AGM Statement

Anglo American PLC
25 April 2006



News Release


25 April 2006


                            Anglo American AGM 2006

Address to shareholders by the chairman and chief executive


At Anglo American plc's Annual General Meeting for shareholders in London today
(25 April 2006), Sir Mark Moody-Stuart, chairman, and Tony Trahar, chief
executive, made the following remarks:



      Speech by Sir Mark Moody-Stuart, Chairman, to the Anglo American plc

                     Annual General Meeting - 25 April 2006


Ladies and Gentlemen, 2005 was another year of strong prices for most of our
commodities.  This contributed to a 39% increase in underlying earnings.  Given
the strong cash generation achieved for the period, the Board is pleased to
recommend an increase in the normal dividend to 90 US cents - an increase of 29%
- together with a special dividend of 33 US cents per share.  In addition we
have commenced a share buy-back programme of $2 billion to be implemented during
this year.



As the Chief Executive will outline in greater detail, during 2005 the Board
carried out a strategic review that will result in the most significant change
in the shape of our business since our listing in London.  Over the last six
years we have divested some $9 billion of non-core assets as part of a strategy
of concentrating on our core natural resources businesses and of upgrading the
quality of our assets.  The decisions taken at the end of last year will move
this strategy on to the next stage and will result in the creation of a more
focussed mining and quarrying business.



Our management team under Tony Trahar's strong leadership, has been making good
progress with the implementation of this strategy.   We expect all the key
milestones to have been achieved well before next year's AGM.  Tony is
determined to drive through the completion of this programme.  He has indicated
to the Board that with the completion of this phase of the Group's development
he believes it would be appropriate for him to make way for a new leader to
oversee the next phase of our plans for growth.   Since Tony will by then be
approaching his normal retirement age, the Board has accepted the logic of this
view.  It provides us with the prospect of securing a smooth and orderly
transition and of creating a leadership group with the prospect of many years in
the job.  We have, therefore, commenced a process of identifying a successor.
Nevertheless, Tony's continuing commitment as Chief Executive to the completion
of our strategic restructuring means that this is not the moment for
valedictories, save to note the enormous contribution which Tony has made and
continues to make to Anglo American's development and success.



Governance

During the year there were an unusually large number of changes to the Board.
At last year's AGM you elected three new Executive Directors, David Hathorn,
Rene Medori and Simon Thompson and one new Non-Executive, Ralph Alexander.



At the end of 2005 two Executive Directors, Tony Lea and Barry Davison, retired
from the Board.  Tony Lea was our Finance Director from the time of the
formation of Anglo American in 1999 having previously served the Group for many
years in both Anglo American Corporation and Minorco.  He played a pivotal role
in establishing the company's credibility with the investment community.  Tony
successfully handed over his role as Finance Director to Rene Medori last
September, but continues to be available for advice.  Barry Davison joined the
Board in 2001 as Executive Chairman of Anglo Platinum.  Barry is a man with a
real passion for his product and he has played a major role in the rapid
expansion of global platinum demand as well as in negotiations with the South
African Government around the evolving black economic empowerment agenda.  He
continues as non-Executive Chairman of Anglo Platinum.  We are grateful to both
Tony and Barry for their contributions to the success of the Group.



From 1 January, Peter Woicke joined the Board and is proposed for election
today. He has had a distinguished career in finance including as a Managing
Director of the World Bank and as Chief Executive Officer of the International
Finance Corporation.



It is with regret that I report the decision of Dr Maria Silvia Bastos Marques
to step down from the Board after two and a half years.  I would like to thank
her for her distinctive and valued contribution to our deliberations.  I am also
delighted to recommend the election of Dr Mamphela Ramphele who has previously
served as a Non-Executive Director of Anglo American Corporation of South Africa
and as Vice Chancellor of the University of Cape Town.  Dr Ramphele also brings
a distinguished record of public service outside of South Africa including as a
Managing Director of the World Bank.



These changes will bring the Board back into compliance with the Combined Code
requirement that at least half of the Board should be made up of independent
non-Executives - excluding myself.



