through our redesign of the Group's structure, we have created seven focused commodity businesses, with their management teams located in the area of core geographic focus for each commodity, responsible for operational performance and project delivery. The rationalised corporate centre will be responsible for providing strategic support to the businesses and will be focused on delivering synergies, technology and business performance. We have worked quickly to implement these new structures and we expect full implementation by the end of the first quarter of 2010, with associated annualised cost savings of approximately $120 million. Taken together with our overall Group restructuring and efficiency initiatives, this has resulted in a reduction of 23,400 to our total headcount during 2009.

Two areas of synergy where we are continuing to deliver clear and substantial value are in our asset optimisation and global procurement programmes. We are now well advanced towards delivering our stated combined target of $2 billion of uplift in 2011, generating more than $1.6 billion in 2009, ahead of expectations. Based on our excellent progress to date, we now expect to achieve our $2 billion asset optimisation and procurement targets from our core businesses alone on the same timeline.

Cost control continues to be a major focus for Anglo American. In 2009, we delivered significant cash cost reductions across the Group totalling $712 million, a 5% decrease. Anglo Platinum has a clear strategy to move the cost position of its operations to the first and second quartile while, in 2009, it achieved flat cash operating unit costs and significant further productivity improvements. Furthermore, following a full restructuring of the operations at Rustenburg and Amandelbult to enable greater operational control and flexibility, it has removed 140,000 ounces of high cost production by placing three shafts on care and maintenance. Anglo American has provided strong support to the recapitalisations of both Anglo Platinum and De Beers, positioning them to take full advantage of economic recovery and to deliver on their long term growth prospects as respective industry leaders.

Our decision to continue the development of several of our key strategic growth projects during the economic downturn positions us to capitalise on the next phase of global economic growth and to deliver our projected organic production growth of more than one third by 2013. Four major projects - the Minas Rio iron ore project and the Barro Alto nickel project, both in Brazil, the Los Bronces copper expansion project in Chile and the Kolomela (previously Sishen South) iron ore project in South Africa - are all well placed on their respective industry cost curves, have long resource lives, further expansion potential and are on track to enter production, some from next year onwards, in what we expect to be a growing commodity demand environment.

We will be driving forward these and other projects during 2010, investing $4.2 billion in projects out of a total planned capital expenditure investment of $6.0 billion for the year. We are also modernising our project management processes and standards to ensure they not only capture lessons from previous projects but that they provide us with world class tools for the future allocation of capital and control of major projects.

I am encouraged by further safety improvements during the year. Our lost time injury frequency rate is 27% lower than 2008 and shows a 52% like-for-like improvement since January 2007. The number of fatalities continues to be reduced and, while still unacceptable until we reach zero, are now 32% fewer than 2008 and nearly 60% fewer than January 2007. In January 2010, Anglo Platinum also achieved a significant milestone of four consecutive months without a fatal incident, a first for the company.

Looking ahead, the medium and long term outlook for the mining industry remains strong. Demand for commodities is expected to remain robust with the continuing shift in the pattern of economic growth towards fast-growing emerging economies. In order to sustain its growth potential, we anticipate that China will continue to upgrade and develop its infrastructure, while the longer term potential of India and Brazil is expected to provide further support. These economies also have the greatest scope for strong consumer spending growth, the principal long term demand driver for platinum group metals and diamonds."

Review of 2009

Financial results

Anglo American's underlying earnings were $2.6 billion, from $5.2 billion in 2008, with operating profit of
$5.0 billion, from $10.1 billion in 2008. The impact of the global economic downturn on realised platinum group metals (PGMs), iron ore, export coal, nickel and diamond prices has been the key driver of the decline in earnings, coupled with falling demand, particularly in the Metallurgical Coal and Thermal Coal businesses. Against the backdrop of the challenging economic environment, notable performances include Copper, with increased production driving operating profit growth; production and sales volume increases at Kumba Iron Ore from the Sishen jig project; and Nickel, as well as significant cost reduction programmes at Platinum, Metallurgical Coal and Diamonds.

Copper delivered an operating profit of $2,010 million, 6% higher as a result of record production and lower costs as well as marginally higher realised copper prices.

Nickel reported an operating profit of $2 million, $121 million lower despite a 32% increase in sales volumes. This reflects the impact of a 30% decrease in the average nickel price and Venezuelan inflation of 25%.

Platinum generated an operating profit of $32 million, down 99% due to a 38% decrease in the dollar basket price of metals sold. Management's focus on costs, including moving production away from higher cost shafts, has enabled cash operating unit costs to remain flat despite inflationary pressures.

Iron Ore and Manganese generated an operating profit of $1,489 million, 42% lower. Within this commodity group, Kumba Iron Ore had a strong performance with operating profit of $1,487 million, 6% lower, despite average export prices falling 40%, achieving strong export sales to China and product shift to higher margin blended fines product.

Metallurgical Coal delivered an operating profit of $451 million, a 59% decrease, with lower price and demand from steelmakers, partially mitigated by cost reduction programmes.

Thermal Coal's operating profit of $721 million was 33% lower, principally as a result of lower prices and demand reduction.

Diamonds recorded an attributable operating profit of $64 million, down 87%, with Diamond Trading Company (DTC) revenues down 45%. The second half of the year benefited from the cost saving initiatives undertaken in the first half, improved demand from Sightholders and delivered an operating profit of
$60 million.

Other Mining and Industrial generated anoperating profit of $506 million, 53% lower. Strong performances from the Zinc and Niobium businesses, driven by improved production, were offset by the impact of the economic slowdown on Tarmac and Scaw Metals.

Production

2009 saw significant improvements in operating efficiency and production, demonstrating the Group's flexibility to react to market demand. Copper achieved record production, up 5%, with operating efficiencies and grade improvements in the second half at Los Bronces and a 15% attributable increase at Collahuasi, despite production at Collahuasi having been impacted by 44 days following the failure of a conveyor electrical control centre. Nickel production at Codemin and Loma de Níquel was flat, despite a run out at the EP2 furnace and an environmental permitting issue at Loma, which had a combined impact of reducing production by 5,600 tonnes (equivalent to 30% of full year 2009 production). Platinum achieved a 3% increase in refined platinum ounces whilst also restructuring its two largest operations to ensure a sustainable reduction in the unit cost of production. Iron ore production from Kumba's Sishen Mine increased by 16% due to the continuing ramp up of the Sishen jig plant. Production from Diamonds, Metallurgical Coal and Thermal Coal was aligned to lower demand, with the exception of the Mafube and Kriel coal mines in South Africa, which increased production to Eskom.

Capital structure

Net debt, excluding hedges, of $10,995 million was marginally lower than at 31 December 2008, and
$340 million lower than at 30 June 2009. Cash inflows from operations of $4.9 billion and the proceeds from the sales of the residual holdings in AngloGold Ashanti, Tongaat Hulett and Hulamin of $2.4 billion funded capital investment of $4.6 billion principally in the Group's core assets, including combined investment in excess of $1.8 billion in the Los Bronces, Barro Alto, Minas Rio and Kolomela (previously Sishen South) near-term strategic growth projects. The Group also provided $225 million of shareholder loans to De Beers. Net debt was adversely impacted by the strength of the rand at the end of the year on the rand denominated debt.

Special items and remeasurements

We have recognised the need for balance sheet value adjustments via a number of impairments, offset by gains on disposals of assets, resulting in a net reduction in asset values of approximately $0.5 billion (after tax and minority interests).

Operating special items and remeasurements, including associates, amounted to a charge of $1,840 million. Included in operating special items, including associates, are impairments totalling $2,130 million. This included an impairment charge against the Amapá iron ore system. Amapá was acquired in 2008 as an operating asset as part of the acquisition of the Minas Rio project. During 2009, Amapá has experienced significant operational challenges across its mine, plant and logistics chain, producing 2.7 Mt compared to the design capacity of 6.5 Mtpa. Management's focus has been, and remains, on seeking to markedly improve performance from the existing operations, rather than investing to expand the operation. The Amapá system is currently believed to have capacity to increase production to 5 Mtpa without significant further capital expenditure. Due to the focus on improving operational performance and preserving cash, limited exploration drilling has been undertaken in 2009 and the anticipated growth potential of surrounding licence areas remains untested. Given these operational difficulties and delays in increasing production, the Group has recorded an impairment charge of $1.5 billion (after tax and minority interest) against the carrying value of the asset.

Dividends

The resumption of the dividend at the earliest possible time remains a key priority for the board. Assuming that the commodity price environment and outlook continue to improve and the business performance remains robust, the board would expect to be able to announce the resumption of a dividend in respect of the current financial year.

Delivering value through operational efficiencies

Anglo American has two Group-wide synergy initiatives which are continuing to deliver clear and substantial value. The asset optimisation and global supply chain and shared services programmes are both well advanced towards delivering their combined $2 billion target. In 2009, a total in excess of $1.6 billion was achieved ($1.4 billion from core operations), ahead of expectations. On the basis of the excellent progress made, it is expected that the $2 billion asset optimisation and procurement targets by 2011 will now be achieved from our core businesses alone on the same timeline.

Asset optimisation delivered $863 million of sustainable value for the full year 2009 ($749 million from core operations), towards its $1 billion target, building on the $335 million delivered in the first half of the year. 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.

The global supply chain and shared services initiatives delivered savings of $510 million ($445 million from core operations), nearly $200 million ahead of its target for the full year, having achieved $131 million in the first half of the 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 for fuels and lubricants, and consolidating the number of different suppliers for any given product or service.

In February 2009, the Group announced a global headcount reduction of 19,000 to be achieved by the end of 2009 followed, in October, by the announcement of the Group's restructuring. Headcount reductions for the year have totalled 23,400.

