2010 Preliminary Results

RNS Number : 4707B

Anglo American PLC

18 February 2011

Anglo American announces EBITDA of $12.0 billion and doubles operating profit to $9.8 billion

Financial results driven by strong operational performance and higher prices

· Group operating profit⁽¹⁾ of $9.8 billion ($9.1 billion from core operations⁽²⁾)

· Underlying earnings⁽³⁾ of $5.0 billion and underlying earnings per share of $4.13, a 93% increase

· Profit attributable to equity shareholders of $6.5 billion

· Net debt⁽⁴⁾ reduced to $7.4 billion at 31 December 2010

Operational excellence and strategic delivery

· $3.0 billion ($2.5 billion from core operations) benefit delivered from asset optimisation and procurement programmes, exceeding target of $2 billion⁽⁵⁾ by the end of 2011:

- Asset optimisation: $1.8 billion (from core operations), including one-off benefits

- Procurement: $0.7 billion (from core operations)

· Strong productivity performances:

- Kumba mining productivity up 11%

- Metallurgical Coal export mine productivity up 48% since 2008

· Platinum business transformed - cash operating costs controlled below inflation, labour productivity increased by 23% since 2008 and production target exceeded at 2.6 million ounces

· $3.3 billion of announced proceeds⁽⁶⁾ from divestments of non-core businesses, including:

- $1.3 billion from sale of zinc business

- $0.9 billion from sale of Moly-Cop and AltaSteel

· Tarmac and Lafarge to combine UK businesses to create a leading UK construction materials company

Near-term volume growth of 50%⁽⁷⁾ by 2015 driven by several major projects

· Barro Alto 36 ktpa nickel project - first production in March 2011, on schedule

· Los Bronces 200 ktpa copper expansion on schedule for first production in Q4 2011

· Kolomela 9 Mtpa iron ore project 81% complete, on schedule for first production by end Q2 2012

· Minas-Rio 26.5 Mtpa iron ore project - significant progress made, with major licences awarded and long-term port tariff agreement secured

$70 billion project pipeline with potential to double production⁽⁷⁾over next decade

· Two major new projects to be approved: Quellaveco (225 ktpa copper) and
Grosvenor (4.3 Mtpa metallurgical coal)

· Expect to approve $16 billion of projects over next 3 years

Safety performance

· Number of fatalities reduced by 68% since early 2007

· Lost time injury rates reduced by 51% since early 2007

· Drive for zero harm stepped up

Dividend

· Final dividend of $0.40 per share, bringing total dividends for the year to $0.65 per share

HIGHLIGHTS US$ million, unless otherwise stated	Year ended 31 Dec 2010	Year ended 31 Dec 2009	Change
Group revenue including associates⁽⁸⁾	32,929	24,637	34%
Operating profit including associates before special items and remeasurements - core operations⁽¹⁾⁽²⁾	9,102	4,451	104%
Operating profit including associates before special items and remeasurements⁽¹⁾	9,763	4,957	97%
Underlying earnings⁽³⁾	4,976	2,569	94%
EBITDA⁽⁹⁾	11,983	6,930	73%
Net cash inflows from operating activities	7,727	4,087	89%
Profit before tax⁽¹⁰⁾	10,928	4,029	171%
Profit for the financial year attributable to equity shareholders⁽¹⁰⁾	6,544	2,425	170%

Earnings per share (US$):
Basic earnings per share ⁽¹⁰⁾	5.43	2.02	169%
Underlying earnings per share⁽³⁾	4.13	2.14	93%

⁽¹⁾Operating profit includes attributable share of associates' operating profit (before attributable share of associates' interest, tax and non-controlling 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 5 to the Condensed financial statements.

⁽²⁾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 11 in the Financial review of Group results section for a reconciliation of operating profit from core operations to Group operating profit.

⁽³⁾ See note 10 to the Condensed financial statements for basis of calculation of underlying earnings.

⁽⁴⁾ Net debt includes related hedges and net debt in disposals groups. In 2010 net debt has been updated to include related hedges, being derivative instruments that provide an economic hedge of assets and liabilities included in net debt. The comparative has been adjusted accordingly. See note 13 to the Condensed financial statements.

⁽⁵⁾ $1bn of sustainable AO benefits from core businesses and $1bn of procurement benefits from core businesses.

⁽⁶⁾ Consideration on a debt and cash free basis, as announced.

⁽⁷⁾ 2009 production base line for production growth information.

⁽⁸⁾ Includes the Group's attributable share of associates' revenue of $4,969 million (2009: $3,779 million). See note 3 to the Condensed financial statements.

⁽⁹⁾ Earnings before interest, tax, depreciation and amortisation (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 6 to the Condensed financial statements.

⁽¹⁰⁾ Stated after special items and remeasurements.

Cynthia Carroll, Chief Executive, said, "Anglo American performed strongly in 2010, both operationally and financially, and we have continued to deliver on our clear strategic objectives. In addition to benefiting from higher commodity prices, our focused commodity businesses are driving superior operating performances, through major productivity improvements, disciplined cost management and the benefits of our asset optimisation and global supply chain programmes. We completed a number of sales of non-core businesses during 2010 and into 2011 and our divestment programme is now well advanced. Anglo American's EBITDA of $12.0 billion, operating profit of $9.8 billion and underlying earnings of $5.0 billion, reflects delivery on all fronts.

We have exceeded all expectations by achieving asset optimisation and procurement benefits of $2.5 billion during 2010 from our core businesses alone, including one-off benefits, well ahead of our 2011 target of $2 billion for sustainable projects. The productivity benefits that we have achieved have also enabled us to leverage the benefits of higher commodity prices. I expect the value we unlock from asset optimisation in particular to increase further as we embed these best in class practices and continue to improve our operational performance.

We have transformed our Platinum business, moving it down the cost curve, with 23% productivity gains and cash operating costs controlled below inflation, and further safety improvements, while exceeding our refined platinum production target of 2.5 million ounces. Our Kumba Iron Ore, Metallurgical Coal and Nickel businesses also delivered productivity gains, while the benefits of the restructuring of De Beers are clear to see, with the business reaping the rewards of the much improved environment for diamonds.

Our near term production growth of 50% by 2015 is exceptionally strong, with four major projects making excellent progress, enabling us to start up a new mining operation every six to nine months over the next few years. The first such project, our 36,000 tonnes per year Barro Alto nickel project will begin production on schedule in March, more than doubling our Nickel business' production when it reaches full capacity. In the fourth quarter of this year, the 200,000 tonnes per year expansion of our Los Bronces copper operation will begin production on schedule and will have highly attractive cash operating costs. Looking to the end of the second quarter of next year, 2012, the 9 million tonnes per year Kolomela iron ore project in South Africa will begin production with a very competitive cost position.

We have made substantial progress with our 26.5 million tonnes per year Minas-Rio iron ore project in Brazil, securing a number of key approvals, including the mining permit and the second part of the installation licence for the mine, beneficiation plant and tailings dam. These approvals support a March 2011 start date for the civil works for the beneficiation plant and tailings dam construction and it should then take between 27 and 30 months to construct and commission the mine and plant, complete the project and deliver the first ore on ship. We have also now secured an extremely competitive cost position for the project by reaching agreement with our partner at the Açu port on a fixed 25-year iron ore port tariff that gives us a clear, first quartile FOB cost position for Minas-Rio. Our optionality for port expansion and the priority rights we have for our iron ore shipments, make this port facility a key strategic asset for Anglo American in Brazil.

Anglo American has a truly world class resource base beyond our near and medium term projects, with the potential to double production over the next decade through our $70 billion pipeline of more than 60 projects. In the next three years alone, we expect to approve $16 billion of projects.

We have completed divestments of our non-core businesses with announced proceeds of $3.3 billion to date, including our zinc portfolio, Moly-Cop and AltaSteel, five undeveloped coal assets in Australia and a number of Tarmac's European businesses. Today we have also announced the creation of a leading UK construction materials company by combining the highly complementary businesses of Tarmac and Lafarge in the UK. We have received strong interest in the remaining businesses and will sell those outstanding in a manner and on a timetable that maximises value.

We continue to focus on our safety performance across the board and recorded further improvement during the year, with fatalities and lost time injury rates both continuing to reduce. Regrettably, however, 14 people lost their lives while on company business during the year, a clear reminder that we have further work to do to achieve zero harm. We have, though, made substantial progress - our Nickel, Thermal Coal, Copper, Iron Ore Brazil and Exploration teams achieved a fatality-free year in 2010 and we have achieved a 68% reduction in the number of fatalities in safety since early 2007.

In terms of the outlook, while there remain a number of uncertainties in the immediate term, not least in the developed economies, our medium to long term view of demand growth for our commodities remains positive, driven by the resource intensive nature of economic growth in emerging markets."

Review of 2010

Financial results

Anglo American's underlying earnings were $5.0 billion, up from $2.6 billion in 2009, with operating profit of $9.8 billion, almost double the level of $5.0 billion in 2009. This increase in operating profit was mainly driven by the Kumba Iron Ore, Copper and Platinum business units, which benefited from strong market prices, partially offset by the strengthening South African rand and Australian dollar currencies. There was an increase in realised prices across all commodities with platinum and nickel prices increasing by 34% and 48% respectively from 2009.

Copper delivered an operating profit of $2,817 million, 40% higher than 2009 as a result of record copper prices and higher molybdenum revenues due to increased prices and sales.

Nickel reported an operating profit of $96 million, $94 million higher than 2009 as a result of higher nickel prices.

Platinum generated an operating profit of $837 million, a significant increase due to higher metal prices and successful cost control programmes; this was partly offset by a stronger rand and lower sales volumes.

Iron Ore and Manganese generated an operating profit of $3,681 million, 147% higher than 2009. Within this commodity group, Kumba Iron Ore had a strong performance with operating profit of $3,396 million, 128% higher.

Metallurgical Coal delivered an operating profit of $783 million, a 74% increase on 2009, primarily due to higher average benchmark coking coal prices and record increased production of high-margin export products. The business had record export sales, with metallurgical coal production increasing by 16%. This offset the impact of the strong Australian dollar and adverse weather conditions, which had a significant impact on production.

Thermal Coal's operating profit of $710 million was 2% lower than 2009, as a result of the stronger rand. This was partially mitigated by a strong recovery in thermal coal prices.

Diamonds recorded an operating profit of $495 million, 673% higher than 2009, due to a strong recovery in the demand for rough diamonds in 2010. Sales of rough diamonds by The Diamond Trading Company (DTC) were up 57% compared with sales in 2009.

Other Mining and Industrial generated anoperating profit of $661 million, 31% higher than 2009, due to strong performances from the Zinc, Scaw Metals and Copebrás businesses. This was partially offset by lower profits from Tarmac and Catalão.