For the coming year we will be making some changes to the composition of our
Board Committees.  Mr Phaswana will step down from the Remuneration Committee.
Mr Margetts will be leaving the Audit Committee and will be replaced by Mr
Woicke.  Dr Ramphele and Mr Woicke will join the Nominations Committee.  Mr
Alexander and Dr Ramphele will join the Safety and Sustainable Development
Committee.



I should like to thank those Directors who have chaired Board Committees: David
Challen, Chairman of the Audit Committee; Chris Fay, who chairs the Safety and
Sustainable Development Committee; Fred Phaswana who chairs the Nominations
Committee; and Rob Margetts who has led our work on remuneration. I am grateful
for the experience and judgement which each has brought to these important areas
of our work.



International Context

The Chief Executive will report upon the Company's operational performance, but
I would like to preface this with some comments on the changing international
context in which we are working and to touch on some of the issues contained in
our Report to Society 2005 - which was published last week and is available here
today if you would like a copy.



Some 70% of our operations are in developing countries. In many of them
government capacities are limited or lacking, institutions are often weak and
poverty is a major challenge.  The sectors in which we are active have a number
of distinct characteristics.  These include:



•  Firstly, our operations have significant environmental and social
impacts that need to be carefully managed;

•  Secondly, since mining involves the extraction of a non-renewable
natural resource it presents distinct challenges in relation to sustainable
development.  We therefore seek to ensure that during the lifetime of a mine we
balance the depletion of a natural resource through growing the stock of social,
human and man-made capital.  This is not too difficult where there is an
effective State that makes good use of tax revenues - but that is not always the
case;

•  Thirdly, the revenues that we generate are often volatile and may cause
macro-economic difficulties and extractive revenues have sometimes been subject
to wholesale embezzlement by government; and

•  Fourthly, our assets are immobile and once we have committed to the
development of an operation we have a clear incentive to manage relations with
stakeholders in such a way as to minimise conflict and to promote stability and
prosperity.



These distinctive challenges involve us in having to manage a wide range of
increasingly salient social and political risks.  These issues are not
peripheral, but are fundamental to our continuing access to land and resources
and to our ability to attract investors and the best talent.



Moreover, I think we are seeing a retreat from some of the protections of fiscal
and regulatory stability that inward investors enjoyed in many countries during
the late 1990s and the early years of the twenty-first Century.  Fuelled in part
by an increase in nationalism around the exploitation of natural resources and
by the current boom in commodity prices, some governments have been seeking a
proportionately higher tax take.  In such situations, governments need to recall
that investor confidence is important at times of famine as well as feast and
they should avoid tax models which do not reflect market lows or which, through
reducing margins, lessen the resources which can be viably developed.



However, there is an important risk management point here for extractive
companies.  Whilst we cannot and should not take on responsibilities that are
properly those of governments, we also cannot stand aloof from major governance
and social issues in the countries where we operate.



Thus, it is important for our industry to be actively engaged in maximising our
beneficial impacts in areas like poverty reduction and to support good
governance measures, such as the Extractive Industries Transparency Initiative
or the International Council on Mining and Metals' Resource Endowment project.
At a community level it is crucial too for us to understand the needs,
priorities and concerns of the communities where we work through structured
engagement and to seek, through our work in areas like training and supply chain
development, to ensure that other skills and enterprises are generated to take
the strain when mining stops in a locality.  In all these areas, working alone
and through initiatives like the International Council on Mining and Metals, the
Global Compact, the Global Business Coalition on HIV/AIDS, and the new NEPAD
Investment Climate Facility, I believe Anglo American to be at the forefront of
addressing these strategic risks to our business.


Climate Change

I want to highlight one other area that relates to sustainable development,
namely climate change.  As a company with energy use equivalent to that of
Finland, we have a corporate responsibility to manage and reduce our carbon
impacts and to anticipate the likely regulatory developments and costs of carbon
which society will impose.  This is highly relevant to us as a major energy user
- and hence our recent decision to increase our targeted energy saving from 12%
to 15% by 2014, relative to our 2004 baseline - and to use an attributed cost of
carbon in all new investment decisions.   This makes sound commercial sense as
well as being environmentally responsible.