Anglo Platinum's strong operational performance during 2009 reflects its focus on driving value from its operations through a series of decisive cost and efficiency initiatives to deliver its clear strategy to move the cost position of its operations to the first and second quartile. The Rustenburg and Amandelbult mines were divided into smaller operating units of five and two operations respectively to enable greater operational flexibility. The sourcing of production ounces has been optimised, resulting in three high cost shafts at Rustenburg being put on care and maintenance and a total of 140,000 ounces (annualised) of high cost production being removed. These efforts will result in a sustainable reduction in the cost position of the Rustenburg mines and effectively move them from the fourth quartile to the third quartile of the cost curve. The benefits of such significant restructuring are clear, with headcount reduced by 15,752 during 2009, cash operating costs per equivalent refined platinum ounce decreasing in real terms (and flat in nominal terms) against the prior year. Over the past two years, employee productivity, measured as square metres mined per total operating employee per month, has improved by 21% to 6.50m² in the second half of 2009.

De Beers implemented a successful restructuring and achieved aggressive cost reductions, with production and operating costs reduced by 45% and a 23% reduction in its global workforce, as production was brought in line with demand.

Clear strategy driving targeted, high quality growth of selected 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 and the most attractive risk-return profiles. Those commodities are copper, diamonds, iron ore, manganese, metallurgical coal, nickel, platinum and thermal coal.

Anglo American has developed a portfolio of world-class operating assets and development projects focused on those commodities, with the benefits of scale, expansion potential and cost position. The Group's $17 billion pipeline of approved projects spans the core commodities and is expected to deliver organic production growth of more than one third by 2013.

Anglo American's decision to preserve the development of its key near-term strategic growth projects during the economic downturn positions the Group to capitalise on the next phase of global economic growth. The four major 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.

Anglo American's Los Bronces copper expansion project is on schedule, with first production in the fourth quarter of 2011 and is expected to increase, from the fourth quarter of 2012, to an average of 490 ktpa over the first three years of full production (an average of over 400 ktpa over the first 10 years). At peak production levels, Los Bronces is expected to be the fifth largest 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. Anglo American has also 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 also on schedule towards start up in early 2011, with the overall development almost 80% complete at the year end. 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 position in the lower half of the cost curve.

Kumba Iron Ore's Kolomela project, previously known as the Sishen South project, is on track and progressing well towards first production in the first half of 2012. Kolomela is situated 80km to the south of Kumba's world class Sishen mine and, when full production is achieved in 2013, will produce 9 Mtpa of high quality iron ore, with further potential for expansion.

The Minas Rio iron ore project in Brazil is a multi-billion tonne resource in the highly attractive seaborne iron ore market with the benefit of an integrated logistics system. Anglo American obtained a series of important licences for the first phase of the project during the year, most notably the first part of the Installation Licence for the mine and beneficiation plant, awarded in December, following the earlier award of the federal permit for land clearance at the mine. The second part of the Installation Licence is expected to be approved during the early part of 2010. 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 half of 2012, with ramp-up to 26.5 Mtpa. Anglo American's forecast attributable share of the post acquisition capital expenditure for the first phase of the project has increased from $2.7 billion to $3.8 billion owing to scoping changes at the mine, pipeline and port, as well as foreign exchange movements.

The size of the Minas Rio orebody and the project's dedicated logistics infrastructure means that it has considerable expansion potential, with studies under way for the expansion of the project up to 80 Mtpa. Anglo American acquired the Minas Rio project in two transactions in 2007 and 2008 and at the end of 2007 declared a resource of 476 Mt (Measured and Indicated) and an additional 770 Mt of Inferred resource. After considerable geological work, this total resource has increased fourfold since 2007 to 5 billion tonnes, including 843 Mt of Inferred resource. The anticipated final product Fe grade over the life of the mine, expected to be above 68%, is particularly high compared to other products on the market and benefits from 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 in Brazil and South Africa, the Group has the potential to increase iron ore production to in excess of 150 Mtpa within 10 years.

In addition, Anglo American expects to make decisions during 2010 in relation to first stage approvals for the development of two further high quality growth projects - the 225 ktpa Quellaveco copper project in Peru and the 4.3 Mtpa Grosvenor metallurgical coal project in Australia.

Divestment portfolio update

During 2009, Anglo American sold its residual holdings in AngloGold Ashanti, Tongaat Hulett and Hulamin, realising total proceeds of approximately $2.4 billion.

In October 2009, Anglo American announced that it would further sharpen the focus of the Group onto the most attractive commodities and, building on the programme of non-core shareholding sales completed over the last three years, the Group's portfolio of zinc assets, Scaw Metals, Copebrás and Catalão will be divested in due course, together with Tarmac.

The preparatory work to separate the businesses for divestment from the Group is under way and the divestments will be carried out in a manner and to a timetable that maximises value for Anglo American's shareholders. It is envisaged that there will be a different divestment timetable for each of the businesses.

During the first quarter of 2010, Anglo American agreed the sales of Tarmac's aggregates businesses in France, Germany, Poland and the Czech Republic and its Polish concrete products business, with expected total proceeds of approximately $400 million.

The sale process for the portfolio of zinc assets is under way and significant levels of buyer interest have been shown.

Outlook

The medium and long term outlook for the mining industry remains strong. Demand for commodities is expected to remain robust with the continuing shift in the pattern of economic growth towards fast-growing emerging economies. In order to sustain its growth potential, China is expected to continue to upgrade and develop its infrastructure, while the longer term potential of India and Brazil is expected to provide further support. These economies also have the greatest scope for strong consumer spending growth, the principal long term demand driver for platinum group metals and diamonds.

In 2009, huge policy stimulus and a turn in the inventory cycle drove the rebound in industrial activity. In 2010, the positive effects of these factors are likely to start to fade. The economic headwinds are most noticeable in the advanced economies, where continuing balance sheet repair will constrain demand prospects. However, the outlook for the emerging economies is much brighter. China and India are likely to grow strongly, though the potential for setbacks remains as a weak external environment combines with intensifying domestic inflation pressures.

Selected major projects

Completed in 2009
Sector	Project	Country	Completion date	Capex $m⁽¹⁾	Production volume⁽²⁾
Iron Ore and Manganese	Sishen expansion	South Africa	Q4 2009	657	13.0 Mtpa iron ore
Metallurgical Coal	Lake Lindsay	Australia	Q1 2009	726	4.0 Mtpa
Thermal Coal	Mafube	South Africa	Q3 2009	230	5.4 Mtpa
	Cerrejón	Colombia	Q1 2009	130	3.0 Mtpa (2^nd stage)

Approved
Sector	Project	Country	First production date	Full production date	Capex $m⁽¹⁾	Production volume⁽²⁾
Platinum	MC Plant Capacity Expansion - phase 1	South Africa	Q3 2009	Q1 2010	80	11 ktpa waterval converter matte
	Mogalakwena North	South Africa	Q4 2007	2012	922	350-400 kozpa refined platinum
	Dishaba (Amandelbult) East Upper UG2	South Africa	Q3 2007	Q4 2012	224	100 kozpa refined platinum
	Styldrift Merensky phase 1	South Africa	Q2 2017	Q2 2018	1,621	245 kozpa refined platinum
	Unki Mine	Zimbabwe	Q3 2010	Q4 2013	457	65 kozpa refined platinum
Diamonds	Jwaneng - Cut 8	Botswana	2010	2024	3,000⁽³⁾	95 million carats
Copper	Los Bronces expansion	Chile	Q4 2011	Q4 2012	2,300 -2,500	200 ktpa copper⁽⁴⁾⁽⁵⁾
	Collahuasi 150 ktpd	Chile	Q1 2011	Q2 2011	92	Expansion to 150 ktpd capacity
Nickel	Barro Alto	Brazil	Q1 2011	Q3 2012	1,800 - 1,900	36 ktpa nickel
Iron Ore and Manganese	Minas Rio phase 1	Brazil	H2 2012	Q3 2013	3,800⁽⁶⁾	26.5 Mtpa iron ore pellet feed (wet basis)
	Kolomela (previously Sishen South)	South Africa	Q2 2012	Q1 2013	1,022	9.0 Mtpa iron ore
Thermal Coal	Zibulo (previously Zondagsfontein)	South Africa	Q3 2009	Q4 2012	512	6.6 Mtpa thermal coal

Future unapproved
Sector	Project	Country	First production date	Full production date	Production volume⁽²⁾
Copper	Quellaveco	Peru	2014	2015	225 ktpa copper⁽⁴⁾
	Collahuasi expansion phase 1	Chile	2012	2012	510 ktpa copper^{(4) (7)}
	Michiquillay	Peru	2017	2018	155 ktpa copper^{(4) (8)}
	Pebble	US	TBD	TBD	350 ktpa copper⁽⁴⁾
Nickel	Jacaré phase 1	Brazil	2015	2016	34 ktpa nickel
	Morro Sem Bone	Brazil	2015	2016	32 ktpa nickel
Iron Ore and Manganese	Sishen Expansion Project 2	South Africa	2017	2019	10.0 Mtpa iron ore
	Sishen Concentrate	South Africa	2017	2018	2.0 Mtpa iron ore pellets
	Minas Rio expansion	Brazil	TBD	TBD	Up to 53 Mtpa iron ore pellet feed (wet basis)
Metallurgical Coal	Grosvenor	Australia	2013	2016	4.3 Mtpa metallurgical

Thermal Coal	Heidelberg underground	South Africa	2013	2017	4.2 Mtpa thermal
	Elders opencast	South Africa	2013	2013	6.4 Mtpa thermal
	Elders underground	South Africa	2013	2017	3.2 Mtpa thermal
	New Largo	South Africa	2012	2016	14.7 Mtpa thermal
	Cerrejón P40	Colombia	2012	2014	8.0 Mtpa thermal

⁽¹⁾ Capital expenditure shown on 100% basis in nominal terms. Platinum projects reflect approved capital expenditure.

⁽²⁾ Represents 100% of average incremental or replacement production, at full production, unless otherwise stated.

⁽³⁾ Debswana will provide $500 million of the $3 billion project investment over the next 15 years.

