Interim Results

RNS Number : 2704A

Anglo American PLC

31 July 2008

News Release

Half year financial report

31 July 2008

Anglo American announces record half year underlying earnings of $3.5 billion

Half year financial results

· Record Group operating profit⁽¹⁾ of $6.2 billion, with operating profit from core operations⁽²⁾ up 30% to $6.0 billion

· Highest ever total Group underlying earnings⁽³⁾ of $3.5 billion up 14%

· Total Group underlying earnings per share up 33% to $2.90

· Strong performances from Ferrous Metals, Coal, Base Metals and Diamonds, with increased production of iron ore, coal and copper

· Total Group profit for the period attributable to equity shareholders up 27% at $4.3 billion

$45 billion pipeline driving production growth

· Approved project pipeline increased to $15 billion to deliver substantial volume growth in the most attractive commodity segments:

- Significant new iron ore and coal production on stream in 2008

- Collahuasi debottlenecking on schedule to enter production in Q4 2008

- Barro Alto nickel project 40% complete and on track for Q1 2010

- Minas-Rio – phase 1 of iron ore project under construction to start up during 2010

- Los Bronces copper expansion project on schedule for production in 2011

- Twickenham platinum expansion project approved to produce 180,000 oz per annum

- Michiquillay copper project – community agreements reached and exploration under way

Strong outlook for the full year

· Strong 2^nd half expected from operational performance

· Executive team in place – including new CEOs for Anglo Platinum, Coal, Kumba Iron Ore and Anglo American South Africa

· New Order Mining Right conversions awarded across Anglo American’s South African mining businesses

· Good progress on safety, with LTIFR trending downwards

· Solutions to power supply constraints being implemented in South Africa

Dividend

· Interim dividend up 16% to 44 cents per share

HIGHLIGHTS FOR THE SIX MONTHS ENDED 30 JUNE 2008 US$ million, except per share amounts	6 months ended 30 June 2008	6 months ended 30 June 2007	Change
Total Group revenue including associates(4)	17,915	19,849	(9.7)%

Operating profit including associates before special items and remeasurements - core continuing operations(1)(2)	5,974	4,608	29.6%
Operating profit including associates before special items and remeasurements - total Group(1)	6,181	5,452	13.4%

Underlying earnings for the period - total Group(3)	3,483	3,058	13.9%

EBITDA - total Group(5)	7,038	6,554	7.4%

Net cash inflows from operating activities - total Group	3,822	3,678	3.9%

Profit for the period attributable to equity shareholders - total Group	4,281	3,379	26.7%

Earnings per share (US$):
Basic earnings per share - total Group	3.56	2.41	47.7%
Underlying earnings per share - total Group	2.90	2.18	33.0%
Interim dividend (US cents per share)	44	38	15.8%

(1) Operating profit includes share of associates' operating profit (before share of associates' tax, finance costs and minority interests) and is before special items and remeasurements, unless otherwise stated. See note 4 to the condensed financial statements for operating profit on a continuing Group basis. For definition of special items and remeasurements see note 6 to the condensed financial statements.

(2) Continuing operations considered core to the Group are Base Metals, Platinum, Ferrous Metals' core businesses (Kumba Iron Ore, Scaw Metals, Samancor Manganese and Minas-Rio), Coal and Diamonds. See the operating profit and underlying earnings tables in the Financial review of Group results section for a reconciliation of operating profit and underlying earnings from core operations to total Group.

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

(4) Represents total Group revenue (including the revenue of discontinued operations) and includes the Group's share of associates' revenue of $3,384 million (six months ended 30 June 2007: $2,903 million). See note 3 and 14 to the condensed financial statements.

(5) EBITDA is operating profit before special items, remeasurements, depreciation and amortisation in subsidiaries and joint ventures and share of EBITDA of associates. See note 13 to the condensed financial statements for analysis of EBITDA by continuing and discontinued operations.

Cynthia Carroll, Chief Executive, said:

"I am pleased to announce another record performance by Anglo American, reporting operating profit of $6.2 billion for the half year and underlying earnings of $3.5 billion. The key drivers of this performance were production growth in copper, iron ore, manganese ore, coal and phosphates, continued strength in the commodity price environment and the early benefits of tighter operational discipline across the businesses.

Our $45 billion project pipeline, which now includes some $15 billion of approved projects, is set to deliver substantial volume growth in the most attractive commodity segments across the near, medium and long term. Our near term projects are on track to deliver significant new coal and iron ore production this year, with the Dawson and Lake Lindsay coking coal projects in Australia and the Sishen iron ore expansion project all now ramping up to full production. We have also approved a number of new projects in South Africa, including the Twickenham platinum expansion project, the Amandelbult No.4 shaft platinum replacement project and, most recently, the Sishen South iron ore project.