We are also looking at the immediate commercial opportunities created by carbon
trading; by instruments such as the Clean Development Mechanism and from power
generation through the use of methane drained from coal beds before they are
mined - contributing to safer mining as well as to prevention of greenhouse gas
emissions.   We are looking too to be closely involved in technological
innovations designed to mitigate the effects of climate change through, for
example, our membership of the US Government led public-private partnership
FutureGen project; through investigating the potential impact of carbon capture
and storage via our Monash project in Australia; and through Anglo Platinum's
involvement in the development and application of fuel cell technologies.



Anglo American is a long-term business and it is essential that we understand
the strategic and policy imperative which will impact upon our business going
forward.



In closing I would like to place on record - on your behalf - the thanks of the
Board to the Chief Executive and his management team and to all our staff for
their efforts, ingenuity and commitment in delivering another fine set of
results.



I will now ask Tony Trahar to provide an account of the financial and
operational performance of the business and of progress in implementing our
strategy.



         Speech by Tony Trahar, Chief Executive, to the Anglo American

                     Annual General Meeting - 25 April 2006


Thank you Chairman.  I would like to start with a few words about strategy, then
to review the financial and operational highlights of 2005 and to update you on
how we are addressing the issue of safety at our operations.



Before moving to the substance of my remarks may I thank you for your kind words
regarding my planned retirement next year.   As you know, I suggested this
timescale with the clear intention of first completing our strategic
restructuring programme. This will be done with due dispatch after which it
seems to me that it will be a good moment, at the age of 58, to hand over to a
new leadership team so that they can oversee the next phase in the development
and growth of the Group.

Strategy

Over the seven years since Anglo American plc was listed in London, we have
pursued a consistent, but steadily evolving, strategy designed:

  • To simplify our shareholding structure, especially through the unravelling
    of the cross-holding with De Beers, and to increase our transparency;
  • To develop a strong project portfolio as the foundation for
    value-enhancing growth;
  • To increase the synergies available to the Group in areas like information
    management, technology, procurement, sustainable development and human
    resources;
  • To further advance our strong sense of corporate social responsibility in
    the countries in which we operate; and
  • To improve the focus of our business through the disposal of non-core
    assets for value;



In 2005 and the early months of 2006 we have continued to implement this
strategy and we have disposed of Boart Longyear, our mining equipment business,
Samancor Chrome and a number of smaller business interests in our Ferrous and
Industries division for  $1.1 billion.  More fundamentally, at the end of
October, we announced the outcome of our strategic review that had at its heart
the intention to focus increasingly on our core mining business.  This will
entail:

  • The listing of Mondi, our paper and packaging business on the London Stock
    Exchange;
  • The disposal of our South African steel and vanadium business, Highveld;
  • The restructuring of Tongaat Hulett, in which we own a 52% stake, so as to
    list separately its aluminium operations;
  • A strategic review of Tarmac's businesses with a view to improving its
    overall returns;
  • Reducing our stake in AngloGold Ashanti; and finally
  • Buying back $2 billion of our own shares.



On each front progress is being made.



Some shareholders may question why, given our planned focus on mining assets, we
have chosen to reduce our exposure to AngloGold Ashanti at a time of rising gold
prices.  It is important to note the relatively small share of our earnings -
some 3% in 2005 - that now comes from gold.   But more particularly, gold
companies have a distinctive group of investors and trade on different multiples
compared with diversified mining companies.  Thus, the value of our stake in
AngloGold Ashanti has not been fully reflected in our overall market
capitalisation.  Already, through reducing our stake to some 41.8% we have
realised some $1 billion in cash.  The announcement of our strategy on AngloGold
Ashanti and the steady progress with its implementation has been well received
by the markets.



We will continue to support value creating opportunities in Mondi leading up to
a separate listing.   We can take credit for having built Mondi, through a
combination of organic growth and shrewd acquisitions, into a major player in
both business papers and packaging.  Nevertheless, the time is now appropriate
to prepare Mondi for a listing in its own right.



In regard to Tarmac - the core of our industrial minerals division - there are
significant overlaps and synergies between its extractive businesses and many of
the disciplines involved in mining.   It also adds stability and geographical
diversity to our earnings.  Thus we continue to regard it as a core business
whilst seeking to improve its margins and returns on capital.  This process has
already begun, with a number of smaller businesses having been identified for
disposal, and recent acquisitions in Romania, Poland and the Czech Republic
adding to its growing European base.