Production

Platinum recorded an increase of 5% to 2.57 million ounces of refined platinum, exceeding their target of 2.5 million ounces. Copper production decreased from the record high in 2009 due to, expected lower throughput and grades at Los Bronces, the impact of strikes and lower grades which was partly offset by improved concentrator throughput at Collahuasi, and the absence of third party purchases at Mantos Blancos. Nickel achieved a 2% increase in production due to a 13% increase from Loma de Níquel despite electricity rationing imposed by the Venezuelan government; nickel production at Codemin was impacted by planned furnace relining and lower grades. Iron ore production from Kumba Iron Ore's Sishen Mine increased by 5% to 41.3 Mt as the jig plant exceeded name plate production capacity through improved quality of plant feed material and more efficient shutdown intervals. Metallurgical Coal delivered record production, with a 16% increase of its high quality metallurgical coal to 14.7 million tonnes, driven by a strong supply response from the Capcoal and Moranbah North complexes, despite the negative impact of Cyclone Ului in the first quarter and record rainfall in the second half of the year in Queensland. Production in Diamonds increased in response to a strong recovery in demand for rough diamonds during 2010. Production at Thermal Coal was flat, driven mainly by higher output at Mafube, and the continuing ramp-up at Zibulo, offsetting the impact of challenging geological conditions predominantly at the Goedehoop complex.

Capital structure

Net debt, including related hedges, of $7,384 million was $3,896 million lower than at 31 December 2009, and $3,546 million lower than at 30 June 2010. Cash inflows from operating activities of $7,727 million and the proceeds from disposals of $2,795 million, funded capital investment (including related hedges) of $4,994 million, principally in the Group's core assets, including combined investment of $2,299 million in the Los Bronces, Barro Alto, Minas-Rio and Kolomela (previously Sishen South) projects. The Group also contributed $450 million towards De Beers' $1 billion rights issue in March 2010, paid a $302 million dividend to company shareholders and $617 million dividends to non-controlling interests.

Special items and remeasurements

The Group recognised a number of one off operating special charges, amounting to $253 million, including associates. These included impairment and related charges of $122 million, chiefly attributable to accelerated depreciation at Loma de Níquel, due to uncertainty over the renewal and restoration of certain concessions. In addition, restructuring costs of $131 million arose in 2010, principally in the Other Mining and Industrial segment given the ongoing divestments programme.

Dividends

Anglo American's dividend policy will provide a base dividend that will be maintained or increased through the cycle. A final dividend of 40 US cents per share has been declared, thereby establishing Anglo American's new base annual dividend per share at 65 US cents, subject to shareholder approval at the Annual General Meeting to be held on 21 April 2011. Taking into account the Group's substantial investment programme for future growth, future earnings potential and the continuing need for a robust balance sheet, any surplus cash will be returned to shareholders.

Delivering value through operational excellence

Anglo American has continued to deliver significant value from its global scale and organisational structure, striving for best in class operating efficiencies across all its operations. Two specific and Group-wide initiatives, namely the asset optimisation and global procurement programmes, are well advanced and continue to deliver ahead of expectations, in terms of both timing and quantum of value. These two programmes were targeted to deliver $2 billion in benefits by 2011, from Anglo American's core businesses alone.

In 2010, $2.5 billion of benefits were delivered from the core businesses ($3.0 billion from the total Group) representing the additional operating profit and capital expenditure savings realised in the year over and above the performance expected had the programmes not been initiated. These benefits are valued employing 2010 commodity prices and exchange rates. Of the $2.5 billion, asset optimisation contributed $1.8 billion of value (including one-off benefits of $279 million), well in excess of the 2011 target for sustainable benefits of $1 billion. Global procurement contributed $713 million of benefits, of which $466 million related to operating profit benefits and $247 million for capital spend benefits.

This strong performance is driven by increased volumes realised from the portfolio of projects and increased cost savings, with benefits from prior period initiatives being enhanced by higher market prices in 2010, partially offset by regional currency strengths. The resulting year on year operating profit benefit for core businesses (at constant 2009 commodity prices and exchange rates) equates to a $170 million uplift in volumes and cash cost savings of $159 million.

Significant growth through project delivery

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 these commodities, with the benefits of scale, expansion potential and cost position. Anglo American's project management systems and processes have been further enhanced to ensure closer collaboration between the Group's technical and project teams, thereby creating improved oversight of project execution and future capital allocation.

The Group's pipeline of projects spans its core commodities and is expected to deliver organic production growth of 50% by 2015. Beyond the near term, Anglo American has a world class pipeline of projects across its selected commodities and is progressing towards approval decisions in relation to 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. Submission to the Board for approval is expected for the Quellaveco project during 2011 and for the Grosvenor project in the second quarter of 2012. Together with a number of other medium and longer term projects, Anglo American has the potential to double production over the next decade through its $70 billion pipeline of more than 60 projects.

Anglo American's four largest near term strategic growth projects are all well placed on their respective industry cost curves, have long resource lives and are entering production from early 2011 onwards, in what is expected to be a period of sustained long term demand growth.

Barro Alto

The Barro Alto nickel project in Brazil was 99% complete at the year end and is on schedule to deliver first production in March 2011. This project makes use of a proven technology and will produce an average of 36 ktpa of nickel in full production (41 ktpa over the first five years), doubling production from Anglo American's Nickel business, with a competitive cost position in the lower half of the cost curve.

Los Bronces

The Los Bronces copper expansion project in Chile is on schedule for first production in the fourth quarter of 2011. Production at Los Bronces is scheduled to increase by 278 ktpa to 490 ktpa over the first three years of full production following project completion and to average 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, reserves and resources that support a mine life of over 30 years and with further expansion potential. Also within the Los Bronces district, work continues on the construction of the exploration tunnel to provide underground drilling access to explore and define the resources at the very significant and high quality new discovery at Los Sulfatos.

Kolomela

Kumba Iron Ore's Kolomela project in South Africa is well advanced and overall project progress reached 81% by 31 December 2010. The project is on schedule to deliver initial production at the end of the first half of 2012, ramping up to full capacity in 2013. Kolomela is situated 80 km 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 seaborne iron ore, with further potential for expansion.

Minas-Rio

The Minas-Rio iron ore project in Brazil has made significant progress and is expected to produce 26.5 Mtpa of iron ore in its first phase. The award of the second part of the mine, beneficiation plant and tailings dam installation licence (LI part 2) in December 2010, being the final primary installation licence, supports the start of the civil works for the beneficiation plant and tailings dam construction in March 2011, after the rainy season. This licence followed the award of the mining permit in August 2010. As previously stated, it should take between 27 and 30 months from commencement of these works to construct and commission the mine and plant, complete the project and deliver the first ore on ship; however, there are still a number of other licences and permits to be obtained during this period.

Anglo American also reached agreement on a fixed 25-year iron ore port tariff with its port partner, LLX SA, in relation to the LLX Minas-Rio (LLX MR) iron ore port facility at Açu. The iron ore volumes associated with the first phase of the project will be subject to a net port tariff of approximately $5.15 per tonne (in 2013 terms) after taking into account Anglo American's shareholding in LLX MR ($7.10 per tonne gross). As part of the agreement to secure the long term tariff arrangements, Anglo American has agreed to fund a greater share of the development cost of the first phase of the port. This agreement is expected to result in additional capital expenditure attributable to Anglo American of approximately $525 million in relation to the port.

Studies for the expansion of the Minas-Rio project have continued during 2010 and the latest resource statement provides a total resource (measured, indicated and inferred) of 5.3 billion tonnes, supporting the expansion of the project. In addition, the port agreement noted above also covers a long-term tariff arrangement for all Anglo American's iron ore volumes beyond the first phase of the Minas-Rio project. The level of the expansion tariff will be dependent upon the capital cost to expand the port to accommodate those additional volumes and that capital cost will be determined in due course.

Divestment portfolio update

Anglo American's programme to divest of its non-core businesses is well advanced. During 2010, Anglo American announced the sale of a number of businesses for a total consideration of $3.3 billion on a debt and cash free basis.

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, and French and Belgian concrete products businesses, for a combined consideration of $483 million. These were all completed in 2010.

In May 2010, Anglo American announced the sale of its portfolio of zinc assets to Vedanta Resources plc (Vedanta) for $1,338 million on an attributable, debt and cash free basis. Of the total consideration⁽¹⁾, $698 million related to the Skorpion mine, $308 million related to the Lisheen mine and $332 million related to Anglo American's 74% interest in Black Mountain Mining (Proprietary) Limited (which holds 100% of the Black Mountain mine and the Gamsberg project). The sale of Skorpion completed on 3 December 2010, the sale of Black Mountain Mining (Proprietary) Limited completed on 4 February 2011, and the sale of Lisheen mine in Irelandcompleted on 15 February 2011.

In July 2010, Anglo American announced that it had entered into an agreement with a consortium to sell its interests in five undeveloped coal assets in Australia for a total consideration of approximately $577 million. The transaction completed in December 2010.

In November 2010, the sale of Moly-Cop and AltaSteel to OneSteel was announced for a total consideration of $932 million. The transaction completed on 31 December 2010.

The preparatory work to separate the remaining 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 - Copebrás, Peace River Coal and Scaw Metals.

Anglo American has conducted a drilling programme at its Catalão ferroniobium business in Brazil which has delineated additional niobium resources. In conjunction with the application of improved processing technology, this may result in the significant extension of Catalão's life of mine and production capacity, which would enable Anglo American to take advantage of the attractive dynamics of, and long term demand outlook for, the niobium market. Anglo American has therefore decided to retain the business in its portfolio and is progressing a feasibility study for Catalão.

On 18 February 2011, Anglo American and Lafarge announced their agreement to combine their cement, aggregates, ready-mixed concrete, asphalt and contracting businesses in the United Kingdom, Tarmac Limited and Lafarge Cement UK, Lafarge Aggregates and Concrete UK. The 50:50 joint venture will create a leading UK construction materials company, with a portfolio of high quality assets drawing on the complementary geographical distribution of operations and assets, the skills of two experienced management teams and a portfolio of well-known and innovative brands.

Outlook

The outlook for demand growth for Anglo American's commodities remains extremely positive. Such demand will be driven by the resource intensive nature of robust economic growth in the emerging markets, led by China and India and many countries across Asia, Latin America and Africa. While there remain a number of short term uncertainties, indicators suggest continued recovery in the developed economies and a continuation of the changing structure of the world's economy through urbanisation and the trending convergence of living standards.

⁽¹⁾The agreed consideration was based on profits and cash flows for the zinc businesses being for the benefit of the purchaser from 1 January 2010, subject to completion.

Selected major projects

Completed in 2010
Sector	Project	Country	Completion date	Capex $m⁽¹⁾	Production volume⁽²⁾
Platinum	MC Plant Capacity Expansion - phase 1	South Africa	Q2 2010	95	11 ktpa Waterval Converter matte (WCM)
	Mainstream inert grind projects	South Africa	Q3 2010	149	Improve process recoveries

Approved
Sector	Project	Country	First production date	Full production date	Capex $m⁽¹⁾	Production volume⁽²⁾
Platinum	Thembelani No. 2 Shaft	South Africa	2008	2018	316	Replace 115 kozpa refined platinum⁽³⁾
	Mogalakwena North	South Africa	2007	2010	822	350-400 kozpa refined platinum
	Twickenham	South Africa	2015	2019	911	180 kozpa refined platinum
	Unki Mine	Zimbabwe	2010	2013	459	70 kozpa refined platinum
	Khuseleka Ore Replacement	South Africa	2007	2015	187	Replace 101 kozpa refined platinum
	Base metals refinery expansion	South Africa	2011	2013	360	11 ktpa Nickel
	Dishaba East Upper UG2	South Africa	2007	2012	219	100 kozpa refined platinum
Diamonds	Jwaneng - Cut 8	Botswana	2010	2024	3,000⁽⁴⁾	100 million carats
Copper⁽⁵⁾	Los Bronces⁽⁶⁾ expansion	Chile	2011	2012	2,500	200 ktpa copper⁽⁷⁾
	Collahuasi Phase 1	Chile	2011	2011	92	19 ktpa copper
Nickel	Barro Alto	Brazil	2011	2012	1,900	36 ktpa nickel
Iron Ore and Manganese	Minas-Rio phase 1	Brazil	2013	2014	5,034	26.5 Mtpa iron ore pellet feed (wet basis)⁽⁸⁾
	Kolomela (previously Sishen South)	South Africa	2012	2013	1,062	9.0 Mtpa iron ore
Thermal Coal	Zibulo (previously Zondagsfontein)	South Africa	2009	2012	517	6.6 Mtpa thermal

See the following page for footnotes.