⁽⁴⁾ Pebble will produce molybdenum and gold by-products, Michiquillay will produce molybdenum, gold and silver by-products and other projects will produce molybdenum and silver by-products.

⁽⁵⁾ Production represents average over first 10 years of the project. Production over the first three years of the project will average 278 ktpa.

⁽⁶⁾ Capital expenditure, post acquisition of Anglo American's share holding in Minas Rio, for 100% of the mine and pipeline, and Anglo American's 49% share of the port. The aggregate cost of 100% of the mine, pipeline and port - and capital expenditure incurred both before and after Anglo American's shareholding in Minas Rio - has increased from $3.6 billion to $5 billion.

⁽⁷⁾ Total production of mine when project has ramped up to full production. Further phased expansions have the potential to increase production to 1 Mtpa.

⁽⁸⁾Expansion potential to 300 ktpa.

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

Pranill Ramchander, Media Relations

Tel: +27 (0)11 638 2592

Anna Poulter, Investor Relations

Tel: +27 (0)11 638 2079

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 copper, iron ore, metallurgical coal, nickel and thermal coal, as well as a divestment portfolio of other mining and industrial businesses. The Group is geographically diverse, with operations in Africa, Europe, South and North America, Australia and Asia.

Webcast of presentation:

A live webcast of the results presentation, starting at 9.00am UK time on 19 February, 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 and is before special items and remeasurements, unless otherwise stated; special items and remeasurements are defined in note 6 to the Condensed financial statements. 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 13 to the Condensed financial statements and to 'Cash inflows from operations' in note 13. Tonnes are metric tons, 'Mt' denotes million tonnes and 'kt' denotes thousand tonnes unless otherwise stated.

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 $4,957 million, with operating profit from core operations of $4,451 million, 51% lower than 2008. This decline in operating profit has been driven by significant decreases in realised prices of all commodities with the exception of copper. Price decreases included a 38% reduction in the platinum basket, an average 40% reduction in benchmark export iron ore, a 30% decline in average nickel and a more than 20% decline in export metallurgical coal.

Copper operating profit was 6% higher than 2008, with record production and a 2% increase in the realised price of copper, partially due to favourable final settlements of sales into a rising market. Nickel profits declined due to a combination of lower price with destocking in the stainless steel sector and a 25% inflation rate in Venezuela. Platinum was impacted by significantly lower average prices compared to 2008. Kumba Iron Ore maintained a strong operating profit margin despite a 40% decline in average benchmark export iron ore prices, achieved through increased volumes, principally sold to China. Samancor's profits declined due to the decrease in global steel demand. Metallurgical Coal and Thermal Coal profits were impacted by the decline in export demand and prices, partially offset by cost reduction programmes. Diamonds saw Diamond Trading Company (DTC) revenues fall by $2.7 billion and, through production holidays and restructuring, De Beers cut its production and operating costs by $900 million; however, despite these measures, operating profit fell by 87%.

Other Mining and Industrials' operating profit increased in the Zinc and Niobium businesses, with growth in sales volumes. This was more than offset by lower profits from Tarmac, due to the housing market decline in Europe, and significant volume decline for Scaw Metals' products. Other Mining and Industrial's operating profit in 2009 relative to 2008 was lower following the sale of Tongaat Hulett and Hulamin in the third quarter of 2009 and also the sale of Namakwa Sands in October 2008.

Group underlying earnings were $2,569 million, 51% lower than 2008, which reflects the operational results above. The net finance costs charge, before remeasurements, of $273 million is $179 million lower than 2008. The effective tax rate, before special items and remeasurements and including attributable share of associates' tax, reduced in the year from 33.4% to 33.1%.

Group underlying earnings per share were $2.14 compared with $4.36 in 2008, a 51% reduction.

Underlying earnings $ million	Year ended 31 Dec 2009	Year ended 31 Dec 2008
Profit for the financial year attributable to equity shareholders of the Company	2,425	5,215
Operating special items including associates	2,574	477
Operating remeasurements including associates	(734)	880
Net profit on disposals including associates	(1,632)	(1,027)
Financing special items including associates	7	-
Financing remeasurements including associates:
Exchange loss / (gain) on De Beers preference shares	21	(28)
Unrealised net losses / (gains) on non-hedge derivatives related to net debt	94	(8)
Other financing remeasurements	13	-
Tax special items including associates	152	-
Tax remeasurements	(469)	153
Tax on special items and remeasurements including associates	180	(264)
Minority interests on special items and remeasurements including associates	(62)	(161)
Underlying earnings	2,569	5,237
Underlying earnings per share ($)	2.14	4.36

The Group's results are influenced by a variety of currencies owing to the geographic diversity of the Group. In 2009, there was a negative exchange variance in underlying earnings of $68 million. The Group results benefited from the weaker Australian dollar, Chilean peso and Brazilian real. Despite the average rand rate in 2009 being 2% weaker than 2008, there was a negative rand exchange impact on underlying earnings. This reflects a significantly stronger rand in the second half of the year when operating activities increased with stronger demand. There was a negative impact on underlying earnings from a significant decline in prices amounting to $2,290 million, reflecting lower prices across all commodities.

Summary income statement $ million	Year ended 31 Dec 2009	Year ended 31 Dec 2008
Operating profit before special items and remeasurements	4,377	7,981
Operating special items	(2,275)	(352)
Operating remeasurements	638	(779)
Operating profit from subsidiaries and joint ventures	2,740	6,850
Net profit on disposals	1,612	1,009
Share of net income from associates (see reconciliation below)	84	1,113
Total profit from operations and associates	4,436	8,972
Net finance costs before remeasurements	(273)	(452)
Financing remeasurements	(134)	51
Profit before tax	4,029	8,571
Income tax expense	(1,117)	(2,451)
Profit for the financial year	2,912	6,120
Minority interests	(487)	(905)
Profit for the financial year attributable to equity shareholders	2,425	5,215
Basic earnings per share ($)	2.02	4.34
Group operating profit including associates before special items and remeasurements⁽¹⁾	4,957	10,085

Operating profit from associates before special items and remeasurements	580	2,104
Operating special items and remeasurements	(203)	(226)
Net profit on disposals	20	18
Net finance costs (before special items and remeasurements)	(28)	(147)
Financing special items	(7)	-
Financing remeasurements	6	(15)
Income tax expense (after special items and remeasurements)	(286)	(606)
Minority interests (after special items and remeasurements)	2	(15)
Share of net income from associates	84	1,113

⁽¹⁾Operating profit before special items and remeasurements from subsidiaries and joint ventures was $4,377 million and attributable share from associates was $580 million.

For special items and remeasurements 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 Platinum, Diamonds, Copper, Nickel, Iron Ore and Manganese (Kumba Iron Ore, Iron Ore Brazil and Samancor), Metallurgical Coal and Thermal Coal. The table below reconciles operating profit from core operations to total Group operating profit.

Operating profit $ million	Year ended 31 Dec 2009	Year ended 31 Dec 2008
Platinum	32	2,169
Diamonds	64	508
Copper	2,010	1,892
Nickel	2	123
Iron Ore and Manganese	1,489	2,554
Metallurgical Coal	451	1,110
Thermal Coal	721	1,078
Exploration	(172)	(212)
Corporate Activities and Unallocated costs	(146)	(219)
Operating profit including associates before special items and remeasurements - core operations	4,451	9,003
Other Mining and Industrial	506	1,082
Operating profit including associates before special items and remeasurements	4,957	10,085
Underlying earnings - core operations ⁽¹⁾	2,166	4,503

⁽¹⁾See note 4 to the Condensed financial statements

Special items and remeasurements

	Year ended 31 Dec 2009			Year ended 31 Dec 2008
$ million	Excluding associates	Associates	Total	Excluding associates	Associates	Total
Operating special items	(2,275)	(299)	(2,574)	(352)	(125)	(477)
Operating remeasurements	638	96	734	(779)	(101)	(880)
Operating special items and remeasurements	(1,637)	(203)	(1,840)	(1,131)	(226)	(1,357)

Operating special items and remeasurements, including associates, amounted to a charge of $1,840 million. Included in operating special items including associates are impairments totalling $2,130 million. This included an impairment charge against the Amapá iron ore system. Amapá was acquired in 2008 as an operating asset as part of the acquisition of the Minas Rio project. During 2009, Amapá has experienced significant operational challenges across its mine, plant and logistics chain, producing 2.7 Mt compared to the design capacity of 6.5 Mtpa. Management's focus has been, and remains, on seeking to markedly improve performance from the existing operations, rather than investing to expand the operation. The Amapá system is currently believed to have capacity to increase production to 5 Mtpa without significant further capital expenditure. Due to the focus on improving operational performance and preserving cash, limited exploration drilling has been undertaken in 2009 and the anticipated growth potential of surrounding licence areas remains untested. Given these operational difficulties and delays in increasing production, the Group has recorded an impairment charge of $1.5 billion (after tax and minority interest) against the carrying value of the asset.

In January 2008, the Venezuelan Ministry of Basic Industries and Mining ("MIBAM") published a resolution cancelling 13 of Minera Loma de Níquel's ("MLdN") 16 exploration and exploitation concessions due to MLdN's alleged failure to fulfil certain conditions of the concessions. The current mining and metallurgical facilities are located on the three concessions that have not been cancelled. MLdN believes that it has complied with the conditions of these concessions and has lodged administrative appeals against the notices of termination and is waiting for a response from MIBAM. MLdN may in the future undertake further appeals, including with Venezuela's Supreme Court, if the MIBAM's ruling does not adequately protect its interests.

An impairment and associated adjustments of $114 million has been recorded due to increased uncertainty over the renewal of the three concessions that have not been cancelled but that expire in 2012 and over the restoration of the 13 concessions that were cancelled.