Financial Performance

During 2005, Anglo American continued its track record of strong earnings
growth, of increasing dividends to shareholders, of identifying and developing
projects to underpin our future growth; and of rigorous cost control.



We reported record underlying earnings of $3.7 billion, an increase of 39%
compared with 2004.  We also achieved record production levels in coal,
diamonds, iron ore, vanadium, nickel, zinc and platinum group metals and Base
Metals, Ferrous Metals and Coal each generated their highest ever contribution
to earnings.  EBITDA was up by  $1.9 billion at $9 billion - enabling us to
reduce debt by almost 40% to $5 billion and to return some $2.5 billion to
shareholders through a special dividend and buy-back programme.



These good results were driven by strong commodity prices and the continuing
expansion of the Group's production base.  Compared with 2004, the average
prices in 2005 for a number of our key commodities were up 300% for vanadium,
71% for iron ore, 28% for copper; 32% for zinc; 6% for platinum and nickel and
9% for gold.   This strength has continued into 2006 with copper up 51% at the
end of the first quarter compared with a year before, zinc up 70%, platinum up
20% and gold up 29%.  Moreover, the relative robustness of the performance of,
and confidence in, the global economy has led most commentators to expect prices
to remain firm during 2006.   This is underpinned in the case of a number of
commodities by relatively restricted supply growth and the steep increase in
many mining and processing input costs, not least of which are rising energy
cots.  The increasing involvement of investment funds does, however, add a
greater element of unpredictability to the markets and we have seen considerable
price volatility in recent weeks.



But the scale of our earnings growth did not result from passivity in the face
of rising prices.  A number of measures that we have put in place over the last
two years significantly enhanced our performance.  An example of this was our
ability to deliver $730 million in cost and efficiency savings in 2005, up 32%
on 2004.  Whilst preserving the entrepreneurial flexibility of our business
units we have increasingly sought to leverage the resources of the Group more
effectively across disciplines including procurement, talent management, and
technical and research support.   We are currently embarking upon a similar
process in relation to Information Technology through a major infrastructure
consolidation process.  We are also planning a significant drive to support
knowledge sharing and collaboration across business units and disciplines
through our new global information portal.



In relation to growth opportunities, the most cost effective route is through
the development of our own greenfield projects or brownfield expansions and we
have one of the largest project pipelines in the industry.  In 2005 we
authorised several new platinum projects and Anglo Platinum expects to increase
production from 2.45 million ounces last year to between 2.7 and 2.8 million
ounces in 2006.



In coal we have agreed the expansion of the Dawson project and the go-ahead for
the new Lake Lindsay colliery - both in Australia.  These metallurgical coal
projects represent an investment of $1.4 billion.  I visited the Australian coal
operations last month with the Chairman and the Safety Committee and we were
most impressed with the potential for further expansion.  In South Africa, and
subject to regulatory clearances, we expect to see the $264 million Mafube
project get under way and in Colombia an expansion at Cerrejon Coal from 28
million to 32 million tonnes per annum has been approved.



In 2005, the Board also approved a $559 million expansion of iron ore operations
at Kumba's Sishen mine.  This will increase production from the mine by 10
million tonnes by 2009.  Our associate company, De Beers, is proceeding with the
Snap Lake and Victor projects in Canada, and the Voorspoed project in South
Africa.   Our Base Metals operations are progressing feasibility studies for the
new Barro Alto nickel project in Brazil; and for a major expansion at the Los
Bronces copper mine in Chile.



In total, the Group has a current approved project portfolio of $6.7 billion
with a further $10 billion to $15 billion of projects under consideration. These
will underpin our growth prospects across the board.

Black Economic Empowerment

Chairman, you referred to the importance of companies working with our host
societies to address their major socio-economic challenges. This is particularly
relevant for Anglo American in South Africa where a great deal still needs to be
done to address the legacies of the apartheid era.  Anglo American has been at
the forefront of business attempts to spread opportunities to new black
entrepreneurs.  At the grassroots level this is reflected in our drive to
procure more from BEE companies - this expenditure has grown from R800 million
in 1999 to R9 billion in 2005.  Last year we had the honour of hosting President
Mbeki at an exhibition that he asked us to stage about the work of our Anglo
Zimele, our business development incubator.  At any one time this is invested in
some 25 to 30 companies supporting over 2,000 jobs.