Future unapproved
Sector	Project	Country	First production date	Full production date	Production volume⁽²⁾
Platinum	Tumela No 4 Shaft	South Africa	2020	2026	271 kozpa refined platinum
Copper⁽⁵⁾	Quellaveco	Peru	2015	2016	225 ktpa copper
	Collahuasi expansion Phase 2	Chile	2012	2012	20 ktpa copper⁽⁹⁾
	Michiquillay	Peru	2018	2019	155 ktpa copper⁽¹⁰⁾
	Pebble	US	TBD	TBD	175 ktpa copper
Nickel	Jacaré phase 1	Brazil	TBD	TBD	34 ktpa nickel
	Morro Sem Boné	Brazil	TBD	TBD	32 ktpa nickel
Iron Ore and Manganese	Sishen Expansion Project phase 1B	South Africa	2011	2012	0.7 Mtpa iron ore
	Sishen Expansion Project 2	South Africa	2015	2019	10.0 Mtpa iron ore
	Sishen Concentrate	South Africa	2015	2016	2.0 Mtpa iron ore
	Minas-Rio expansion	Brazil	TBD	TBD	TBD
Metallurgical Coal	Grosvenor	Australia	2013	2016	4.3 Mtpa metallurgical
	Drayton South	Australia	2015	2017	4.2 Mtpa thermal
	Moranbah South	Australia	2016	2019	TBD
Thermal Coal	Elders Project	South Africa	2016	2020	12.8 Mtpa thermal
	New Largo	South Africa	2013	2016	15 Mtpa thermal
	Cerrejón P500 P1	Colombia	2013	2015	8 Mtpa thermal
	Cerrejón P500 P2	Colombia	TBD	TBD	10-20 Mtpa thermal

⁽¹⁾ Capital expenditure shown on 100% basis in nominal terms and reflects approved capital expenditure.

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

⁽³⁾ Thembalani 2 Shaft is currently under review.

⁽⁴⁾Debswana will invest $500 million in capital expenditure. Project investment, including capital expenditure, is likely to total $3 billion over the next 15 years. Total carats exposed are over the life of the expansion.

⁽⁵⁾ 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.

⁽⁶⁾The February 2010 earthquake in Chile impacted the rate of progress and ultimate capital cost of the Los Bronces expansion project. Remedial actions have ensured the project remains on schedule for first production in Q4 2011. The cost impact remains under review.

⁽⁷⁾ Production represents average over first 10 years of the project. Production over the first three years of the project will average 278 ktpa.

⁽⁸⁾ Capital expenditure, post acquisition of Anglo American's shareholding in Minas-Rio, includes 100% of the mine and pipeline, and an attributable share of the port, as modified by the agreement with LLX SA and LLX Minas-Rio.

⁽⁹⁾ Further phased expansions have the potential to increase production to 1 Mtpa.

⁽¹⁰⁾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 Mulholland, Investor Relations

Tel: +27 (0)11 373 6683

Kgapu Mphahlele, Investor Relations

Tel: +27 (0)11 373 6239

Anglo American plc is one of the world's largest mining companies, is headquartered in the UK and listed on the London and Johannesburg stock exchanges. Anglo American's portfolio of mining businesses spans precious metals and minerals - in which it is a global leader in both platinum and diamonds; base metals - copper and nickel; and bulk commodities - iron ore, metallurgical coal and thermal coal. Anglo American is committed to the highest standards of safety and responsibility across all its businesses and geographies and to making a sustainable difference in the development of the communities around its operations. The company's mining operations and extensive pipeline of growth projects are located in southern Africa, South America, Australia, North America and Asia. www.angloamerican.com

Webcast of presentation:

A live webcast of the results presentation, starting at 9.00am UK time on 18 February, can be accessed through the Anglo American website at www.angloamerican.com.

Note: Throughout this results announcement, '$' denotes United States dollars and 'cents' refers to United States cents; 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 5 to the Condensed financial statements. Underlying earnings, unless otherwise stated, is calculated as set out in note 10 to the Condensed financial statements. Earnings before interest, tax, depreciation and amortisation (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 6 to the Condensed financial statements and to 'Cash flows from operations' in note 6. 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, though these may not necessarily correspond to the views held by Anglo American.

Financial review of Group results

Group operating profit was $9,763 million, with operating profit from core operations of $9,102 million, 104% higher than 2009. This increase in operating profit was driven by the Kumba Iron Ore, Copper and Platinum business units, which benefited from strong market prices, partially offset by the strengthening South African rand and Australian dollar currencies. There was an increase in realised prices across all export commodities, with a 34% increase in platinum, a 92% increase in export iron ore, a 32% increase in copper, a 25% increase in export metallurgical coal, a 48% increase in nickel and a 28% increase in export thermal coal.

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. The table below reconciles operating profit from core operations to total Group operating profit.

Operating profit $ million	Year ended 31 Dec 2010	Year ended 31 Dec 2009
Platinum	837	32
Diamonds	495	64
Copper	2,817	2,010
Nickel	96	2
Iron Ore and Manganese	3,681	1,489
Metallurgical Coal	783	451
Thermal Coal	710	721
Exploration	(136)	(172)
Corporate Activities and Unallocated costs	(181)	(146)
Operating profit including associates before special items and remeasurements - core operations	9,102	4,451
Other Mining and Industrial	661	506
Operating profit including associates before special items and remeasurements	9,763	4,957
Underlying earnings - core operations⁽¹⁾	4,454	2,166

⁽¹⁾See note 4 to the Condensed financial statements

Copper operating profit was 40% higher than 2009, with a 32% increase in the realised price of copper, partially offset by an 8% decrease in sales volumes owing to lower production and shipping constraints as a result of the failure of a shiploader in Patache port in December. Nickel recorded a significant increase in its operating profit driven by improved nickel prices. Platinum operating profit was driven by higher metal prices and cost control programmes, partly offset by a stronger rand and lower sales volumes. Kumba Iron Ore's operating profit was 128% higher than 2009, driven by a 6% increase in export sales volumes and a 92% increase in realised prices. Samancor's strong performance was driven by higher manganese ore and alloy prices resulting from increases in world steel production and demand. Despite weather impacts in 2010 and a stronger Australian dollar, Metallurgical Coal increased its operating profit by 74% from 2009 due to higher average realised coking coal prices and record production of high-margin export products. Thermal Coal operating profit decreased by 2% due to the stronger rand, partly offset by a strong recovery in export thermal coal prices. De Beers Diamond Trading Company (DTC) revenue increased by 57% compared with 2009 in response to increased demand for rough diamonds during 2010, primarily driven by increased consumer demand in India and China.

Other Mining and Industrial's operating profit increased in the Zinc, Scaw Metals and Copebrás businesses, owing to higher metal and soft commodity prices and tightly controlled costs. This was partially offset by lower profits from Tarmac due to difficult trading conditions in the UK and the sale of the majority of Tarmac's European businesses during 2010. Lower operating profits at Catalão were due to lower niobium grades and overall recoveries.

Group underlying earnings were $4,976 million, 94% higher than 2009, which reflects the operational results above. Net finance costs, before remeasurements, of $244 million were $29 million lower than 2009. The effective tax rate, before special items and remeasurements and including attributable share of associates' tax, reduced in the year from 33.1% to 31.9%.

Group underlying earnings per share were $4.13 compared with $2.14 in 2009, a 93% increase.

Underlying earnings $ million	Year ended 31 Dec 2010	Year ended 31 Dec 2009
Profit for the financial year attributable to equity shareholders of the Company	6,544	2,425
Operating special items including associates	253	2,574
Operating remeasurements including associates	(382)	(734)
Net profit on disposals including associates	(1,598)	(1,632)
Financing special items including associates	13	7
Financing remeasurements including associates	(106)	128
Special items and remeasurements tax including associates	112	(137)
Non-controlling interests on special items and remeasurements including associates	140	(62)
Underlying earnings	4,976	2,569
Underlying earnings per share ($)	4.13	2.14

The Group's results are influenced by a variety of currencies owing to its geographic diversity. In 2010, there was a negative exchange variance in underlying earnings of $687 million. The Group results suffered from the stronger Australian dollar and South African rand. The Australian dollar and the South African rand strengthened by 16% and 15% respectively in 2010 compared with 2009. There was a positive impact on underlying earnings from a significant increase in prices amounting to $3,260 million, reflecting higher prices across all commodities.

Summary income statement $ million	Year ended 31 Dec 2010	Year ended 31 Dec 2009
Operating profit before special items and remeasurements	8,508	4,377
Operating special items	(228)	(2,275)
Operating remeasurements	386	638
Operating profit from subsidiaries and joint ventures	8,666	2,740
Net profit on disposals	1,579	1,612
Share of net income from associates (see reconciliation below)	822	84
Total profit from operations and associates	11,067	4,436
Net finance costs before remeasurements	(244)	(273)
Financing remeasurements	105	(134)
Profit before tax	10,928	4,029
Income tax expense	(2,809)	(1,117)
Profit for the financial year	8,119	2,912
Non-controlling interests	(1,575)	(487)
Profit for the financial year attributable to equity shareholders	6,544	2,425
Basic earnings per share ($)	5.43	2.02
Group operating profit including associates before special items and remeasurements⁽¹⁾	9,763	4,957
Operating profit from associates before special items and remeasurements	1,255	580
Operating special items and remeasurements	(29)	(203)
Net profit on disposals	19	20
Net finance costs (before special items and remeasurements)	(88)	(28)
Financing special items	(13)	(7)
Financing remeasurements	1	6
Income tax expense (after special items and remeasurements)	(315)	(286)
Non-controlling interests (after special items and remeasurements)	(8)	2
Share of net income from associates	822	84

⁽¹⁾Operating profit before special items and remeasurements from subsidiaries and joint ventures was $8,508 million (2009: $4,377 million) and attributable share from associates was $1,255 million (2009: $580 million). For special items and remeasurements see note 5 to the Condensed financial statements.