At 31 December 2009, Anglo American's interest in the book value of MLdN, including its mineral rights, was $285 million (as included in the Group's balance sheet). In the 12 months to December 2009, MLdN's production and contribution to Group operating profit were respectively 10,400 tonnes of nickel in ferronickel and a $7 million loss. The average price of nickel in 2009 was 667 c/lb. As of 17 February 2010, the price of nickel was 910 c/lb.

Due to the nature of the assets, the effect of the strengthening Canadian dollar and the impact of the global recession on pricing and production levels, De Beers has recorded an impairment of $595 million (attributable share: $267 million) in respect of its Canadian asset portfolio and written off $101 million (attributable share: $45 million) of Canadian deferred tax assets.

Also included in special items and remeasurements were one-off redundancy costs at the corporate centre of $47 million and within Anglo Platinum, Metallurgical Coal and Thermal Coal of $136 million. There were operating remeasurement gains of $734 million which principally related to net gains on non-hedge capital expenditure derivatives held by Iron Ore Brazil and Los Bronces and an unrealised gain on an embedded derivative at MLdN.

Net profit on disposals of $1,632 million, including associates, comprises a profit on the disposal of the residual shareholdings in AngloGold Ashanti of $1,139 million, $247 million on Anglo Platinum's disposal of its 50% share in Booysendal and $69 million relating to the disposal of 51% of Anglo Platinum's 100% share in Lebowa Platinum Mines.

Financing remeasurements including associates are made up of an unrealised net loss of $94 million on non-hedge derivatives and a $21 million foreign exchange loss on retranslating De Beers US dollar preference shares held by a rand denominated entity.

Tax remeasurements amounted to a gain of $469 million related to foreign currency translation of deferred tax balances.

Net finance costs

Net finance costs, excluding a net remeasurement loss of $134 million (2008: gain of $51 million), decreased to $273 million (2008: $452 million). This was due to a $70 million reduction in the total interest expense and a $184 million reduction in other financing losses (principally exchange losses), partially offset by a $75 million reduction in total investment income.

Taxation

	Year ended 31 Dec 2009			Year ended 31 Dec 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	4,422	234	4,656	8,832	654	9,486
Tax	(1,305)	(235)	(1,540)	(2,545)	(623)	(3,168)
Profit for the financial year	3,117	(1)	3,116	6,287	31	6,318
Effective tax rate including associates (%)			33.1			33.4

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 income tax expense. Associates' tax included within 'Share of net income from associates' for the year ended 31 December 2009 was $286 million (2008: $606 million). Excluding special items and remeasurements this becomes $235 million (2008: $623 million).

The effective rate of tax before special items and remeasurements including attributable share of associates' tax for the year ended 31 December 2009 was 33.1%. This was broadly in line with the equivalent effective rate of 33.4% for the year ended 31 December 2008. In future periods, it is expected that the effective tax rate, including associates' tax, will remain above the United Kingdom statutory tax rate.

Balance sheet

Equity attributable to equity shareholders of the Company was $26,121 million compared with $20,221 million at 31 December 2008. This increase reflected additional tangible assets of $5,653 million with capital investment, principally in the Group's core commodity assets. Cash at the end of 2009 was $498 million higher than 2008 and included a $316 million benefit of a weak dollar on non-US cash holdings. A weaker dollar, higher commodity prices than at 31 December 2008, as well as a stronger trading performance in later stages of 2009 compared to the prior year, contributed to a $929 million increase to inventories and current receivables.

This was offset by an increase in short, medium and long term borrowings, which were $320 million greater than 2008, reflecting refinancing in 2009 and the impact of a stronger rand on rand denominated debt. Deferred tax liabilities also increased in the year by $637 million. Investments in associates were $300 million lower as a result of De Beers impairing its Canadian assets, a demand driven decline in earnings at Samancor and the disposal of Tongaat Hulett and Hulamin.

Cash flow

Net cash inflows from operating activities were $4,087 million compared with $8,065 million in 2008. EBITDA was $6,930 million, a decrease of 42% from $11,847 million in 2008.

Proceeds from the sale of financial asset investments totalled $2,041 million, including net cash inflows on the sale of the Group's residual interest in the shares of AngloGold Ashanti and proceeds on the sale of preference shares as part of the disposal of the Booysendal joint venture.

Purchases of tangible assets amounted to $4,607 million, a decrease of $539 million. This spend was focused on the four key near term strategic growth projects (Los Bronces, Barro Alto, Minas Rio and Kolomela). The overall reduction reflected the planned reduction on capital investment outside these key projects.

Net cash used in financing activities was $1,605 million, compared to net cash inflows in 2008 of $3,542 million. During the year, the Group used cash to repay $6,624 million of short term borrowings and the payment of $741 million of interest. This was partially offset by the proceeds of four bond issuances completed in the year totalling $5,892 million.

Liquidity and funding

Net debt, excluding hedges, was $10,995 million, a decrease of $48 million from 31 December 2008. Cash and cash equivalents, excluding the impact of exchange, has increased by $259 million. This reflected operating cash flows, the sale of financial asset investments and investments in associates, purchase of tangible assets and movement in financing activities as detailed in the cash flow section.

Net debt at 31 December 2009 comprised $14,317 million of debt, partly offset by $3,319 million of cash and cash equivalents (net of bank overdrafts) and $3 million current financial asset investments. As a result of refinancing activities outlined below, the debt aging profile has changed with 90% of the total debt being due after more than one year, compared with 52% at 31 December 2008. Net debt to total capital⁽¹⁾ at 31 December 2009 was 30.8%, compared with 37.8% at 31 December 2008.

In 2009, Anglo American conducted four major bond transactions raising a total of $5.9 billion, which refinanced the Group's short term debt position. In April, $2 billion was raised in a dual tranche issuance, with $1.25 billion maturing in 2014 and $0.75 billion in 2019. In May, a convertible bond was issued, maturing in 2014, which raised $1.7 billion. In September and December, two separate Eurobonds were issued each raising €750 million ($1.1 billion), maturing in 2013 and 2016 respectively.

At 31 December 2009, Anglo American had undrawn bank facilities of $9.5 billion, cash deposits of $3.3 billion and commercial paper maturing throughout 2010 of $67 million. Anglo American's only significant facilities maturing in 2010 are a £300 million ($500 million) Eurobond which matures in December 2010, as well as the Amapá facilities of $538 million. In addition, the Group has undrawn rand facilities equivalent to $1.9 billion with 364 day maturities, which roll automatically on a daily basis, unless notice is served.

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

⁽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.

Group corporate cost allocation

As a result of the Group announcement on 22 October 2009 to streamline its management structure and remove a layer of global management, certain activities previously performed within the divisions are now to be undertaken at the corporate centre, certain will be undertaken in the new business units and the remainder will no longer be performed. At the same time, it has been decided that the figure presented externally as Group corporate costs will only comprise costs associated with parental or direct shareholder related activities and that costs associated with activities which are value-adding to the business units will be reported within the business units. As a result, a proportion of corporate costs which are believed to be value-adding to the business units will be allocated to each business unit. The Group corporate costs, as included within the notes to the accounts, can be reconciled to the historical basis for presentation as in the table below.

Corporate costs (on a consistent basis with those reported in the 2008 Annual Report) of $272 million (2008: $345 million) were incurred in 2009, a reduction of $73 million. The reduction was due in part to the strengthening dollar but principally result from stringent cost reduction measures across the corporate offices.

Group corporate costs $ million	2009	2008
Corporate costs as previously reported	272	345
Costs previously reported within divisional results	76	102
Corporate costs allocated to business units	(202)	(228)
Corporate costs as reported under new structure	146	219

Dividends

Analysis of dividends US cents per share	2009	2008
Interim dividend	-	44
Recommended final dividend	-	-
Total dividends	-	-

Operations review 2009

In the operations review on the following pages, operating profit includes 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.

COPPER

$ million (unless otherwise stated)	Year ended 31 Dec 2009	Year ended 31 Dec 2008
Operating profit	2,010	1,892
EBITDA	2,254	2,104
Net operating assets	4,763	3,148
Capital expenditure	1,068	808
Share of Group operating profit	41%	19%
Share of Group net operating assets	12%	10%

Copper generated an operating profit of $2,010 million, an increase of 6%, underpinned principally by record production and lower operating costs, as well as the benefit of a marginally higher realised copper price and the weaker Chilean peso. This was partly offset by the impact of a lower molybdenum price.

Markets

Average market price (c/lb)	2009	2008
Copper	234	315

Copper prices rose steadily during the year, reflecting improving global economic conditions, and ended at a high of 333 c/lb. This price increase was driven initially by speculative and investment fund inflows and Chinese stock building, before gaining further ground in the second half as a number of operating incidents and industrial action impacted global supply.

Despite the price increase from 132 c/lb at the end of 2008, the average price for the year was 26% lower than in 2008, although 2% higher on a realised price basis, partially due to the favourable final settlements of sales prices into a rising market.

Operating performance

	2009	2008
Attributable copper production (tonnes)	669,800	639,800

Record total copper production of 669,800 tonnes was achieved in the year, an increase of 5%, driven by annual production records at both Los Bronces and Collahuasi. Los Bronces production was affected in the first half by lower sulphide grades and recoveries, before improved operating efficiencies and ore grades in the second half lifted full year production to a record high. At Collahuasi, despite production having been impacted for 44 days following the failure of a conveyor electrical control centre, attributable production rose by 15% to 235,800 tonnes.

Operating costs benefited from improved operational efficiencies and price reductions achieved for key consumable items such as sulphuric acid, diesel and power. Lower freight costs were offset by higher concentrate treatment and refining charges.

Projects

Construction of the Los Bronces expansion project is progressing according to schedule with its target date for commissioning in late 2011. Engineering design was substantially completed by the end of 2009 and construction work on the various sites is on schedule. A significant milestone, the opening of the Los Bronces section of the conveyor tunnel from the mine through to the grinding plant at Confluencia, was achieved in November 2009. Production at Los Bronces is scheduled to increase to 490 ktpa over the first three years of full production (an average of over 400 ktpa over the first 10 years). At peak production levels, Los Bronces is expected to be the fifth largest producing copper mine in the world, with highly attractive cash operating costs and 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.