This half year we have seen further strategic progress with the shape of the portfolio through the disposal of non-core holdings, including the sale of our stake in China Shenhua Energy and the announced sale of Tarmac Iberia, with combined proceeds in excess of $900 million.

We are focused on achieving growth in our core mining businesses, making targeted, value enhancing acquisitions and on uplifting the performance of our existing long life asset base. These initiatives to drive operational improvements are particularly important at a time when the industry continues to experience significant cost pressures across the supply chain. We are also making excellent progress in driving cultural change across the Group by capitalising on our scale with increased integration, knowledge-sharing across business units and adherence to common standards and policies. We are also embedding a performance culture throughout the organisation and building a management team driven by value maximisation. I am delighted with the changes we have made to strengthen our operational management capabilities, particularly in our platinum and coal businesses.

In April, the South African Department of Minerals and Energy granted new order mining rights across our South African mining operations. This significant achievement provides an ever stronger platform for our $8 billion of approved projects in South Africa, our employees, contractors and for the many black empowered businesses with which we are partners. This is good news for Anglo American and for South Africa as we continue to grow our businesses and contribute to the country's economic prosperity.

Last year we initiated a step change in our safety practices across the Group and Anglo American today is helping to lead the way, particularly in South Africa, working together with the unions and the government to achieve a safer, more productive industry. I am pleased to say that our new global safety risk management training is under way and we are continuing to make good progress at the operations, with significant incidents reduced by more than 50% year-on-year and extended periods of incident free, safe production. This progress reflects increased trust and dedication on the part of our employees. We are re-energised as a group and working on our journey to "Zero Harm".

The power constraints in South Africa continue to have an impact on our businesses in the country and we are working closely with Eskom and the government to identify solutions. Among many initiatives, Anglo American is stepping up its own energy efficiency programmes, in addition to procuring some 85 MW of supplementary power.

Despite the macro outlook for the second half remaining uncertain due to the evident slowdown in many developed economies, this is offset by continued strong demand, particularly from the developing economies, led by China. We expect a strong second half to the year driven by increased production, further improvements in our operational performance and robust pricing. Anglo American's unique portfolio, spanning precious, base and bulks, positions us well to maximise the benefit from the strong demand environment as we capture the full value of our considerable growth prospects."

Review of the six months ended 30 June 2008

Financial results

Anglo American's first half total Group underlying earnings were a record $3.5 billion as continued strong metal prices reflected the favourable trading environment for the Group's key commodities and volumes improved in most commodities. Operating profit from the Group's core operations was 30% higher than for the corresponding period last year at $6.0 billion.

Strong contributions came from Ferrous Metals, Coal, Base Metals and Diamonds, which all achieved higher operating profit in the period. Platinum recorded lower operating profit due to lower refined production volumes and higher inflation. Industrial Minerals suffered from the downturn in the UK housing market.

Base Metals generated an operating profit of $2,454 million (41% of Anglo American's total operating profit from core operations), up 13%, due to increased copper and phosphate fertiliser production and higher copper, lead and fertiliser prices.

Platinum reported operating profit of $1,467 million (25% of Anglo American's total operating profit from core operations), down 3%, due to lower refined production volumes, partially offset by higher US dollar prices and the weaker average rand in relation to the US dollar.

Ferrous Metals' operating profit increased 80% to $1,296 million, with operating profit from its core businesses increasing by 129% to $1,252 million, (21% of Anglo American's total operating profit from core operations), mainly due to higher iron ore and manganese ore sales volumes and prices, and manganese alloy prices.

Coal recorded operating profit of $731 million (12% of Anglo American's total operating profit from its core operations), 129% higher, mainly due to higher prices for both thermal and metallurgical export coal and higher production, particularly at the Australian operations.

Diamonds recorded attributable operating profit of $328 million (5% of Anglo American's total operating profit from core operations), up 23%, principally due to the steady increase in the price of diamonds during the period.

Industrial Minerals' operating profit fell 22% to $163 million reflecting the difficult trading conditions in key markets such as Spain and the UK, as well as the impact of significant cost increases. Excluding the results of Tarmac Iberia, the sale of which is due to complete during Q3, results were 17% below the same period in the prior year.