Special items and remeasurements

	Year ended 31 Dec 2010			Year ended 31 Dec 2009
$ million	Subsidiaries and joint ventures	Associates	Total	Subsidiaries and joint ventures	Associates	Total
Operating special items	(228)	(25)	(253)	(2,275)	(299)	(2,574)
Operating remeasurements	386	(4)	382	638	96	734
Operating special items and remeasurements	158	(29)	129	(1,637)	(203)	(1,840)
Net profit on disposals	1,579	19	1,598	1,612	20	1,632

Total operating special items, including associates, amounted to a charge of $253 million in the year ended 31 December 2010. This included impairment and related charges of $122 million principally relating to accelerated depreciation of $97 million and assets written off within the Platinum segment of $20 million, partially offset by an impairment reversal at Dawson Seamgas (Metallurgical Coal segment) of $22 million. Accelerated depreciation of $73 million has been recorded at Loma de Níquel due to uncertainty over the renewal of three concessions that expire in 2012 and over the restoration of 13 concessions that have been cancelled.

Operating special items also include restructuring costs, principally retrenchment and consultancy costs, relating to amounts incurred in the Other Mining and Industrial segment of $71 million and the Platinum segment of $38 million.

Operating remeasurements, including associates, reflect a net gain of $382 million principally in respect of non-hedge derivatives of capital expenditure in Iron Ore Brazil. The net gain includes net unrealised gains of $148 million, net realised gains of $255 million and other remeasurement losses of $17 million.

Net profit on disposals of $1,598 million, including associates, was recognised, chiefly as a result of the Group's ongoing divestment programme. The Group completed the disposal of its 100% interest in Moly-Cop and AltaSteel (Other Mining and Industrial segment), generating a profit on disposal of $555 million, its undeveloped coal assets in Australia (Metallurgical Coal segment), generating a profit on disposal of $505 million, and its 100% interest in the Skorpion zinc mine (Other Mining and Industrial segment), generating a profit on disposal of $244 million.

The Group completed the disposal of Tarmac's Polish concrete products business in March 2010, its French and Belgian concrete products business in May 2010, and its aggregates business in France, Germany, Poland and the Czech Republic in September 2010, resulting in combined net cash inflows of $472 million. Tarmac is included in the Other Mining and Industrial segment.

In addition, net gains were recognised on transactions in Platinum and Thermal Coal. In April 2010 the Group sold its 37% interest in the Western Bushveld joint venture (Platinum segment) for consideration of $107 million. In November 2010 the Group realised a gain of $546 million as a result of the Bafokeng-Rasimone Platinum mine transaction (Platinum segment). In June 2010 the previously announced black economic empowerment (BEE) transaction to dispose of a 27% interest in Anglo American Inyosi Coal (Proprietary) Limited (Thermal Coal segment) was completed. The amount recognised on disposal principally relates to an IFRS 2 Share-based payment charge of $78 million.

Financing remeasurements, including associates, reflect a net gain of $106 million principally due to preference share investments, and an associated embedded interest rate derivative. In addition, financing remeasurements also include net gains on non-hedge derivatives of debt of $17 million.

Special items and remeasurements tax, including associates, amounted to a charge of $112 million. This relates to a tax remeasurement credit of $122 million and a tax charge on special items and remeasurements of $234 million.

Net finance costs

Net finance costs, excluding a net remeasurement gain of $105 million (2009: loss of $134 million), decreased to $244 million (2009: $273 million). This was primarily the result of a reduction in interest and other finance expense of $92 million driven by lower gross debt across the Group, partially offset by the full year effect of interest expense on bonds issued during 2009.

Tax

	Year ended 31 Dec 2010			Year ended 31 Dec 2009
$ million (unless otherwise stated)	Before special items and remeasurements	Associates' tax and non-controlling interests	Including associates	Before special items and remeasurements	Associates' tax and non-controlling interests	Including associates
Profit before tax	9,109	322	9,431	4,422	234	4,656
Tax	(2,699)	(313)	(3,012)	(1,305)	(235)	(1,540)
Profit for the financial year	6,410	9	6,419	3,117	(1)	3,116
Effective tax rate including associates (%)			31.9%			33.1%

IAS 1 (Revised) 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 2010 was $315 million (2009: $286 million). Excluding special items and remeasurements this becomes $313 million (2009: $235 million).

The effective rate of tax before special items and remeasurements including attributable share of associates' tax for the year ended 31 December 2010 was 31.9%. This was broadly in line with the equivalent effective rate of 33.1% for the year ended 31 December 2009. 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 $34,239 million compared with $26,121 million at 31 December 2009. This increase is primarily the result of profit for the year of $6,544 million and the balance sheet impact of strengthening exchange rates relative to the US dollar (in particular the rand).

The increase in property plant and equipment of $4,612 million is primarily the result of additions and foreign exchange gains, partly offset by depreciation, assets transferred to disposal groups and assets disposed as part of the Group's divestment programme.

Investments in associates on the balance sheet increased by $1,588 million, mainly due to the Group's $450 million contribution towards De Beers' $1 billion rights issue in March 2010, improved earnings in both De Beers and Samancor, and the recognition of an associate following the Bafokeng-Rasimone Platinum mine transaction.

Assets classified as held for sale, net of associated liabilities, were $188 million at 31 December 2010 and represent Zinc assets.

Cash flow

Net cash inflows from operating activities were $7,727 million compared with $4,087 million in 2009. EBITDA was $11,983 million, an increase of 73% from $6,930 million in 2009.

Proceeds from the sale of subsidiaries and joint ventures were $2,795 million and primarily include proceeds from the sale of Other Mining and Industrial assets, the sale of undeveloped assets in Metallurgical Coal and proceeds from the Bafokeng-Rasimone Platinum mine transaction.

Purchases of tangible assets, net of associated derivatives, amounted to $4,994 million, an increase of $236 million. This spend was focused on the four key near term strategic growth projects (Los Bronces, Barro Alto, Minas-Rio and Kolomela).

Net cash used in financing activities was $2,400 million, compared to $1,680 million in 2009. During the year, the Group used cash to repay $2,338 million of short term borrowings, partially offset by the issuance of senior notes during the year.

Liquidity and funding

Net debt, including related hedges, was $7,384 million, a decrease of $3,896 million from 31 December 2009. Cash and cash equivalents, excluding the impact of exchange, increased by $2,857 million, reflecting operating cash flows and disposal proceeds, offset by investments in associates, purchase of property, plant and equipment and a net repayment of borrowings.

Net debt at 31 December 2010 comprised $13,439 million of debt and the closing liability position on related derivatives of $405 million, partly offset by $6,460 million of cash and cash equivalents (including amounts in disposal groups). The debt ageing profile has remained consistent with the prior year, with 89% of the total debt being due after more than one year (2009: 90%). Net debt to total capital⁽¹⁾ at 31 December 2010 was 16.3%, compared with 28.7% at 31 December 2009.

In July 2010, the Group replaced a $2.5 billion facility maturing in March 2012 with a $3.5 billion facility maturing in July 2015.

In September 2010 the Group raised $1.25 billion through the issuance of senior notes (US bonds). The senior note offering comprised $750 million 2.15% senior notes due 2013 and $500 million 4.45% senior notes due 2020.

At 31 December 2010 Anglo American had undrawn committed borrowing facilities of $11.1 billion. In January 2011 the Group repaid $1.1 billion drawn on its $2.25 billion revolving credit facility maturing in June 2011. The Group subsequently cancelled this facility.

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

Group corporate cost allocation

Corporate costs which are considered to be value adding to the business units are allocated to each business unit and costs reported externally as Group corporate costs only comprise costs associated with parental or direct shareholder related activities.

Corporate costs (after costs allocations) of $181 million (2009: $146 million) were incurred in 2010, an increase of $35 million. The increase was mainly due to insurance cost increases resulting from increases in new claims, the impact of the stronger rand and inflation.

Dividends

Analysis of dividends US cents per share	2010	2009
Interim dividend	25	-
Recommended final dividend	40	-
Total dividends	65	-

⁽¹⁾ Net debt to total capital is calculated as net debt (including related hedges) divided by total capital. Total capital is net assets excluding net debt.

Operations review 2010

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 property, plant and equipment including cash flows on related derivatives.

COPPER

$ million (unless otherwise stated)	Year ended 31 Dec 2010	Year ended 31 Dec 2009
Operating profit	2,817	2,010
EBITDA	3,086	2,254
Net operating assets	6,291	4,763
Capital expenditure	1,530	1,123
Share of Group operating profit	29%	41%
Share of Group net operating assets	14%	12%

Copper generated an operating profit of $2,817 million, an increase of 40%, mainly due to record copper prices, coupled with higher molybdenum revenues related to both higher prices and sales. This was partly offset by higher unit costs driven by increased power costs and a strengthening in the peso, lower sales volumes reflecting lower production and shipping constraints, following the failure of a ship loader at Patache port in December, and an increase in project evaluation expenditure in both Chile and Peru.

Markets

Average prices	2010	2009
Average prices (LME cash, c/lb)	342	234
Average realised prices (c/lb)	355	269

Copper prices increased significantly during 2010, particularly during the second half of the year, as demand picked up in the OECD countries and remained relatively robust in China, while supply continued to be constrained, visible inventories fell and the US dollar weakened. The emergence of physically backed copper Exchange Traded Funds (ETFs) further fuelled the bullish consensus views.

The LME copper cash price ended 2010 at a (nominal) record of 442 c/lb, a 33% increase over the prior year closing price. The 2010 average price of 342 c/lb represented a 46% increase compared with the previous year. The average realised price for the year was 355 c/lb, 32% higher than for 2009. The lower percentage increase in the realised price versus the average price reflects the lower level of provisional price adjustments in 2010 compared with 2009.

Operating performance

	2010	2009
Attributable copper production (tonnes)	623,300	669,800

Total copper production of 623,300 tonnes was 7% lower than the prior year which, with the exception of Collahuasi, was in line with expectations.

Los Bronces production of 221,400 tonnes was 7% lower than the record production level achieved in 2009, principally due to, as forecast, lower throughput as a result of harder ore and lower grades. The earthquake in February 2010 also had a small negative impact on production levels due to power outages and the need to realign a SAG mill. Recoveries were marginally higher than prior year.

Collahuasi attributable production at 221,800 tonnes was 6% lower than the record level achieved in 2009. In addition to lower grades, production was also impacted by an illegal contractor strike in May, which had a negative impact of 5,000 tonnes, a 33-day strike in November during wage negotiations with employees reducing production by a further 5,000 tonnes and a number of smaller negative impacts on production relating to unscheduled outages in the concentrator plant. These were partly offset by targeted improvements and debottlenecking, which significantly improved throughput at the concentrator plant. In December 2010 a catastrophic failure occurred in the shiploader at Collahuasi's Patache port. Collahuasi is currently implementing a contingency plan to ship copper out of alternative ports in Arica, Iquique and Antofogasta during the first quarter of 2011 whilst repairs are being carried out. The incident reduced Anglo American's share of December sales by approximately 8,800 tonnes of copper but did not impact production.

Mantos Blancos production of 78,600 tonnes was 13% lower, principally due to there being no purchases of third party solutions (from which the prior year had benefited), expected lower grades and the impact of a conveyor failure in the first quarter. At El Soldado, production of 40,400 tonnes was 2% lower. The impact of mining lower grade ore and recovering low grade stockpiles was mostly offset by additional copper recovered from processing slag from the Chagres smelter. Production at both Mantoverde and the Chagres smelter were in line with 2009.

Higher power, labour, contractor, spares and fuel costs, coupled with a stronger peso and lower production levels, adversely impacted unit operating costs, although their impact was partly offset by higher by-product revenues, lower sulphuric acid prices and lower TC/RCs, in addition to benefits generated by asset optimisation and procurement initiatives.