I am pleased to note that AngloGold Ashanti has been granted its new order
mineral rights.  In relation to equity ownership, the Anglo American Group has
helped to catalyse the emergence of several major South African black-owned
mining companies.  Over the last year, we have facilitated, through our
subsidiary, Kumba, the creation of the largest black-owned, managed and
controlled mining company in South Africa and we have supported De Beers'
genuinely broadly-based empowerment deal with Ponahalo.



We are also proud of the progress that is being made in establishing wider
employee share ownership schemes across our Group in South Africa.  We are
making good progress too in increasing the proportion of historically
disadvantaged South Africans in our management ranks.

BRICs

We are looking at opportunities arising from new geographies.  The balance of
power in the world economy has been shifting dramatically over the last five
years - a process which seems certain to accelerate - as the BRIC economies,
Brazil, Russia, India and China, come increasingly to the fore.  These economies
and their material intensive growth patterns are to a large extent driving
commodity markets - as did the demands of Japanese growth in the 1960s and
1970s.



We have a long-established presence in Brazil with identified expansion
opportunities.  In Russia our most significant asset is Mondi's Syktyvkar mill
but we have also established a representative office in Moscow and are looking
at further opportunities.  India is already a significant market for a number of
our products and we are looking to establish a representative office during 2006
to bring us closer to operational opportunities.  In China, which is already a
major market for our products, Tarmac, Kumba and Mondi each have small
operations and AngloGold Ashanti and Anglo Platinum have active exploration
programmes.   Anglo Coal has a number of significant opportunities under review.




During 2005, we acquired a small stake in major Chinese coal producer, Shenhua.
We intend to look not only at conventional opportunities to acquire and develop
mines but also at new partnerships both within the BRIC economies and
internationally with the significant companies that are emerging from these
countries.


Safety and Corporate Social Responsibility

One of our greatest challenges has been to improve our safety record.  We have
made a lot of progress since 1999 with a major reduction in both our number of
fatalities and our lost time injury frequency rate.  It has been a consistent
priority at all levels from the board room to the stope. We have many examples
of excellence with Base Metals, for example, not having had a fatality in over
16 months anywhere in the world.  Over the last two years we have, nonetheless,
seen a slowing in the momentum of improvement.  We continue to suffer injuries
and fatalities amongst our 128,000 employees and 44,000 contractors at our
managed operations.



Over the last few months we have introduced a new framework of non-negotiable
standards - the Anglo Safety Way.  All senior managers, including myself, have
attended a new safety training module, developed by Du Pont, as the start of a
cascade process.  We have also introduced a new safety peer audit process that
has been successfully introduced around the Group and in terms of culture we are
determined that lessons are captured and learned more effectively from safety
incidents and that our managers accept that 'zero harm' is a realistic goal in
our operations.  I hope to be able to report on a much improved safety
performance at next year's meeting.



Chairman, in your remarks you referred to a number of the important initiatives
which we are pursuing in relation to sustainable development.  I can confirm
that the executive team see these challenges as central to the long-term future
of our business including our access to capital, to talent and to land and
resources.  Our recently released "Report to Society", which is available to
shareholders at this meeting, clearly sets out the many exciting programmes we
have underway at our operations - and the progress that is being made on this
front.

Conclusion

Ladies and Gentlemen, 2005 was a year of significant achievement.  We achieved
record earnings, production was up, costs were contained, projects were
delivered on time, and further organic growth prospects were added.  We have
also set ourselves clear strategic targets for refocusing the Group to realise
value and to provide the foundation for future growth.



In terms of risks, Chairman you have referred to issues of resource nationalism
and higher taxes in some jurisdictions.  There are also major cost pressures
bearing upon a number of our key inputs which we have, to date, been largely
successful in containing.   Although there are also clearly concerns in the
world economy arising from trade imbalances, the scale of the US deficit and the
inflationary pressures which may result from higher energy prices, the overall
outlook remains encouraging, with leading indicators signalling continuing
strong global growth and robust underlying demand.  If prices and demand
continue at, or near, current levels the Group can expect another strong year.



                      This information is provided by RNS
            The company news service from the London Stock Exchange