Production

Production volumes were up for copper, zinc, iron ore, manganese ore, coal and phosphate fertilisers. Platinum production volumes from mining operations were down on the prior year due to flooding at the Amandelbult mine, skilled labour shortages, safety related stoppages, lower throughput at the Mogalakwena (formerly Potgietersrust or 'PPRust') South concentrator and electricity constraints. Nickel production was down following labour related disruptions and furnace downtime at Loma de Níquel.

Capital structure and increased return to shareholders

Net debt, excluding hedges, has increased by $161 million since 31 December 2007 and at 30 June 2008 amounted to $5.4 billion, reflecting the impact of the acquisition of the Foxleigh coal mine in Queensland, Australia, planned capital expenditure, the share buyback and the purchase of additional shares in Anglo Platinum Limited. This was partly offset by proceeds from disposal of our equity interest in China Shenhua Energy. The $4 billion share buyback programme announced in August 2007, is 35% complete, with around $1.4 billion of shares having been repurchased at 30 July 2008.

Dividends

The interim dividend has been set at 44 US cents per share (cps) - 16% higher than the 38 cps interim dividend declared for the first half of 2007.

Strategic update

Anglo American has made further progress in 2008 as the Group focuses on its core mining businesses and optimises its unique portfolio of assets.

In May, the disposal of our interest in China Shenhua Energy was announced, realising cash proceeds of approximately $700 million. In June, the sale of Tarmac Iberia to Holcim was announced for a consideration of up to $230 million. The Tarmac group continues to be managed to maximise shareholder value while options for its sale are being explored.

The asset optimisation scheme to improve operational efficiencies at site level and to allow performance benchmarking is delivering benefits. For example, at the German Creek coal operation in Australia, plant debottlenecking has resulted in a record first half performance, increasing production from 118 kt to 167 kt per week, a 42% increase. Similarly at Dawson, blending has delivered a 30% value increase in coking coal. The scheme is being rolled out across the Group, delivering more value from existing assets, in terms of resources, equipment and people.

Anglo American was granted its new order mining rights conversions by the South African Department of Minerals and Energy in April. This relates to the conversion of all the mineral rights in Anglo American's South African Coal, Ferrous Metals, Base Metals and Platinum businesses. The applications for conversion of mineral rights associated with Anglo Platinum's 50:50 joint ventures with Royal Bafokeng Resources and the African Rainbow Minerals consortium continue and are being processed based on joint submissions and representations by all stakeholders.

Several senior management changes have been announced in 2008, marking a significant strengthening of the leadership team, involving a combination of internal and external appointments. Neville Nicolau was appointed CEO of Anglo Platinum and Ian Cockerill was appointed CEO of Anglo Coal, joining from Gold Fields. Following Ras Myburgh's secondment to Eskom, Chris Griffith moved from Anglo Platinum to become CEO of Kumba Iron Ore. Kuseni Dlamini was appointed Head of Anglo American South Africa, Russell King was appointed Chief Strategy Officer and Andrew Hinkly was appointed Global Head of Procurement and Supply Chain. The two previous Joint Acting CEOs of Anglo Platinum have been appointed to new roles within the Group; Norman Mbazima becomes CEO of Scaw Metals and Duncan Wanblad was appointed CEO of Copper in the Base Metals division of Anglo American.

Delivering profitable growth through projects and acquisitions

Anglo American's $45 billion project pipeline includes some $15 billion of approved projects that are currently under development (compared to $12 billion at 20 February 2008). These projects are set to deliver considerable organic growth in the near, medium and long term and will build upon the Group's existing portfolio of assets in precious, base metals and bulk commodities.

Recently approved platinum projects in South Africa include the $800 million Twickenham expansion project, which is expected to produce 180,000 oz of refined platinum per annum by 2016 and the $1.6 billion Amandelbult No.4 shaft 271,000 oz replacement project. Anglo Platinum's Mogalakwena North expansion project is on schedule to reach full production in 2009 and to produce an additional 230,000 oz per annum of refined platinum.

Kumba Iron Ore's Sishen Expansion Project made its first contribution to production during the period, having been commissioned at the end of 2007. The $782 million Sishen South project has also been approved and is expected to produce 9 Mtpa of iron ore, with first production forecast for 2012.

In Peru, where one of Anglo American's key priorities has been to build strong and supportive relationships with local communities, agreement was reached in June with the communities around the proposed Michiquillay copper project and exploration activity has now commenced. This project has the potential to produce up to 300,000 tpa of copper from one of the largest undeveloped copper deposits in the world. The feasibility study for Anglo American's other major investment in Peru, at the Quellaveco copper deposit, is now at an advanced stage.