Projects

The Los Bronces expansion project is on schedule for first production in the fourth quarter of 2011. Production at Los Bronces is scheduled to increase to 490 ktpa over the first three years of full production following project completion and to average 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 and resources that support a mine life of over 30 years, with further expansion potential. Also within the Los Bronces district, work continues on the exploration tunnel being constructed. The tunnel will provide underground drilling access to explore and define the resources at the Los Sulfatos discovery.

At Collahuasi, the expansion project to increase sulphide processing capacity to 150,000 tonnes of ore per day is scheduled to be commissioned in the second half of 2011. In July 2010, Collahuasi announced the increase of its copper reserves and resources by 40%, or by more than 2 billion tonnes, to 7.1 billion tonnes at 0.82% copper. A concept study to evaluate the next phases of expansion at Collahuasi, to ultimately increase production to at least 1 Mt of copper per annum, is expected to be completed in the first quarter of 2011.

Studies continue at both Mantos Blancos and Mantoverde to evaluate further extensions to the lives of the operations. During 2010, the life of Mantos Blancos was extended by five years to 2020, and Mantoverde by two years to 2016.

In Peru, the feasibility study for the Quellaveco project is complete. It is the intention to submit the project for Board approval during 2011 once the necessary water permits have been awarded. Some early works activity is under way in order to maintain the project completion date of late 2014. Also in Peru, early-stage work continues at the Michiquillay project. The drilling relating to the geological exploration programme will restart once certain social agreement issues under discussion with the local communities have been resolved. It is currently envisaged that the project will move to the pre-feasibility stage once drilling analysis and ore body modelling have been satisfactorily completed.

Activity at the Pebble project in Alaska continued during 2010, with the focus on engineering work to advance towards a pre-feasibility study, further environmental study work towards completion of an environmental baseline document, and additional geological exploration drilling. The project's pre-feasibility study is expected to be completed in 2012.

Outlook

Copper production is expected to increase during 2011, with the start-up of production from the expansion project at Los Bronces in September 2011, together with improvements in plant throughput, and at El Soldado due to a significant grade improvement as the development phase of the open pit mine nears completion. A further step change in production will be seen in 2012, when the Los Bronces expansion project reaches full capacity, delivering the targeted economies of scale, driving unit costs down the industry cost curve and offsetting upward cost pressures expected to continue in 2011.

The short to medium term outlook for the copper price is robust, underpinned by healthy demand growth, in particular from China and other industrialising countries, and insufficient copper supply from existing mines and planned projects. Such conditions are expected to lead to a period of metal market deficits and dwindling inventories, exacerbated by the emergence of physically backed ETFs. Copper is also expected to benefit from continued investor interest in commodities as a new asset class. While some further price-induced substitution is expected to occur, this is not expected to be significant enough to undermine the other positives, certainly over the medium term.

NICKEL

$ million (unless otherwise stated)	Year ended 31 Dec 2010	Year ended 31 Dec 2009
Operating profit	96	2
EBITDA	122	28
Net operating assets	2,334	1,787
Capital expenditure	525	554
Share of Group operating profit	1%	0.04%
Share of Group net operating assets	5%	5%

Nickel generated an operating profit of $96 million, following a year of much improved nickel prices. Nickel's operating profit was net of $11 million of costs relating to development of the unapproved project pipeline, a $10 million increase compared with 2009.

Markets

Average price (c/lb)

2010

2009

Average market price (LME, cash)

Average realised price

989

986

667

668

The average nickel price was 48% higher than in 2009, underpinned by strong stainless steel demand. Global nickel consumption increased by 12% to 1.48 Mt in 2010, while supply remained constrained owing to strike action and delays to new projects experienced by a number of producers.

From a low of $7.73/lb during February, prices rose sharply to a high for the year of $12.52/lb in April as a result of improved underlying fundamentals and stainless steel restocking. Prices retreated to $8.14/lb in June, amid concerns over the impact of the European debt crises, but rebounded during the fourth quarter, ending the year at $11.32/lb.

LME stocks decreased by 18% from a high of 166,000 tonnes at the beginning of February to 136,000 tonnes at the end of December, indicative of underlying physical demand for nickel.

Operating performance

	2010	2009
Attributable nickel production (tonnes)	20,200	19,900

Nickel production increased by 2% to 20,200 tonnes in 2010 primarily owing to improved production levels at Loma de Níquel. Overall unit costs were 7% above 2009.

Loma de Níquel produced 11,700 tonnes of nickel, an increase of 13% compared with 2009, when production was impacted by the non-renewal of the environmental permit to dispose of smelter slag during January and by a metal run-out in May from the operation's No. 2 electric furnace, which halted production for the rest of that year. Despite resuming operations at the rebuilt furnace in March 2010, production was severely impacted until August by electricity rationing imposed by the Venezuelan government, resulting in approximately 2,400 tonnes of lost output.

Loma's unit operating costs at $5.83/lb were 12% lower than in 2009. The principal factors in the reduction were the higher volume of output and the 50% devaluation of the Venezuelan Bolivar, partly offset by high local inflation.

Due to uncertainty over the renewal of three mining concessions, which have not been cancelled but which will expire in 2012, and over the renewal of thirteen concessions that were cancelled in 2008, an accelerated depreciation charge of $73 million has been recorded against Loma de Níquel mining properties. This has been recognised as an operating special item. Refer to note 5 in the Condensed financial statements.

Year on year production at Codemin decreased by 11% or 1,000 tonnes, primarily due to the planned relining of a furnace in the last quarter of the year. Production was also negatively affected by lower grade. Unit operating costs were higher than 2009 principally due to a stronger Brazilian real and the impact of planned maintenance.

Projects

The Barro Alto project ended the year at 99% complete, remaining on schedule to deliver first production in the first quarter of 2011. This project makes use of a proven technology and will produce an average of 36 ktpa of nickel in ferronickel at full production, averaging 41 ktpa over the first five years, with a competitive cost position.

The Nickel business' unapproved project pipeline has the potential to increase production by an additional 66 ktpa, with further upside potential, leveraging the Group's considerable nickel laterite technical expertise. Jacaré, with mineral resources of 3.7 Mt contained nickel, was the largest nickel discovery in the last decade and has the potential to significantly strengthen Anglo American's position in the worldwide nickel market.

Outlook

Nickel production is forecast to more than double in 2011 as the Barro Alto project ramps up. Codemin production is expected to normalise, with no significant maintenance planned, and production at Loma de Níquel should benefit from a more stable power supply and a full year with both furnaces.

The long term outlook for nickel is positive, underpinned by stainless steel demand driven by growth and urbanisation rates in emerging economies. In the short to mid-term, nickel prices will be heavily influenced by the successful delivery of new projects, some of which use an unproven processing technology, as well as the introduction to the market of physically backed ETFs.

PLATINUM

$ million (unless otherwise stated)	Year ended 31 Dec 2010	Year ended 31 Dec 2009
Operating profit	837	32
EBITDA	1,624	677
Net operating assets	13,478	12,141
Capital expenditure	1,011	1,150
Share of Group operating profit	9%	1%
Share of Group net operating assets	31%	31%

Platinum recorded an operating profit of $837 million, a significant increase, due to higher metal prices and successful cost control programmes, partly offset by a stronger rand and lower sales volumes. Lower sales volumes were the result of a shipment delay caused by the weather in Europe in late December 2010. Refined metal also became available after the last shipping date of the year, whereas 2009 sales volumes benefited from higher than usual stock levels at the beginning of the year.

Markets

The average dollar price achieved for platinum was $1,611 per ounce for the year, a 34% increase compared with $1,199 in 2009. The average prices achieved for palladium and rhodium sales for the year were $507 per ounce (2009: $257) and $2,424 per ounce (2009: $1,509) respectively. The average price achieved on nickel sales was $9.70 per pound (2009: $6.54). The overall basket price achieved for the year of $2,491 per platinum ounce sold compared with $1,715 achieved in 2009.

The PGM markets had a strong year in 2010, with significant recovery in demand from the autocatalyst and industrial markets, healthy demand from the jewellery sector and increasing investor interest in the platinum and palladium markets, primarily via ETFs. Supply increases from the industry were largely delivered and, as a result, the platinum and palladium markets remained essentially in balance. The rhodium market saw a reduced surplus due to improved autocatalyst demand.

Platinum continued its commitment to the development of the PGM markets, working with industry partners and stakeholders in the maintenance of existing, and the development of new, industrial applications for the metals, while also maintaining the health of the jewellery markets.

Autocatalysts

Demand for platinum in autocatalysts had another year of solid recovery in 2010, as global production and sales of vehicles increased from lows of 59 million and 66 million vehicles in 2009 to reach 73 million and 71 million respectively. In particular, vehicle sales in the BRIC countries saw strong growth year on year, with Chinese production of light duty vehicles surpassing that of the traditionally largest market, the US, at close to 16 million. In Europe, the diesel proportion of sales rebounded to 50% in 2010 after declining to 47% in 2009, driven mainly by increased fleet sales. US vehicle inventories have returned to historical averages in 2010 and reached 67 days in December 2010, compared with an average of 62 days in 2009 and a high of 118 days in February 2008.

Industrial

Demand from the industrial sector continued to recover from 2009 lows, with capacity utilisation rates in the chemical and petroleum sectors having improved and all major indices seeing significant recovery. New capacity build in the glass sector contributed strongly to this recovery.

Jewellery

Despite the increase in the platinum price over the year, the jewellery market remained resilient and achieved approximately 1.5 million ounces of new metal demand in 2010. This represents a 40% decline compared with the record demand seen in 2009, when inventory rebuilding took place.

Investment

2010 started with strong investor inflows into the platinum and palladium ETFs, particularly into the new ETFs launched in the US. By the end of the year, the aggregate holdings in the platinum ETFs were a record 1.23 million ounces, with a record 2.21 million ounces being held across the palladium ETFs. The investment sector is now firmly established as a key source of demand for PGMs, making up 10% and 15% of platinum and palladium 2010 demand respectively.

Operating performance

Platinum performed strongly in 2010, achieving its goals of further improving its safety record, producing more than 2.5 million ounces of refined platinum, controlling cash operating costs growth below inflation, increasing employee productivity to more than 7m² per month per operating employee, strengthening its balance sheet via a successful R12.5 billion ($1.6 billion) rights issue and spending capital of $1 billion. The focus on and delivery of targets across all of these areas resulted in the resumption of dividend payments and contributed to Platinum's ultimate operating strategy of delivering 'Safe, Profitable Platinum'.

Safety

Platinum's Lost Time Injury Frequency Rate of 1.17 for 2010 improved by 14.6% and was a record for the business. Consistent improvement is being seen in many parts of the business - many of Platinum's mines operated for over 3.5 million shifts without a fatality and the number of injury free operations continues to increase. Sadly, eight employees lost their lives at Anglo Platinum's managed operations during the year.

Production

Refined platinum production increased by 5% to 2.57 million ounces, exceeding the company's target of 2.5 million ounces. Equivalent refined platinum production (equivalent ounces are mined ounces expressed as refined ounces) from the mines managed by Platinum and its joint venture partners was 2.48 million ounces, an increase of 0.8% compared with 2009. Sales of refined platinum for the year were 2.52 million ounces, compared with 2.57 million ounces in 2009.