Anglo American has also 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%.

At Collahuasi, an expansion project is under way to increase sulphide processing capacity to 150,000 tonnes per day by early 2011, while the significant potential for subsequent phased expansions continues to be evaluated.

At Mantoverde in Chile, pre-feasibility studies are currently under way for a sulphide-ore life extension.

In Peru, good progress was made in the year on a revised feasibility study for the 225 ktpa Quellaveco project. This study is targeted for completion during 2010.

The focus at the Michiquillay project, also in Peru, has been on building relationships with the local communities and, in this respect, land access negotiations were completed in June 2009. The geological exploration programme that began in July had completed 16,000 metres of drilling by the end of the year. Drilling was suspended in late 2009 pending resolution of issues currently under discussion with local communities. Baseline environmental and hydrological studies also commenced during the second half of the year. Conceptual engineering studies have been completed and a decision to award the pre-feasibility engineering studies will be taken during 2010.

Activities at the Pebble project in Alaska advanced on all fronts during 2009. In 2010, the project team will work towards finalising the engineering design, complete the environmental baseline document and carry out additional exploration drilling within the claim area.

Outlook

Increased throughput is not expected to fully compensate for lower ore grades putting pressure on production levels in 2010 prior to the commissioning of the Los Bronces expansion project which, together with targeted throughput improvements at Collahuasi and El Soldado, will deliver a step increase in attributable copper production in 2011. While a continued strong copper price through 2010 would put pressure on the Chilean peso and labour costs, further cost and operating efficiency benefits are expected to be delivered through the Group's global supply chain and asset optimisation initiatives.

Demand for copper from China is expected to continue growing at a healthy rate, while demand in North America and Europe is also showing signs of recovery. On the supply side, production is anticipated to continue to be constrained by industrial action, declining grades, increasing social and environmental demands and other political risks. Notwithstanding Chinese government measures to restrict short term credit and the high level of restocking in 2009 giving rise to potential price volatility in 2010, the strong long term fundamentals for copper remain in place.

NICKEL

$ million (unless otherwise stated)	Year ended 31 Dec 2009	Year ended 31 Dec 2008
Operating profit	2	123
EBITDA	28	150
Net operating assets	1,787	1,401
Capital expenditure	554	530
Share of Group operating profit	0.04%	1%
Share of Group net operating assets	5%	4%

Nickel generated an operating profit of $2 million, strongly impacted by the 30% decrease in average nickel prices for the year and Venezuelan inflation of approximately 25%. Sales volumes of 23,635 tonnes were 32% higher, mainly due to the drawing down of stockpiles at Loma de Níquel and Codemin following the weakening in the nickel market in the fourth quarter of 2008.

Markets

Average market price (c/lb)	2009	2008
Nickel	667	953

Nickel demand increased during the second half of the year, mainly due to higher Chinese stainless steel output and imports, after being negatively affected in the first half by price-led substitution, destocking in the stainless steel sector and weak global economic conditions. The nickel price reached a low of 427 c/lb during March, increased to 956 c/lb in August and ended the year at 838 c/lb.

Operating performance

	2009	2008
Attributable nickel production (tonnes)⁽¹⁾	19,900	20,000

⁽¹⁾Excludes Anglo Platinum nickel production

Nickel production decreased marginally to 19,900 tonnes owing to lower production at Loma de Níquel, partially offset by higher production at Codemin.

Loma de Níquel produced 10,400 tonnes of nickel, a decrease of 5%. Production was impacted in January by the non-renewal of the environmental permit to dispose of slag from the smelting process while studies were finalised to find disposal alternatives, an estimated impact of 1,100 tonnes. In May, a metal run-out from the EF2 furnace resulted in its closure for the rest of the year, with a loss of approximately 4,500 tonnes of production during 2009. Reconstruction of the furnace was completed in January 2010 and full production is expected during the second quarter. While only 50% of smelting capacity was available between June and December, production achieved 59% of budget through optimisation of the remaining plant processes.

Operating costs were kept under tight control despite Venezuelan inflation and the artificially pegged exchange rate. Port congestion difficulties faced in the first half were overcome through the use of an alternative port and shipping route.

At 31 December 2009, Anglo American's interest in the book value of MLdN, including its mineral rights, was $285 million (as included in the Group's balance sheet). In the 12 months to December 2009, MLdN's production and contribution to Group operating profits were respectively 10,400 tonnes of nickel in ferronickel and a $7 million loss. The average price of nickel in 2009 was 667 c/lb. As of 17 February 2010, the price of nickel was 910 c/lb.

Codemin´s production increased 4% to 9,500 tonnes, primarily as a result of improved equipment availability. Cash operating costs were reduced by 11%, aided by higher production and lower fuel oil prices.

Projects

The Barro Alto project in Brazil was nearly 80% complete at the year end and is on schedule towards producing its first metal in early 2011 and full production in the second half of 2012. This project makes use of an existing operation and proven technology and will produce an average 36 ktpa of nickel in full production (41 ktpa over the first five years), with a cost position on the lower half of the curve. Further asset optimisation initiatives are under way which are expected to improve its cost positioning further. When Barro Alto reaches full production in 2012, Anglo American's nickel production (excluding nickel production from Anglo Platinum) will reach 61 ktpa, while additional potentially world class projects in the pipeline could further increase production to 120 ktpa, with further upside potential, leveraging the Group's considerable nickel laterite technical expertise. Barro Alto has an approved life of mine of more than 25 years from its extensive resource base.

The unapproved Jacaré and Morro Sem Bone projects submitted their PAE (Economic Exploitation Plan) to the Brazilian mining authorities during 2009.

Outlook

In 2010, Loma de Níquel's production is expected to substantially increase following the start-up of the rebuilt EF2 furnace and the implementation of various process improvements. Production at Codemin is expected to decrease to approximately 8,400 tonnes (12%) due to its planned furnace relining.

The long term outlook for nickel is for robust growth, underpinned by stainless steel uses for applications where corrosion resistance, hygiene and strength are required, such as in the automotive and construction industries, nickel alloys for the energy and electronic (batteries) sectors and the broader industrialisation of the emerging economies, led by China.

PLATINUM

$ million (unless otherwise stated)	Year ended 31 Dec 2009	Year ended 31 Dec 2008
Operating profit	32	2,169
EBITDA	677	2,675
Net operating assets	12,141	9,045
Capital expenditure	1,150	1,563
Share of Group operating profit	1%	22%
Share of Group net operating assets	31%	27%

Anglo Platinum generated an operating profit of $32 million, a 99% decrease compared with 2008. Key contributory factors included a 38% reduction in the dollar price realised on the basket of metals sold, offset by higher sales volumes and proceeds received from a business interruption insurance claim at Amandelbult.

The average dollar price achieved for platinum was $1,199 per ounce for the year, a 24% decrease compared with $1,570 in 2008. The average prices achieved for palladium and rhodium sales for the year were $257 per ounce (2008: $355) and $1,509 per ounce (2008: $5,174) respectively. The average price achieved on nickel sales for 2009 was $6.54 per pound (2008: $9.79). The overall basket price achieved for the year of $1,715 per platinum ounce sold compared with $2,764 achieved in 2008.

Markets

The unprecedented volatility in platinum demand and price experienced in 2008 was followed by a period of consolidation in 2009. The inherent strength in the structure of the platinum business saw the platinum market return to balance during 2009, as jewellery and investment demand increased, reacting to lower price levels in the first half of the year, and as investor sentiment improved. These increases offset lower demand for use in autocatalysts and from the industrial sector.

Developments in 2009 again highlight the importance of Anglo Platinum's continued commitment to market development which supports the maintenance of existing, and the development of new, industrial (including autocatalyst) applications, and the maintenance of healthy jewellery markets. Market development for by-product metals, most specifically palladium and rhodium, maximise the contribution to the total revenue from the basket of metals sold.

Autocatalysts

Demand for PGMs in the autocatalyst industry declined in 2009 due to lower levels of automobile production. The reduction in metal purchased by auto manufacturers was exacerbated, in the first half of the year, by their need to decrease vehicle inventory levels, therefore restricting production and selling from available stock. Some re-building of these inventories, together with widespread government incentive schemes, saw a firming in PGM demand in the second half of 2009. Incentive schemes resulted in an increase in the sale of smaller gasoline vehicles and a consequent reduction in diesel vehicle demand in Europe.

Industrial

Demand for platinum in the industrial sector reduced in line with the global economic decline in 2009. Low utilisation rates in the chemical and petroleum sectors further reduced demand for new metal as companies reduced inventory levels. Glass demand was negatively affected by excess capacity and a return of metal from decommissioned plants.

Jewellery

As expected, demand for platinum jewellery fabrication responded quickly and strongly to the lower platinum prices in the latter part of 2008 and the first half of 2009. The increased demand was most notable in the unsaturated Chinese market. Total demand for jewellery in 2009 was 70% higher than in 2008.

Investment

Investor inflow into the platinum and palladium Exchange Traded Funds (ETFs) continued strongly throughout the year. Platinum holdings increased by just over 380,000 ounces to 680,000 ounces and palladium by just over 500,000 ounces to 1,170,000 ounces in 2009. The expected launch of the US based ETFs supported firm investment demand towards the end of 2009.

Anglo Platinum makes use of its extensive knowledge of the PGM market to form the basis of its operating strategy, thereby enhancing the company's ability to forecast the market's needs and, consequently, the level of production required to ensure long term market sustainability.

Operating performance

Anglo Platinum achieved a significant milestone in January 2010 when it recorded four consecutive months without a fatal incident at its operations, including the entire fourth quarter of 2009. Anglo Platinum's continued focus on safety resulted in a further 21% improvement in its lost time injury frequency rate to 1.37, from 1.74 in 2008. Despite these improvements, sadly 13 employees lost their lives at Anglo Platinum's managed operations during the year.