In Chile, the expansion of Los Bronces is progressing on schedule for completion in 2011 and will increase copper production by an average of 170,000 tpa to an initial production level exceeding 400,000 tpa. The debottlenecking project at Collahuasi, also in Chile, is on schedule to enter production in the fourth quarter of 2008, increasing sulphide mill throughput to 140,000 tpd.

In Brazil, the 36,000 tpa Barro Alto ferronickel project is 40% complete and is progressing well, on track to begin production in the first quarter of 2010.

Also in Brazil, Anglo American has agreed to acquire a 63.3% shareholding in a new company ("IronX"), which holds a 51% interest in the Minas-Rio iron ore project and 70% in the Amapá iron ore system, from Eike Batista and other selling shareholders for $3.5 billion. Subject to the satisfaction of final conditions under the transaction agreements, this transaction will be completed by 5 August 2008. Following completion of this transaction, Anglo American has committed to extend the offer to the minority shareholders in IronX at the same price per share. The successful completion of the offer to the minority shareholders will result in Anglo American owning 100% of the Minas-Rio project, 70% of the Amapá system and 49% of LLX Minas-Rio, the owner of the Port of Açu, at a cost of approximately $5.5 billion in cash for 100% of the issued and outstanding shares in IronX. This would mark a significant step in Anglo American's aim of becoming a substantial player in the global seaborne iron ore trade.

Anglo American's coal projects at Dawson, Lake Lindsay and Mafube are all ramping up towards full production. The construction of the MacWest project is advanced, with first coal having been produced in July. The Zondagsfontein mixed product mine is progressing well and first coal production is due in 2009. The acquisition of a 70% shareholding in Foxleigh was completed in February and is contributing to 2008 profits.

At De Beers, the Victor diamond mine in Ontario, Canada has been commissioned more than eight months ahead of schedule, with full production expected in the third quarter of 2008. The Snap Lake mine in the Northwest Territories was brought into commercial production in early 2008 and is expected to reach full production in the second half. In South Africa, the commissioning of Voorspoed in the Free State is under way, and its first diamonds were recovered in June 2008, ahead of schedule.

Outlook

The global macro-economic outlook continues to be uncertain, with US economic activity expected to be weak in the near term. It is also clear that the constraints in the credit markets are far from resolved and risk rates have not yet returned to normalised or long-term levels.

However, in emerging markets, the Chinese economy in particular continues to develop and is expected to grow at around 10% in 2008/09. This growth is relatively resilient, being driven primarily by the secular domestic trend of urbanisation and development. Furthermore, this growth is driving an increasing intensity of use for the commodities that China requires to build its infrastructure, such that China now represents the largest regional consumer of many key commodities and is the dominant driver of demand growth.

On the supply side, a number of operational challenges across the industry have led to near-term supply being lower than anticipated (e.g. power availability in a number of countries, infrastructure bottlenecks, weather-related shortages and labour issues), while in the longer term the mining industry is adjusting to the higher demand environment. It seems likely that the industry will be working hard for some years to keep pace with this sustained higher level of demand and that higher than inflation cost pressures will remain. Consequently, the balance of supply and demand should sustain strong prices for many of Anglo American's key commodities despite the current challenges in the developed economies.