Costs

Costs continued to be managed tightly, with cash operating costs per equivalent refined platinum ounce of R11,730 ($1,603), an increase of 4.4%, or flat in real terms. Cost increases were curbed primarily through a 12% increase in productivity to 7.06m² per month per operating employee, exceeding the target of 7m². This was offset by a decline in grades of 3% to a 4E built-up head grade of 3.23 g/t, an average rise in wages of 8.7% and an increase in electricity tariffs of 26.4%.

Overall headcount was reduced to 54,022 at the end of the year, from 58,320 at the end of 2009.

Projects

Capital expenditure amounted to $1,011 million, a 12% decrease, with $511 million spent on projects and $500 million on stay-in-business capital.

The concentrator at the Unki project in Zimbabwe was formally commissioned during the fourth quarter of 2010. First production of refined metal from the mine is expected during the first quarter of 2011. At full capacity, Unki will supply 70 koz of refined platinum, a run rate expected to be reached in 2013.

The Mogalakwena North Project reached steady state during the third quarter of 2010 (annual steady state 2011) and through optimisation projects will continuously produce 600 ktpm of ore.

Dishaba East Upper project implementation commenced in 2007 and is on schedule to reach steady-state platinum production of 100,000 platinum ounces per annum by 2012.

Outlook

2011 is expected to be a strong year for Platinum, building on the momentum established in improving the safety of all employees, increasing production to 2.6 million ounces of refined and equivalent refined platinum to meet expected solid demand. Costs will continue to be closely managed in order to keep them around 2010 levels, delivering further productivity improvements and investing $1.16 billion of capital to ensure the company's future production growth profile.

The platinum market is expected to remain in balance in 2011 due to continued strength from autocatalyst and industrial demand, resilient jewellery markets and continued investor interest. An increase in supply levels is also expected. In such an environment, the platinum price is expected to average at least $1,800 per ounce. Palladium's price strength is expected to continue as that market moves further into deficit due to the strength of autocatalyst and investor demand and reduction in supplies to the market.

Light vehicle sales in 2011 are expected to increase to 75 million, underpinning further demand for PGMs for autocatalysts, particularly in China and India.

At expected higher platinum prices, demand for jewellery is expected to plateau in 2011, but new sources of demand, such as the Indian market, are being pursued and should start to add to demand in the medium term. Industrial demand for PGMs should increase further in the year due to strong consumer demand for end products.

IRON ORE AND MANGANESE

$ million (unless otherwise stated)	Year ended 31 Dec 2010	Year ended 31 Dec 2009
Operating profit	3,681	1,489
Kumba Iron Ore	3,396	1,487
Iron Ore Brazil	(97)	(141)
Samancor	382	143
EBITDA	3,856	1,593
Net operating assets	11,701	10,370
Capital expenditure	1,195	1,140
Share of Group operating profit	38%	30%
Share of Group net operating assets	27%	27%

Iron Ore and Manganese generated an operating profit of $3,681 million, 147% higher than 2009. This was as a result of higher iron ore export prices and sales volumes, as well as higher manganese ore and alloy volumes and prices.

Markets

World crude steel production continued to increase during 2010 and returned to above pre-2008 levels at 1.4 billion tonnes. China's continued robust economic growth contributed to growth in crude steel production, despite power restrictions and destocking through the supply chain. Crude steel production in China increased by 9% to 626 Mt and continued to exceed demand. The European, Japanese and South Korean markets saw a 24% increase in crude steel output, bringing total production to 341 Mt, only slightly below levels achieved in 2008. Despite the continued strength in iron ore demand in China, a surge in Chinese domestic iron ore supply during 2010 resulted in a decrease of 2% to 603 Mt in seaborne imports. Global seaborne iron ore demand increased by 5% to 979 Mt, driven by a 19% increase in demand from the steel industry in the rest of the world.

Index prices rose strongly during the year, with the 62% Fe Platts index averaging approximately $147/t (CFR), up from $80/t in 2009.

The manganese ore and alloy market reflected the increase in world crude steel production and demand, resulting in significantly increased prices for alloy and ore during the year. Production increased to meet demand, with furnaces reaching full capacity for the first time since 2008.

Operating performance

Kumba Iron Ore

Kumba generated an operating profit of $3.4 billion, more than double the $1.5 billion for 2009, largely attributable to a 92% weighted average increase of realised iron ore export prices and a 6% increase in export sales volumes. This was partly offset by the 15% strengthening of the rand against the US dollar and the implementation of the South African mining royalty, effective from 1 March 2010.

Total sales volumes increased by 8% to 43.1 Mt. Export sales volumes from Sishen Mine for the year increased by 1.9 Mt or 6% to 36.1 Mt. Export sales volumes to China of 19.8 Mt represented 61% of total export volumes for the year, compared with 75% during 2009. Export sales volumes to Europe, Japan and South Korea increased by 54% to 13.9 Mt. Total domestic sales volumes for the year increased by 21% to 7.0 Mt due to higher demand from ArcelorMittal South Africa.

Volumes railed on the Sishen-Saldanha export channel increased by 5% to 36.5 Mt. This performance was adversely impacted by industrial action at Transnet and significant derailments during the second and third quarters of 2010, before returning to a more solid performance in the fourth quarter.

Total tonnes mined at Sishen Mine increased by 19% to 153.2 Mt, of which waste material mined comprised 67% or 102.0 Mt, an increase of 24%. Total production at Sishen Mine increased by 5% to 41.3 Mt. The jig plant achieved 13.3 Mt of production for the year, 0.3 Mt above the name plate capacity of the plant through improved quality of plant feed material and more efficient shutdown intervals. Production from the Dense Media Separation (DMS) plant decreased by 3% to 28.1 Mt due to the failure of single-line equipment and the availability of feedstock from the pit.

Sishen Mine's unit cash cost of R113.69 ($15.83) per tonne increased by 15% compared with R98.83 ($11.78) per tonne in 2009. This expected increase was driven by a 24% increase in waste mining volume and above inflation increases in the key input costs of labour, diesel and electricity.

Iron Ore Brazil

Iron Ore Brazil generated an operating loss of $97 million, reflecting the pre-operational stage of the Minas-Rio project, partially offset by operating profit at Amapá following a substantial production improvement, a focus on cost containment and the price environment, partially offset by an adverse change in product mix and plant availability issues experienced in the early part of the year. Amapá produced 4.0 million tonnes of iron ore, a 52% increase. The production and cost profile at Amapá remains in line with the study conducted at the end of 2009 and production is forecast to increase further in 2011 and 2012.

Samancor

Samancor generated an operating profit of $382 million, a 167% increase, due to higher sales volumes and prices following the improvement in global steel demand.

Projects

The development of the 9 Mtpa Kolomela Mine is well advanced and overall project progress reached 81% as at 31 December 2010. The project remains on budget and on schedule to deliver initial production at the end of the first half of 2012, ramping up to full capacity in 2013. To date, 22.6 Mt of waste material has been moved, 18.6 Mt of it during 2010. $679⁽¹⁾ million of capital expenditure has been incurred to date, with $307⁽¹⁾ million incurred during 2010.

Significant progress has been made at the Minas-Rio project in Brazil, expected to produce 26.5 Mtpa in its first phase. The award of the second part of the mine, beneficiation plant and tailings dam installation licence (LI part 2) in December 2010, being the final primary installation licence, supports the start of the civil works for the beneficiation plant and tailings dam construction in March 2011, after the rainy season. This licence followed the award of the mining permit in August 2010. As previously stated, it should take between 27 and 30 months from commencement of these works to construct and commission the mine and plant, complete the project and deliver the first ore on ship; however, there are still a number of other licences and permits to be obtained during this period.

Project development at the plant has been focused on progressing earthworks in preparation for the commencement of civil works. The pipeline element of the project is well progressed, with pipe laying, welding and burying beginning in June, and ended the year ahead of schedule, including the completion of two underground river crossings (one of which is the longest of its type in Brazil). The civil works for the filtration plant are under way and, at the port, offshore works have continued with the commencement of the construction of the iron ore pier and breakwater, following completion of the 2.9 km main trestle.

Studies for the expansion of the Minas-Rio project have continued during 2010 and the latest resource statement provides a total resource volume (measured, indicated and inferred) of 5.3 billion tonnes, supporting the expansion of the project. In addition, the port agreement noted above also covers a long term tariff arrangement for all of Anglo American's iron ore volumes beyond the first phase of the Minas-Rio project. The level of the expansion tariff will be dependent upon the capital cost to expand the port to accommodate those additional volumes and that capital cost will be determined in due course.

⁽¹⁾Excludes capitalised costs for pre-strip waste removal.

Outlook

Analyst forecasts indicate that global crude steel production is expected to grow by 5-10% in 2011. The rate of growth in crude steel production in China is anticipated to decrease as the Chinese government seeks further improvements in overall energy efficiency for the next five-year plan. However, with anticipated shortfalls in seaborne iron ore supply, in particular from India, the overall global seaborne iron ore market is expected to remain structurally tight.

Kumba's export sales volumes are anticipated to be in line with volumes achieved during 2010. Domestic sales volumes remain dependent on the off-take requirements from ArcelorMittal. Waste mining at all the operational sites is anticipated to increase, which will put upward pressure on unit cash costs of production. Annual production volumes during 2011 are expected to remain at levels achieved during 2010 as the jig plant has reached its name plate capacity.

Kumba's operating profit remains highly sensitive to the rand/US dollar exchange rate.

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

Kumba Iron Ore update

Kumba's Sishen Iron Ore Company (SIOC) notified ArcelorMittal South Africa Limited (ArcelorMittal) on 5 February 2010, that it was no longer entitled to receive 6.25 Mtpa of iron ore contract mined by SIOC at cost plus 3% from Sishen Mine, as a result of the fact that ArcelorMittal had failed to convert its old order mining right. This contract mining agreement, concluded in 2001, was premised on ArcelorMittal owning an undivided 21.4% interest in the mineral rights of Sishen Mine. As a result of ArcelorMittal's failure to convert its old order mining right, the contract mining agreement automatically lapsed and became inoperative in its entirety as of 1 May 2009.

As a result, a dispute arose between SIOC and ArcelorMittal, which SIOC has referred to arbitration. Following mediation by the Department of Trade and Industry, SIOC and ArcelorMittal reached an interim pricing arrangement in respect of the supply of iron ore to ArcelorMittal from the Sishen Mine. This arrangement will endure until 31 July 2011. Both parties have exchanged their respective pleadings, and the arbitration panel has been appointed.

After ArcelorMittal failed to convert its old order mining right, SIOC applied for the residual 21.4% mining right previously held by ArcelorMittal and its application was accepted by the Department of Mineral Resources (DMR) on 4 May 2009. A competing application for a prospecting right over the same area was also accepted by the DMR. SIOC objected to this acceptance. Notwithstanding this objection, a prospecting right over the 21.4% interest was granted by the DMR to Imperial Crown Trading 289 (Proprietary) Limited (ICT). SIOC initiated a review application in the North Gauteng High Court on 21 May 2010 in relation to the decision of the DMR to grant a prospecting right to ICT.