The major restructuring of mining operations announced early in 2009 was completed by the end of the year. The two largest operations, Rustenburg and Amandelbult, were split into more efficient stand-alone units, of five and two mines respectively. This new structure ensures a sustainable reduction in the unit cost of production and underpins the commitment to extracting maximum value from the assets. As part of the restructuring process, the source of ounces across the portfolio was optimised, including placing three high-cost shafts onto care and maintenance indefinitely; Siphumelele 3 shaft and Siphumelele 2 Shaft in April and August respectively and Khuseleka 2 Shaft at Khuseleka Mine in August. Union and Mogalakwena remain untouched by these changes.

Production

Refined platinum production for the year was 3% higher at 2.452 million ounces, in line with the company's 2009 target. Equivalent refined platinum production (equivalent ounces are mined ounces expressed as refined ounces) was 2.464 million ounces. Sales of refined platinum for the year were 2.57 million ounces compared with 2.22 million ounces in 2008, an increase of 16%. This increase was due to unsold metal at the end of 2008 being available for sale in 2009 and the achievement of higher refined production volumes.

Costs

Costs were tightly controlled during 2009. The focus on cost management, inbound supply chain projects and asset optimisation initiatives began to bear fruit and resulted in the cash operating cost per equivalent refined platinum ounce remaining flat at R11,236. This was achieved despite upward inflationary pressure caused by wage and electricity tariff increases in excess of consumer price inflation.

Cost increases were curbed through improved productivity and numerous cost management initiatives including:

- Placing the high cost Siphumelele 3 (Bleskop), Siphumelele 2 (Brakspruit) and Khuseleka 2 (Boschfontein) shafts onto "care and maintenance";

- Early renegotiation with suppliers for reduced prices on key input commodities such as diesel, steel tyres and reagents;

- Changing Mogalakwena's mining production levels without sacrificing concentrator throughput;

- Completing the restructuring processes at the Rustenburg and Amandelbult mines; and

- Reducing overhead costs at the corporate and regional offices.

Anglo Platinum reduced its head office and regional office headcount by 724 people in 2009, bringing the total reduction since July 2008 to 1,150. Overall headcount was reduced by 15,752 during the year, and by 18,786 since October 2008. Productivity levels increased 13% compared with 2008, to 6.33m² per total operating employee on average per month.

Projects

Capital expenditure for 2009, excluding capitalised interest, was 26% lower at $1,150 million, of which $708 million was spent on projects and $442 million on stay-in-business capital.

Total expected capital expenditure for 2010 has been reduced to approximately $1 billion, excluding capitalised interest.

The 65,000 ounce per annum Unki platinum project in Zimbabwe is progressing towards the commissioning of its concentrator in the fourth quarter of 2010. The development of the underground declines is 64% complete and the supporting infrastructure is 80% complete.

Outlook

Anglo Platinum expects the platinum market in 2010 to return to a position of deficit as a result of a moderate increase in supply but a significant recovery in demand. South African production is expected to remain constrained as producers adapt to a safer working environment and as lower rand metal prices resulted in production in 2009 being restricted at high-cost operations across the industry.

Vehicle sales in 2010 are expected to be similar to those seen in 2009, though production is likely to increase as fewer sales from stock are expected in 2010. Higher sales of larger sedan vehicles are expected as diesel fleet purchases recover.

While demand for industrial products is expected to recover slowly, platinum demand is expected to be enhanced by a substantial element of restocking.

Another good year is expected from the investment segment, particularly following the launch of the US ETFs.

Jewellery demand is expected to decrease in 2010 in the absence of the extra demand that re-built supply chain inventory levels in 2009. While the higher price may discourage new jewellery demand in mature markets, the Chinese jewellery market continues to react positively to gradual price increases and remains the largest market for platinum jewellery.

The platinum price in 2010 is expected to remain above $1,500 per ounce on average as small improvements in the global economic recovery and restocking are likely to further increase the expected demand recovery in 2010.

Firm investment demand for palladium and the strong reliance by gasoline engines, more typical in smaller engines and in the growing Chinese market, is likely to see the price of the metal strengthen. Rhodium remains in demand for its particular catalytic properties, but suffered a reduction in demand owing to thrifting at the very high prices during 2008.

Given the prevailing market conditions, the company has targeted 2010 production of 2.5 million ounces of refined platinum and to produce this volume at a unit cost marginally above R11,000 per platinum ounce, the same level as in the preceding two years.

IRON ORE AND MANGANESE

$ million (unless otherwise stated)	Year ended 31 Dec 2009	Year ended 31 Dec 2008
Operating profit	1,489	2,554
Kumba Iron Ore	1,487	1,583
Iron Ore Brazil	(141)	(9)
Samancor	143	980
EBITDA	1,593	2,625
Net operating assets	10,370	10,457
Capital expenditure	1,044	783
Share of Group operating profit	30%	25%
Share of Group net operating assets	27%	32%

Iron Ore and Manganese generated an operating profit of $1,489 million, some 42% lower than 2008. This was as a result of lower iron ore prices, partly offset by higher iron ore sales volumes, and lower manganese ore and alloy volumes and prices.

Markets

World crude steel production continued to increase during the second half of 2009 compared with both the first half of 2009 and second half of 2008, with most major steel producing countries posting an increase in output. World crude steel production of 1.2 billion tonnes was, however, markedly lower than the 1.3 billion tonnes produced in 2008. Steel production in China in 2009 increased 13.5% to 568 Mt. China's economic growth continues to be robust on the back of strong domestic focused consumption and infrastructure based stimulus spending. The increase in steel production, coupled with lower Chinese domestic iron ore production, resulted in record seaborne iron ore imports into China. In the second half of 2009, the European, Japanese and South Korean markets saw a tentative recovery, with an improvement in iron ore demand following some production increases and restocking by the steel industry.

The manganese ore and alloy market reflected the decline in world crude steel production. The market was characterised by uncertainty in ore and alloy demand masked by stocking and de-stocking activities and, consequently, prices for ore and alloy declined significantly during the year. Supply cutbacks swept the manganese sector in an effort to match the reduced levels of demand, which were maintained into the third quarter of 2009. Demand began to improve during the second half of the year, when producers responded to the improved order levels by announcing furnace restarts.

Operating performance

Kumba Iron Ore's strong financial performance for the year was underpinned by a solid operational performance. The company reported operating profit of $1,487 million, a decrease of 6%, mainly as a result of lower average export sales prices, mostly offset by higher export sales volumes. Despite lower benchmark iron ore export prices, which decreased on average by 40% for the 2009/10 iron ore year, Kumba maintained a strong operating profit margin of 53%. Total sales volumes increased by 21% from 33.0 Mt to 40.0 Mt. Export sales volumes from Sishen Mine increased by 37% from 24.9 Mt to 34.2 Mt as volumes ramped up from the jig plant (Sishen expansion), the successful introduction of a new blended fines product and an increase in demand from China. Total domestic sales volumes decreased by 28% or 2.3 Mt owing to lower demand from ArcelorMittal SA.

Total production at Sishen Mine increased by 16% from 34.0 Mt to 39.4 Mt, principally as a result of the continued ramp up of the jig plant, which achieved production of 10.4 Mt in 2009 and remains on schedule to achieve approximately 13 Mt during 2010.

The Amapá iron ore system produced 2.7 Mt during the year, compared with 1.2 Mt in 2008 (of which 712,000 tonnes was produced after the Group's acquisition in August 2008). The production rate ramped up during the second half of the year and, in the fourth quarter, monthly average production was 314,000 tonnes.

Amapá was acquired in 2008 as an operating asset as part of the acquisition of the Minas Rio project. During 2009, Amapá has experienced significant operational challenges across its mine, plant and logistics chain, producing 2.7 Mt compared to the design capacity of 6.5 Mtpa. Management's focus has been, and remains, on seeking to markedly improve performance from the existing operations, rather than investing to expand the operation. The Amapá system is currently believed to have capacity to increase production to 5 Mtpa without significant further capital expenditure. Due to the focus on improving operational performance and preserving cash, limited exploration drilling has been undertaken in 2009 and the anticipated growth potential of surrounding license areas remains untested. Given these operational difficulties and delays in increasing production, the Group has recorded an impairment charge of $1.5 billion (after tax and minority interest) against the carrying value of the asset.

Samancor achieved an operating profit of $143 million, a 85% decrease, due to lower manganese ore and alloy sales volumes and prices following the decline in global steel demand.

Projects

The development of the 9 Mtpa Kolomela Mine continues and remains on budget and on schedule to deliver first production during the first half of 2012, ramping up to full capacity in 2013. Mining operations commenced during the year, with the first blast carried out on 17 September 2009. To date, 4 Mt of material has been moved. Since the start of construction activities on the project in 2008, capital expenditure has totalled $367 million, of which $290 million was incurred during 2009.

The pace of construction and project expenditure at Minas Rio is, in large part, dependent upon receiving a number of environmental licences and other permits. A total of 21 licences and permits were granted in the year, key among these were the first part of the Mine and Beneficiation Plant Installation Licence (granted in December), the federal permit for land clearance at the mine and the approvals of specific permits for the port road modifications. The second part of the Installation License is expected to be approved during the early part of 2010. Anglo American continues to work with local, state and federal authorities and landowners to ensure that the timing of licence and permit receipts and land acquisitions does not further impact the overall timing of the project.

Project development on the plant and pipeline in 2009 has been focused on the areas of earthworks and civil works. Filtration plant ground improvement works were commenced. At the port, offshore works have continued with the construction of the main trestle, now 2.5 km in length, and dredging works, while the temporary jetty for breakwater construction is nearing completion. Onshore, the quarry for production of the breakwater rock is operational and the quarry-to-port road modifications and construction are progressing. First iron ore production is scheduled for the second half of 2012, with a planned annual capacity in the first phase of 26.5 Mtpa of iron ore pellet feed. Forecast attributable capital expenditure for the first phase of the project has increased to $3.8 billion, owing to scoping changes at the mine, pipeline and port, as well as foreign exchange movements.