SIOC initiated an application on 14 December 2010 to interdict ICT from applying for a mining right in respect of the Sishen Mine and the DMR from accepting an application from ICT, nor granting such 21.4% mining right to ICT pending the final determination of the review application. This application is currently pending.

The DMR informed SIOC on 12 January 2011 that ICT had applied for a 21.4% mining right over Sishen Mine on 9 December 2010 and that the DMR had accepted this application on 23 December 2010. The DMR's acceptance of the application means that the mining right application will now be evaluated according to the detailed process stipulated in the Mineral Resources & Petroleum Development Act 2004 before a decision is made as to whether or not to grant the mining right.

SIOC does not believe that it was lawful for the DMR to have accepted ICT's application, pending the High Court Review initiated in May 2010, and has formally objected to, and appealed against, the DMR's acceptance of ICT's mining right application. SIOC has also requested that its interdict application be determined on an expedited basis, in order to prevent the DMR from considering ICT's mining right application until the finalisation of the review proceedings. In addition, SIOC is in the process of preparing a challenge against the DMR's decision of 25 January 2011 to reject SIOC's May 2009 application to be granted the residual 21.4% mining right. Finally, on 26 January 2011, SIOC lodged a new application for the residual 21.4% mining right.

On 4 February 2011 SIOC made an application to join ArcelorMittal as a respondent in the review proceedings.

SIOC will continue to take the necessary steps to protect its shareholders' interests in this regard.

METALLURGICAL COAL

$ million (unless otherwise stated)	Year ended 31 Dec 2010	Year ended 31 Dec 2009
Operating profit	783	451
EBITDA	1,116	706
Net operating assets	3,918	3,407
Capital expenditure	217	96
Share of Group operating profit	8%	9%
Share of Group net operating assets	9%	9%

Metallurgical Coal generated an operating profit of $783 million, a 74% increase, primarily due to higher average benchmark coking coal prices and record production of high-margin export products. The business delivered record export sales growth of 30% for metallurgical coal, with production increases of 16% compared with the prior year, 12% higher than the previous record in 2008. This offset the impact of the strong Australian dollar, which had the effect of increasing unit costs by 17% in US dollar terms. Adverse weather and flooding had a significant impact on production, initially with Cyclone Ului in the first quarter and subsequently record spring and summer rainfall from the third quarter onwards in the regions where the business operates.

Markets

Anglo American weighted average achieved FOB prices ($/tonne)	2010	2009
Export metallurgical coal	176	141
Export thermal coal	87	74
Domestic thermal coal	30	27

Attributable sales volumes ('000 tonnes)	2010	2009
Export metallurgical coal	14,948	11,542
Export thermal coal	6,384	6,239
Domestic thermal coal	8,342	8,604

2010 saw a significant increase in demand for metallurgical coal from the global steel industry with a return to levels last seen in 2008 in the traditional Asian markets and sustained growth in China and India. Demand increased in the first quarter as steelmakers started to restock, which resulted in a temporary oversupply of steel mid-year as steel producers drew down stock again. In the third quarter, this trend reversed and the industry has subsequently seen a strengthening in coal demand and prices. European demand continues to recover, albeit at a slower pace than in Asia. Unseasonal record rainfall in Australia has limited supply from Queensland mines since September, a trend which has continued throughout the fourth quarter and will continue to impede production into early 2011. Industry stock levels reached record low levels and this is expected to result in a further increase in metallurgical coal prices in 2011.

The market for metallurgical coal has traditionally priced coal through annual price negotiations, providing for fixed pricing for a 12 month period. Since the second quarter of 2010, a move to quarterly pricing has occurred. In parallel with this shift, multiple coking coal indices have been developed with the aim of creating a liquid spot market with transparent pricing, though no reliable index has yet been determined. Metallurgical Coal is well placed to continue to supply its customers under the new pricing mechanisms as they evolve.

Operating performance

Attributable production ('000 tonnes)	2010	2009
Export metallurgical coal	14,702	12,623
Thermal coal	14,461	14,052

Metallurgical Coal delivered record production and sales of metallurgical coal. The business increased the sales of its high quality metallurgical coal by 30% to 14.9 million tonnes, driven by a strong supply response from the Capcoal and Moranbah North complexes. The production increases were achieved despite the negative impact of Cyclone Ului in the first quarter and record rainfall in the second half of the year in Queensland. The rainfall experienced in 2010 was more than double the historic average for the areas in which the business operates. Successful stock management, dewatering capacity, relocation of assets and the quick mobilisation of additional production capacity were key to ensuring that the open cut production recovered as quickly as possible. Combined with improved coal logistics chain management, this enabled the business to deliver record sales volumes in response to stronger demand.

Productivity improvements at the underground operations were a major focus during the year, particularly in response to the rain disruption at the open cut operations. Unit costs were negatively affected by the adverse weather conditions, mitigated by the benefits from the increased production volumes, with export cost per tonne in local currency 1% lower than the previous year. A comprehensive rain loss mitigation initiative aimed at reducing the impact of rain at the open cut operations has been initiated.

Port and track expansions for the Dalrymple Bay Coal chain were completed in 2010 to address immediate seaborne market growth. The business has flexible arrangements in place to assist in logistics planning and weather mitigation. To meet the continuing industry growth, rail and port throughput will be addressed through the 25 Mtpa Abbot Point expansion and the 30 Mtpa Wiggins Island project, scheduled for 2012 and 2014 respectively, and a number of conceptual projects currently under way.

Projects

Metallurgical Coal took further steps to focus its business on high-margin export products by progressing the Grosvenor and Drayton South feasibility studies and by divesting non-core assets including the sale of five undeveloped exploration assets and the Dawson Seamgas assets. The proposed divestment of the Callide mine was announced. The Callide mine primarily supplies domestic power stations in Queensland and produced 8.5 million tonnes of thermal coal in 2010 and has expansion potential from its resource base of more than one billion tonnes.

At the Greenfield projects of Grosvenor, Moranbah South, Dartbrook and Drayton South, studies continue in order to meet expectations of growing demand for both metallurgical and export thermal coal. Approval of the 4.3 Mtpa Grosvenor metallurgical coal project is targeted for the second quarter of 2012.

Outlook

A continued focus on longwall productivity and other asset optimisation programmes to improve operational effectiveness are expected to further increase sales of high margin export products in 2011.

The positive industry trends seen in 2010 are expected to continue as the European market recovers and new steel plants come on stream in India and Asia. The demand outlook for both metallurgical and export thermal coal is stimulating expansion of supply from new and existing mines to meet demand over the medium term. Prices are forecast to remain strong as Australia, which provides two-thirds of the world seaborne metallurgical coal market, has experienced severe weather-related supply constraints in the first quarter of 2011, while Europe and China experience another cold winter.

THERMAL COAL

$ million (unless otherwise stated)	Year ended 31 Dec 2010	Year ended 31 Dec 2009
Operating profit	710	721
South Africa	426	442
Colombia	309	305
Projects and corporate	(25)	(26)
EBITDA	872	875
Net operating assets	2,111	1,707
Capital expenditure	274	400
Share of Group operating profit	7%	15%
Share of Group net operating assets	5%	4%

Thermal Coal delivered an operating profit of $710 million, a 2% decrease compared with 2009, predominantly as a result of the stronger rand partly offset by a strong recovery in thermal coal prices. Export sales volumes, including capitalised export sales volumes from Zibulo, increased by 3% compared with 2009.

Markets

Anglo American weighted average achieved FOB prices ($/tonne)	2010	2009
RSA export thermal coal	82.49	64.46
RSA domestic thermal coal	19.64	18.48
Colombian export thermal coal	72.69	73.47

Attributable sales volumes ('000 tonnes)	2010	2009
RSA export thermal coal	16,347	15,857
RSA domestic thermal coal	5,178	6,251
Colombian export thermal coal	10,461	10,103

2010 was a robust year for the global seaborne thermal coal market. Despite a challenging environment for thermal coal imports into Europe, surging energy demand growth in Asia, provided predominantly by coal fired power generation, helped drive global demand and support prices.

Thermal coal markets in Europe and the US saw softer demand as weakened power markets and cheaper gas reduced coal consumption. At the beginning of the year, Colombian producers were compelled to price competitively to move thermal coal into their traditional US and European markets. This resulted in delivered thermal coal prices in the European market regularly trading at a discount to the South Africa FOB export price, which excludes the cost of freight. As demand in the Asia Pacific market progressively improved, South African thermal coal sales into this market increased and Colombian producers began exporting significant volumes to this region for the first time.

China and India imported significantly more thermal coal during 2010, compared with 2009, increasing by some 40% and 15% respectively, which boosted demand for South African coal. The Richards Bay Coal Terminal in South Africa exported 63 million tonnes during 2010, a 2 million tonne increase over 2009, with some 65% exported to Asian markets and around 30% going to the European and Mediterranean region.

Operating performance

Attributable production ('000 tonnes)	2010	2009
RSA thermal coal	21,612	22,186
RSA Eskom coal	36,403	36,225
Colombian export thermal coal	10,060	10,190

South Africa

Operating profit from South African sourced coal was 4% lower than 2009 at $426 million. This was mainly due to the stronger South African rand which was partly offset by a 28% increase in average export thermal coal prices. Export sales volumes, including capitalised export sales volumes from Zibulo, increased by 3% compared with 2009. As in previous years, Thermal Coal utilised the full rail capacity entitlement that was made available, and rail remains the key constraint.

Annual production stayed steady at 58.5 Mt, driven mainly by higher output at Mafube, which has ramped up to full production, with the Zibulo operation also ramping up to its commercial production levels. New Denmark improved production with the new longwall equipment being commissioned during the first quarter of 2010. This was, however, partly offset by lower production from the remaining underground operations which were adversely impacted by geological conditions and pit room constraints. Isibonelo's production was also affected by pit room constraints, coupled with reduced demand from Sasol.

Colombia

Severe wet weather conditions in the second half of 2010 had a significant impact on production, logistics and sales at the majority of coal mining operations in Colombia, where the total annual rainfall for the region was almost double the previous average recorded figure.

Operating profit from Cerrejón of $309 million was marginally higher than that achieved in 2009, despite the extreme wet weather conditions and the strong Colombian peso. Overall saleable production was in line with 2009 performance, primarily as a result of a very good start to the year when dry conditions prevailed at the mine. Improvements in coal recovery rates continued to contribute positively to all aspects of the operation. Cerrejón's in-pit mining initiatives have enabled the mine to cope with the unprecedented rainfall. The 4% increase in total tonnage sold was partly due to the utilisation of the stockpile which had been built up over the previous dry periods.

Projects

In South Africa, the $517 million Zibulo project is approaching completion, the opencast operation is at full production and the underground operation has four of eight production sections deployed. The washing plant, which is a 50:50 joint venture with BHP Billiton Energy Coal South Africa, is fully commissioned and is operating at 80% of planned monthly production. Completion of the man and materials shaft is expected to be in the second quarter of 2011. The mining rights of Zibulo colliery and the environmental management plan were approved during 2010.

The feasibility study for the New Largo project started in 2010 and is expected to be completed in the first quarter of 2012. Significant progress has been made to complete a provisional coal supply agreement with Eskom by end of March 2011.