Studies for the expansion of the Minas Rio project continued during 2009. The latest resource statement, resulting from geological work, provides a total resource volume (Measured, Indicated and Inferred) of
5 billion tonnes, with further upside potential supporting the envisaged expansion of the project.

Outlook

Analyst forecasts indicate that global steel consumption should grow in excess of 5% per annum over the next three years, which would lead to increasing iron ore demand. Chinese demand for iron ore is expected to grow by at least 5% during 2010. With recovery beyond China expected during 2010, the supply pressures on seaborne iron ore continue to increase. Overall, the global seaborne iron ore market remains structurally tight.

Kumba expects to further increase production volumes during 2010. Export sales volumes into China are expected to normalise at around 60% of the geographical sales mix. Although global steel demand is expected to return to growth in 2010, this is likely to be moderate and the sustainability of the increase in demand from developed countries remains uncertain. Domestic sales volumes remain dependent upon ArcelorMittal SA's offtake requirements, which declined in 2009.

The market for manganese ore and alloys is dependent upon the carbon steel industry. Improvements in demand and prices will be underpinned by strengthening steel production trends, the rate of furnace restarts and the level of Chinese exports.

METALLURGICAL COAL

$ million (unless otherwise stated)	Year ended 31 Dec 2009	Year ended 31 Dec 2008
Operating profit	451	1,110
EBITDA	706	1,319
Net operating assets	3,407	2,669
Capital expenditure	96	467
Share of Group operating profit	9%	11%
Share of Group net operating assets	9%	8%

Metallurgical Coal delivered an operating profit of $451 million, a 59% decrease, primarily due to lower prices as a result of weaker demand conditions, partially offset by lower mining costs.

Markets

Anglo American weighted average achieved FOB ($/tonne)	2009	2008
Export metallurgical coal	141.04	187.36
Export thermal coal	73.82	83.22
Domestic thermal coal	26.75	20.75

Attributable sales volumes ('000 tonnes)	2009	2008
Export metallurgical coal	11,542	13,147
Export thermal coal	6,239	5,780
Domestic thermal coal	8,604	9,682

Following a year of tight market conditions and record prices in 2008, demand for coal was severely constrained in the first quarter as steelmaker inventories were wound down, particularly impacting the PCI coal market. Benchmark metallurgical coal prices retreated from their c.$300 per tonne peak in 2008 by up to 60%, reducing the average selling price for the year by 22%.

Metallurgical coal markets improved in the second quarter owing to significant buying from China, initially of hard coking coal and subsequently a wider range of metallurgical coals, including PCI, thereby underpinning traditional benchmark prices at levels second only to those seen in 2008. The second half of the year saw a significant increase in demand from traditional customers in Japan, South Korea, India and Europe as steel industry production units ramped up.

Operating performance

Attributable production ('000 tonnes)	2009	2008
Export metallurgical coal	12,623	13,145
Thermal coal	14,052	14,696

Production of metallurgical coal of 12.6 Mt was 4% lower than 2008, in response to weaker demand from steel customers. However, the business was well positioned to weather the volatile market due to its diversified product positioning across all market segments and its strong long term relationships with key customers, enabling market share to be gained during the period. Total attributable coal production was 26.7 Mt, a 4% decrease.

In response to the market downturn in late 2008, Metallurgical Coal acted swiftly to restructure its operations and reduce its cost base while continuing development of key strategic projects. Marginal activities were closed, headcount was reduced by 20%, a new streamlined organisational model was implemented and significant reductions were made in maintenance and supply costs. These initiatives resulted in significantly lower unit costs, by more than $10 per tonne, compared with the cost base in the second half of 2008, and in a 24% productivity increase over 2008.

In recent years, logistics constraints in the rail to port chain have hindered business performance. The co-ordinated three year programme to expand system capacity at Dalrymple Bay Coal Terminal has proceeded well, with the port expansion complete, the track expansion to be completed by March 2010 and the last of the rolling stock to be delivered by mid-2010. This action has improved capacity in the logistics system. Metallurgical Coal continues to manage the port queuing challenges by building flexibility into its logistics planning.

The initiatives taken across the business, including through asset optimisation and a 50% reduction in required stay in business capital, resulted in a more competitive cost position for the business and position it well to capitalise on the more buoyant market conditions expected in 2010.

Projects

Production from the brownfield expansion projects at Dawson, Drayton South and Capcoal (Lake Lindsay) mines will continue to increase over the next two to three years as equipment productivity is raised to benchmark standards.

Significant greenfield projects continue to be studied at Grosvenor, Moranbah South and Dartbrook to meet expectations for growing demand for both metallurgical and thermal coal over the next decade. It is expected that a first stage approval decision in relation to the approval and development of the 4.3 Mtpa Grosvenor metallurgical coal project in Australia will be taken during 2010.

Outlook

The positive trend seen from the steel industry in both China and the traditional markets during the second half of 2009 is expected to continue in 2010, with a return to 2008 steel production levels providing positive momentum for metallurgical coal prices.

THERMAL COAL

$ million (unless otherwise stated)	Year ended 31 Dec 2009	Year ended 31 Dec 2008
Operating profit	721	1,078
South Africa	442	736
South America	305	375
Projects and corporate	(26)	(33)
EBITDA	875	1,200
Net operating assets	1,707	1,018
Capital expenditure	400	365
Share of Group operating profit	15%	11%
Share of Group net operating assets	4%	3%

Thermal Coal generated an operating profit of $721 million, a 33% decrease, predominantly as a result of lower thermal coal prices, mitigated in part by the benefits of tighter cost discipline across the business.

Markets

Anglo American weighted average achieved FOB ($/tonne)	2009	2008
RSA export thermal coal	64.46	84.54
RSA domestic thermal coal	18.48	20.41
South American export thermal coal	72.98	81.33

Attributable sales volumes ('000 tonnes)	2009	2008
RSA export thermal coal	15,857	15,916
RSA domestic thermal coal	6,251	7,046
South American export thermal coal	10,854	11,568

2009 saw considerable price and market trend changes compared with 2008. The average 2009 FOB index price for South African thermal coal exports (API4) was $65 per tonne, compared with $120 per tonne in 2008.

Driven by a suppressed industrial sector, European power demand in 2009 decreased significantly. The softer oil price and an abundance of cheap gas contributed to lower demand for imported coal, resulting in increased stockpiles. In contrast, the Pacific market continued to see growth, with increasing demand for imported thermal coal. As China was able to accommodate large volumes of Indonesian and Australian exports, India turned to South Africa to meet its escalating demand for thermal coal. The proportion of South African coal exports shipped to Asia in 2009 was 41%, compared with 18% in 2008, with 29% going to India. In the absence of European demand, this ability to deploy coal eastwards gave support to both South African export volumes and prices. With the Pacific market driving the API4 price as 2009 progressed, the flow of coal away from the Atlantic became increasingly evident. Colombian and US exports were generally not as competitive in the Asian markets as in the Atlantic market due to comparatively higher freight costs during the year.

Operating performance

Attributable production ('000 tonnes)	2009	2008
RSA thermal coal	22,186	22,287
RSA Eskom coal	36,225	36,158
South American export thermal coal	10,190	10,410

South Africa

Operating profit from South African sourced coal decreased 40% to $442 million, mainly due to the 24% decrease in export prices, coupled with lower sales volumes and rand strength. Domestic sales prices were 2% lower. Despite the economic downturn, annualproduction remained steady at some 59 Mt, driven mainly by higher output at Mafube as it reached full capacity during 2009, offset by lower production at New Denmark, where major geological challenges suspended the longwall operations. A new longwall has been commissioned during the first quarter of 2010 and is ramping up.

South America

Operating profit from Cerrejón decreased by 19% to $305 million, driven primarily by less favourable market conditions as average sale prices decreased by 8% and total sales volumes by 4%. The impact of the $98 million decrease in turnover was partly offset by reduced input costs arising from lower fuel prices and price associated royalties, as well as cost control measures. Although significant improvements in 2009 coal recovery rates continued to reflect positively in all aspects of the operation, saleable production was reduced in response to Cerrejón's perception of a weaker market.

Projects

In South Africa, the $512 million, 6.6 Mtpa Zibulo project (Zondagsfontein) is under construction, including the building of a 50:50 joint venture coal washing plant with BHP Billiton Energy Coal South Africa. The project is on schedule, with first coal produced during the third quarter of 2009 and it will continue to ramp up during the course of 2010, reaching full production in 2012.

In Colombia, the $130 million expansion at Cerrejón to 32 Mtpa was completed and full production was achieved early in 2009. Feasibility studies are under way to expand the operation to around 40 Mtpa.

Outlook

Underlying demand remains relatively strong, supported by economic growth in the Asia-Pacific region, in particular from India and China, the steady increase in the oil price and the cold European and Asian winter. A significant portion of 2010 sales is exposed to market pricing. Potential exists for market prices to increase during the first quarter, with current API4 prices for the latter part of 2010 trending above $80 per tonne, significantly higher than those seen in 2009.

DIAMONDS

$ million (unless otherwise stated)	Year ended 31 Dec 2009	Year ended 31 Dec 2008
Share of associate's operating profit	64	508
EBITDA	215	665
Group's associate investment in De Beers⁽¹⁾	1,353	1,623
Share of Group operating profit	1%	5%

⁽¹⁾Excludes shareholder loans of $367 million and preference shares of $88 million (2008: $118 million and $88 million respectively)

Anglo American's share of operating profit from De Beers decreased by 87% to $64 million.

Diamond Trading Company (DTC) sales totalled $3.23 billion, significantly below the previous year (2008: $5.93 billion), owing to the impact of the global economic downturn. The DTC employed a flexible approach in response to the volatile levels of client demand for rough diamonds during the year. This agility enabled the DTC to continue making sales, albeit at a reduced level, throughout the year and to steadily increase levels of supply as rough demand and market sentiment began to improve during the year.