At Cerrejón, a two phase growth strategy has been adopted and is currently being implemented. The first phase, referred to as P500 Phase 1, requires an increase in the port and logistics chain capacity, whilst maintaining the current operational footprint, in order to reach a target of 40 Mtpa. The second phase, referred to as P500 Phase 2, will require a river diversion and pit expansions to access the additional reserve required to reach a potential 50-60 Mtpa. The feasibility study for Phase 1 was reviewed by the shareholder review teams towards the end of 2010. A process is under way to address the findings of the review process. The aim is to have the Phase 1 ready for approval by the shareholder boards towards the end of the second quarter of 2011.

Outlook

Extreme wet weather, predominantly in Australia, Indonesia and Colombia, have significantly affected short term thermal coal availability and 2011 export prices are expected to trade in a range considerably above that prevailing during 2010.

DIAMONDS

$ million (unless otherwise stated)	Year ended 31 Dec 2010	Year ended 31 Dec 2009
Share of associate's operating profit	495	64
EBITDA	666	215
Group's associate investment in De Beers⁽¹⁾	1,936	1,353
Share of Group operating profit	5%	1%

⁽¹⁾Excludes shareholder loans of $358 million and preference shares of nil (2009: $367 million and $88 million respectively).

Anglo American's share of operating profit from De Beers increased significantly to $495 million. DTC sales of rough diamonds totalled $5.08 billion, a 57% increase (2009: $3.23 billion), due to improved consumer demand and better prices during 2010.

Markets

The first half of 2010 saw a strong recovery in demand for rough diamonds from DTC Sightholders against the low levels seen in early 2009. This recovery trend continued through the second half of the year following improved demand from retail markets, particularly in the Eastern markets of India and China. By the end of 2010, DTC rough diamond prices had returned to pre-recession levels.

Since launching two years ago, De Beers' proprietary diamond brand, Forevermark, has continued to establish itself in China, Hong Kong and Japan. Forevermark jewellery is now available in 348 stores globally, a 40% increase on the beginning of 2009. Expansion, particularly across China, is progressing rapidly with five new cities added in 2010 and further locations planned for 2011.

Operating performance

Revenue from sales of rough diamonds by the DTC, including those through joint ventures, increased by 57% compared with 2009, in response to increased consumer demand. Approximately 33.0 million carats were recovered from wholly-owned and joint venture operations in 2010, compared with around 24.6 million carats in 2009, an increase of 34%.

The business has remained focused on prudent cash management and has continued to tackle costs aggressively. While costs necessarily rose due to increased production levels, exacerbated by a weaker US dollar, De Beers was able to maintain savings from the restructuring of the cost base in 2009, contributing to improved margins. In Botswana, Debswana commenced a comprehensive operations and cost review that identified many efficiency improvement opportunities which will be delivered over the next three years.

De Beers has an uncompromising focus on the safety of its employees and the security of its product. Regrettably, Debswana experienced a fatality late in the year, and De Beers' 2010 LTIFR was 0.24 versus 0.21 for 2009. This deteriorating trend is being addressed through the continued rollout of the Safety Risk Management Programme (SRMP).

In 2010, a review of the impact of the illicit diamond trade on De Beers demonstrated that there were a number of criminal syndicates behind the systematic theft of product from the operations. This resulted in the development of a new Global Security Strategy, which called for an organisational restructuring, with security specialists being recruited to both the centre and operations. A baseline of security control effectiveness for each operation was also established, forming the basis for improvement targets. Going forward, De Beers' will be driving a Loss Prevention programme as a key pillar to improve product security.

Projects

Debswana commenced the Cut-8 expansion project at Jwaneng mine during 2010. Cut-8 represents the largest ever investment in Botswana and is expected to extend the life of mine to at least 2025.

De Beers continued to take an active leadership role in protecting consumers' confidence in diamonds. As it has done since its inception, De Beers continued to support the Kimberley Process, offering guidance to DTC Sightholders on the identification of potentially illegal and unethical exports from Zimbabwe's Marange region. De Beers continued to support increased producer country participation in the diamond pipeline, a key element of further empowerment. The 2010 De Beers' Shining Light Awards, focused on promoting young, undiscovered designers in southern Africa, was the largest to date, comprising 30 pieces of diamond jewellery from Botswana, Namibia and South Africa.

Outlook

The near term market outlook has been improved by the strengthening demand for rough diamonds throughout 2010 and the robust retail performance during the year end gifting season, which extended from the traditional Thanksgiving and Christmas period, to cover Diwali and the Chinese New Year, reflecting increasing growth in Eastern markets. It is likely that some of the price and volume increases were driven by retailer restocking and the business therefore expects 2011 to produce positive growth, albeit at a slower rate than 2010. While starting from a low level, growth is expected to continue to be strong in the emerging markets of China, India and other Far East markets. Production of approximately 38 million carats is expected in 2011, reflecting increasing demand from Sightholders and growing consumer demand.

OTHER MINING AND INDUSTRIAL

$ million (unless otherwise stated)	Year ended 31 Dec 2010	Year ended 31 Dec 2009
Operating profit	661	506
Tarmac	48	101
Zinc	321	175
Scaw Metals	170	131
Copebrás	81	(40)
Catalão	67	106
Coal Americas	(3)	(8)
Other	(23)	41
EBITDA	912	878
Net operating assets	3,807	5,029
Capital expenditure	224	268
Share of Group operating profit	7%	10%
Share of Group net operating assets	9%	13%

Tarmac

Tarmac generated an operating profit of $48 million, a 52% decrease, reflecting difficult trading conditions in the UK and the sale of the majority of Tarmac's European businesses during 2010. On a like-for-like basis, operating profit decreased by 17%. There was strong downward price pressure during the year and Tarmac continued to deliver cost savings to mitigate the impacts of these difficult trading conditions.

In the UK Quarry Materials businesses, volumes remained at similar levels to 2009, but unusual weather patterns resulted in a greater degree of seasonal variation over the year. Tarmac's work to maximise operational efficiency continues and a newly revised management structure continues the good progress made in recent years.

Weak demand in the housing and commercial sectors put considerable pressure on the Tarmac Building Products business, which continued its cost reduction and business rationalisation initiatives.

The 2011 outlook remains relatively weak for the construction sector as a whole, but underlying fundamental demand remains and will turn to orders when economic conditions are more conducive to construction activity.

Zinc

	2010	2009
Attributable zinc production (tonnes)	349,700⁽¹⁾	350,400
Attributable lead production (tonnes)	71,200	68,300
Average market price - zinc (c/lb)	98	75
Average market price - lead (c/lb)	97	78

⁽¹⁾Allowing for Skorpion's full year production, total attributable zinc production was 362,900 tonnes, a 4% increase over the previous period.

Zinc generated an 83% increase in operating profit to $321 million, mainly as a result of higher metal prices, improved efficiencies and tightly controlled costs.

Production at Skorpion increased by 1% to 151,700 tonnes on a full year basis, although only 138,500 tonnes is reported due to the disposal of the operation on 3 December 2010. While electricity constraints, mill motor failures and cell repairs affected production, the combined impact was more than offset by a number of asset optimisation initiatives.

At Lisheen, ore processed increased by 4% and zinc metal production increased by 2% to 175,100 tonnes. Lead metal production increased by 7% to 20,600 tonnes.

At Black Mountain, good progress was made with the improvements to the underground infrastructure, which resulted in an increase of 13% in total ore hoisted. Tonnes milled increased by 7%, with improved feed grades on all metals other than silver. This resulted in strong metal in concentrate production increases of 28% for zinc to 36,100 tonnes, 3% for lead to 50,600 tonnes, 14% for copper to 2,500 tonnes and 4% for silver to 56,600 kg.

Anglo American announced the sale of its zinc portfolio to Vedanta on 10 May 2010 for total consideration⁽¹⁾ of $1,338 million. The sale of Skorpion was completed on 3 December 2010 resulting in a net cash inflow of $570 million.

Scaw Metals

Scaw Metals increased its operating profit by 30% to $170 million.

Moly-Cop and AltaSteel performed well, assisted by strong demand for grinding media and increased vertical integration with the Canadian rolling mills. Production of steel products at 794,200 tonnes exceeded the prior year, notwithstanding the earthquake in Chile in February 2010 impacting production in Talcahuano. In November, Anglo American announced the sale of Moly-Cop and AltaSteel to OneSteel. The transaction was completed on 31 December 2010 resulting in a net cash inflow of $993 million.

In the South African managed businesses, certain key steel markets remained under pressure, resulting in a lower operating profit. The reduction is attributed to selling price pressure, rising input costs and the effect of a strong rand. Despite this, the integrated nature of the business allowed the rolling mills to maintain reasonable levels of output to supply the downstream businesses. Grinding media demand remained strong, albeit with some pricing pressure. Production of steel products at Scaw South Africa was 710,000 tonnes, a 2% increase over the prior year.

Copebrás

Copebrás recorded an operating profit of $81 million, a $121 million improvement over 2009, as a result of improved market conditions and operational improvement initiatives. Strong prices for soft commodities during the second half of 2010 served as a sound foundation for increased demand for fertilisers in Brazil. Sales volumes of 998,100 tonnes of fertilisers were virtually in line with those achieved in 2009, but higher operating margins were achieved, with record sales for certain products.

Catalão

Catalão generated an operating profit of $67 million for the year, 37% lower than 2009 as a result of lower niobium grades and overall recoveries, partially offset by improved realised prices. Sales in 2010 reached 4,100 tonnes. Following a landslide in the pit in late 2009, operations at Catalão started to improve by mid-year when access was re-established in richer parts of the pit. The subsequent discovery of water in certain parts of the pit in the third quarter required a revision of the mining plan. Normal levels of production were reached towards the end of the year.

Coal Americas

Peace River Coal (PRC) in Canada had a much improved operating performance in 2010, delivering a 44% increase in run of mine coal and a 35% increase in clean metallurgical coal production. This was due to improved mining and plant operations and improved coal recovery, coupled with the successful implementation of Phase 1 of the Trend Mine Plant Upgrade project in May 2010, which improved and stabilised plant performance. Phases 2 and 3 of the Trend Mine Plant Upgrade Project are progressing on schedule and will be commissioned in the first quarter of 2011, delivering a further 30% capacity improvement in Trend plant throughput.

⁽¹⁾The agreed consideration was based on profits and cash flows for the zinc businesses being for the benefit of the purchaser from 1 January 2010, subject to completion.

The business was impacted by temporary port constraints during December 2010, which led to the delay of two cargoes into the first week of 2011, with the result that metallurgical coal sales volume for 2010 ended 18% lower than coal production. As a result of the impact on revenue of these delayed cargoes, PRC reported an operating loss of $3 million for the year. However, given the current market strength and the strong trading conditions anticipated for 2011, coupled with increasing production from PRC, a substantial uplift in profitability is forecast for 2011.

The Environmental Assessment Application for the Roman Mountain Brownfield project was submitted in 2010. This project will consist of an integrated plant and mining operation of up to 5 Mtpa capacity with the Trend mine.

The business continues to develop strong relationships with the community and the key First Nations in the area, which was reflected in the successful launch of mining fundamentals and a truck driver training programme in 2010. The programme is delivering promising results and has had a positive impact on the workforce in the area.

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This information is provided by RNS

The company news service from the London Stock Exchange

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