Markets

In line with most products in the luxury sector, the diamond industry was severely affected in 2009 by the global recession. The impact of high stock levels throughout the diamond pipeline, constricted liquidity in the cutting centres and lower consumer demand led to lower demand for rough diamonds from the DTC Sightholders. The market was hit most acutely in the first quarter and, as the year progressed, industry sentiment improved, which allowed the DTC to increase prices and sales volumes throughout the second half of the year.

At the retail level, the 2009 holiday period took place amidst continued economic weakness, with American consumers continuing to spend less than previous years. The luxury goods and high-end jewellery sector appeared to perform slightly above expectations, outperforming other categories. In the emerging markets of India and China, demand for diamond jewellery remained positive in the face of a weaker economic climate.

In accordance with the strategy to stimulate demand, the Forevermark programme continued to expand in China, Hong Kong, Japan and Macau. The brand is now available in 245 stores across Asia and achieved over $100 million in retail sales in its first 12 months. In the US, De Beers partnered with Sightholders and retailers to roll-out an integrated marketing campaign for the holiday shopping season. The Everlon Diamond Knot Collection was marketed by leading major retailers and over 300 independent outlets in the US. Although sales figures have yet to be released, anecdotal reports from participating retailers and Sightholders described the campaign as being one of the few successes in an otherwise difficult market place.

Operating performance

At the beginning of 2009 and in response to reduced demand from DTC Sightholders, De Beers reduced its production across its portfolio of mines. Through production holidays and extended maintenance shifts, output was significantly reduced in the first quarter, resulting in a 91% reduction in carats produced compared with the same period in 2008. As Sightholder demand increased gradually in the second quarter, which continued throughout the rest of the year, De Beers increased production to 18 million carats in the second half of the year (2008 H2: 24 million carats), an increase of 173% compared with the first half and a reduction of 49% year-on-year. For 2009 as a whole, De Beers produced 24.6 million carats (2008: 48.1 million carats). Production from Debswana totalled 17.7 million carats (2008: 32.3 million carats), Namdeb produced 0.9 million carats from land and sea operations (2008: 2.1 million carats), while the output from South African operations also decreased to 4.8 million carats (2008: 12.0 million carats). The Canadian mines produced 1.1 million carats (2008: 1.6 million carats).

De Beers tackled costs aggressively, achieving a $1.1 billion reduction in operating and capital expenditure, a 45% reduction in production and operating costs and a 23% reduction in its global workforce.

The effects of the strengthening Canadian dollar, the impact of the global economic downturn on pricing and production levels at Snap Lake, have led to a non-cash impairment charge of $595 million (attributable $267 million) against the value of De Beers' Canadian assets and written off $101 million (attributable share $45 million) of deferred tax assets.

Projects

At the end of 2009, Debswana announced a major expansion project at Jwaneng, the world's flagship diamond mine in Botswana. This project, also known as Cut-8, will extend the mine life at Jwaneng until at least 2025. Debswana will invest $500 million in capital expenditure, while the estimated project investment is likely to total $3 billion over the next 15 years. At its peak, the project will create more than 1,000 jobs and will create access to a further 95 million carats, which could be worth in excess of $15 billion over the life of the mine.

Outlook

De Beers will continue to take a cautious approach to production, sales and cost management in 2010, whilst anticipating a steady recovery of the industry.

As the world economy recovers, the global market for polished diamonds has stabilised and is also recovering. De Beers is encouraged by initial stronger levels of demand compared with those it witnessed at the same stage in 2009, and history has shown that demand generally rebounds strongly in post-recessionary periods as manufacturers and retailers look to re-build their inventories. De Beers remains cautious as the global consumer demand for luxury goods is yet to fully recover to pre-crisis levels and will therefore continue to take a prudent approach to production during 2010. While production is planned to increase above 2009 levels, it is not expected to return to historic highs for the foreseeable future. De Beers will continue to focus on cost and capital management, further increasing efficiencies and reducing costs.

China and India are the two priority growth markets for diamonds and are expected to collectively account for one third of global demand by the middle of the decade. De Beers launched the Forevermark programme, a proprietary diamond brand, in both the Chinese and Indian markets to support its partners in driving demand for diamonds. In the US, consumers were particularly hard hit by the economic downturn. However, the fourth quarter Everlon marketing initiative was received well and trends indicate the downturn has bottomed out, with growth over the Christmas season providing encouragement for the world's largest diamond consumer market.

OTHER MINING AND INDUSTRIAL

$ million (unless otherwise stated)	Year ended 31 Dec 2009	Year ended 31 Dec 2008
Operating profit	506	1,082
Tarmac	101	229
Zinc	175	136
Scaw Metals	131	274
Copebrás	(40)	217
Catalão	106	78
Coal Americas	(8)	29
Other	41	119
EBITDA	878	1,513
Net operating assets	5,029	5,231
Capital expenditure	268	603
Share of Group operating profit	10%	11%
Share of Group net operating assets	13%	16%

Tarmac

Tarmac generated an operating profit of $101 million, a 56% decrease, reflecting a $1.5 billion, or 35%, decrease in turnover resulting from both a fall in demand and the weaker sterling exchange rate, mitigated by significant cost reductions. Volumes showed a further significant decline in the year, with overall demand 20% lower, although Tarmac's leading market positions were maintained. Capacity was mothballed and production curtailed to align with falling demand, which resulted in considerable reductions in fixed costs. In addition, improvements in operating efficiency and a programme of overhead reductions were deepened and accelerated, helping to maintain the EBITDA margin at 11%. Total fixed and support costs were reduced by $464 million, or 29%. Despite the substantial decline in turnover, Tarmac generated net cash inflow from operating activities after capital expenditure of $88 million, compared with $97 million in 2008.

2009 saw a deepening of the difficult market conditions faced by the construction industry in the UK. Driven by the wider economic issues, industrial and commercial construction spending decreased significantly. Continental Europe did not suffer as severely as the UK in 2008, but in 2009 saw declines in construction activity comparable with those in the UK.

Significantly lower demand in the housing and commercial sectors resulted in UK volumes declining by 24%, including asphalt volumes, which had shown more resilience in 2008 than other products. On a like-for-like basis, UK operating profits decreased by 71%.

On a like-for-like basis, Tarmac International's underlying operating profits were 52% lower, with worsening market conditions in France, Poland and the Czech Republic offsetting resilience in Germany and cost savings of $9 million.

Total cost savings of $82 million were achieved by Tarmac in 2009, including headcount reductions of more than 1,200 made across Tarmac during the year, representing a reduction of 11%.

Zinc

	2009	2008
Attributable zinc production (tonnes)	350,400	340,500
Attributable lead production (tonnes)	68,300	62,900
Average market price - zinc (c/lb)	75	85
Average market price - lead (c/lb)	78	95

Zinc generated a 29% increase in operating profit to $175 million, despite lower zinc and lead prices during the year, largely as a result of improved production and sales, as well as lower costs.

Production at Skorpion increased by 3% to 150,400 tonnes, a record production year, where nameplate production was exceeded. While electricity constraints, cathode crane failure and cell repairs were again experienced, the combined impact was negated by various asset optimisation initiatives. Tight cost control and record production resulted in mine operating unit costs being 9% lower than 2008.

At Lisheen, zinc production increased by 3% to 171,800 tonnes due to higher grades and tonnage mined, while lead output increased by 21% due to higher grades, improved recoveries and tonnes mined. Asset optimisation initiatives in the mine and mill resulted in a record production year.

At Black Mountain, tonnes milled increased by 7% as a result of increased ore production from the Deeps mine. Zinc production was 1% higher at 28,200 tonnes, while lead production increased by 5% to 49,100 tonnes, with the higher tonnes milled being offset by lower feed grades. Zinc and lead metallurgical recoveries, however, improved by 1% and 3% respectively.

Scaw Metals

Despite the tough operating conditions in the steel industry during the year, Scaw Metals generated an operating profit of $131 million. The 52% decrease in operating profit was due to the difficult economic environment across all operations, with reduced demand in some key markets resulting in downward pressure on prices. The lower steel prices and the impact of high input and consumable costs resulted in pressure on margins. However, the integrated nature of Scaw Metals enabled the rolling mills to continue to supply the downstream businesses with product at a time when most major steel mills were curtailing capacity and running at losses. In addition, the careful management of working capital and capital expenditure resulted in strong cash generation. Total production of steel products was 1,411,000 tonnes, with the South African operations producing 693,000 tonnes and the balance of 718,000 tonnes from the international operations.

Copebrás

Copebrás delivered an operating loss of $40 million, due principally to reduced fertiliser prices, partially offset by a 30% increase in sales volumes to 1.06 Mt following good weather conditions in the second half and depressed fertiliser prices, leading farmers to either restock or increase consumption.

Catalão

Catalão generated an operating profit of $106 million, 36% higher than the previous year, with sales volumes of 5,200 tonnes, a 12% increase, resulting from increased capacity at the tailings operation.

Coal - Americas

Canada - Peace River Coal generated an operating profit of $13 million for the year, having successfully completed its $102 million transition to owner operated mining, resulting in a 16% improvement in mined waste volumes, part of which constituted overburden waste pre-stripping for 2010 and 2011. Metallurgical coal sales increased by 14%, though lower average realised prices, arising from generally weaker market conditions, offset the tonnage increase. Drilling, definitional modelling and environmental approval work were substantially progressed on the Roman Mountain project, which targets the construction of the 4 Mtpa brownfield operation adjacent to the existing Trend Mine.

Venezuela - Carbones del Guasare ("CdG") was subject to further economic uncertainty and delivered an operating loss of $21 million in 2009. Sales and production volumes of 0.7 Mt were sharply lower (30%) than 2008 and significantly below the performance potential of the mine.

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