Selected major projects


Sector	Project	Country	First production date	Full production date	Capex $m(1)	Production volume(2)
Platinum	Mototolo JV	South Africa	Q4 2006	2008	200	130 kozpa refined platinum
	Marikana JV	South Africa	Q1 2006	2009	36	145 kozpa refined platinum
	Mogalakwena North expansion(3)	South Africa	Q4 2007	2009	692	230 kozpa refined platinum
Newly approved	Mogalakwena North replacement(3) MC plant capacity expansion - phase 1	South Africa South Africa	Q4 2007 Q3 2009	2009 2009	230 80	Replace 200 kozpa refined platinum 11 ktpa waterval converter matte
	Mainstream inert grind projects	South Africa	Q4 2009	2010	188	Improve process recoveries
Newly approved	Lebowa Brakfontein Merensky Slag cleaning furnace 2	South Africa South Africa	Q2 2008 Q4 2009	2010 2010	179 134	Replace 108 kozpa refined platinum 650 tpd increased slag cleaning capacity
	Base metals refinery expansion	South Africa	Q3 2009	2010	279	11 ktpa nickel
	Amandelbult East Upper UG2	South Africa	Q3 2007	2012	224	100 kozpa refined platinum
	Townlands ore replacement	South Africa	Q4 2007	2014	139	Replace 70 kozpa refined platinum
	Paardekraal	South Africa	Q2 2010	2015	316	Replace 120 kozpa refined platinum
Newly approved Newly approved	Twickenham Amandelbult No 4 shaft project	South Africa South Africa	Q1 2012 Q4 2015	2016 2019	800 1,602	180 kozpa refined platinum Replace 271 kozpa refined platinum
Diamonds	Snap Lake	Canada	-	2008	997	1.6 m carats pa
	Victor	Canada	-	2008	1,021	0.6 m carats pa
	Voorspoed	South Africa	-	2009	185	0.7 m carats pa
Base Metals	Collahuasi debottlenecking	Chile	Q4 2008	2009	64	30 ktpa copper(4)
	Barro Alto	Brazil	Q1 2010	2011	1,500	36 ktpa nickel
	Los Bronces expansion	Chile	Q1 2011	2011	1,744	170 ktpa copper(4)(5)
Ferrous Metals	Sishen expansion	South Africa	Q4 2007	2009	754	13 mtpa iron ore
	Minas-Rio phase 1	Brazil	Q4 2010	2011	3,456	26.5 mtpa iron ore pellet feed (wet basis)
Newly approved	Sishen South(6)	South Africa	H1 2012	2013	782	9 mtpa iron ore
Coal	Dawson	Australia	Q3 2007	2008	839	5.7 mtpa coking, semi-soft and thermal
	Lake Lindsay	Australia	Q4 2007	2008	726	4.0 mtpa coking & semi-soft
	Mafube	South Africa	Q4 2007	2008	218	5.4 mtpa thermal
	Cerrejón	Colombia	Q1 2007	2008	131	3.0 mtpa (2nd stage) thermal
	MacWest	South Africa	Q3 2008	2009	47	2.7 mtpa thermal
	Zondagsfontein	South Africa	Q2 2009	2010	505	6.6 mtpa thermal


Sector	Project	Country	First production date	Full production date	Capex $m(7)	Production volume(2)
Base Metals	Quellaveco	Peru	2013	2013	2,200	200 ktpa copper(4)
	Collahuasi expansion phase 1	Chile	2010	2010	750	650 ktpa copper(4)(8)
	Collahuasi expansion phase 2	Chile	2014	2015	TBD	1,000 ktpa copper(4) (8)
	Michiquillay	Peru	2016	2017	TBD	300 ktpa copper(4)
	Pebble	USA	2015	2020	TBD	350 ktpa copper(4)
Ferrous Metals	Sishen Pellet	South Africa	2014	2015	338	1.5 mtpa iron ore pellets
	Sishen Expansion 2 Sishen C Grade	South Africa South Africa	2013 TBD	2014 TBD	775 TBD	10 mtpa iron ore 10 mtpa iron ore
	Minas-Rio phase 2	Brazil	TBD	TBD	TBD	26.5 mtpa pellet feed (wet basis)
Coal	Heidelberg opencast	South Africa	2009	2009	35	0.9 mtpa thermal
	Elders opencast	South Africa	2009	2011	450	6.4 mtpa thermal
	Heidelberg underground	South Africa	2013	2014	300	4.2 mtpa thermal
	Elders underground	South Africa	2011	2012	240	3.2 mtpa thermal
	New Largo	South Africa	2012	2015	670	14.7 mtpa thermal

The Group has a number of other projects under evaluation including Der Brochen, Pandora and Styldrift in Platinum, Cerrejón P40 and Roman in Coal and Gahcho Kue in Diamonds.

(1) Capital expenditure shown on 100% basis, unless otherwise stated. Platinum and Ferrous Metals projects reflect approved capex. Estimates for Base Metals, Platinum and Diamonds are presented on a nominal basis, estimates for Coal and Ferrous Metals are presented on a real basis

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

(3) Mogalakwena was formerly known as PPRust

(4) Projects will also produce molybdenum and silver by-products, Pebble will produce molybdenum and gold by-products and Michiquillay will produce molybdenum, gold and silver
by-products

(5) Production represents average over first 10 years of the project

(6) Sishen South was approved on 30 July 2008

(7) Shown on 100% basis, approximate amounts

(8) Total production of mine when project ramps up to full production

For further information, please contact:

United Kingdom

Anna Poulter, Investor Relations
Tel: +44 (0)20 7968 2155

James Wyatt-Tilby, Media Relations

Tel: +44 (0)20 7968 8759

South Africa

Pranill Ramchander, Media Relations

Tel: +27 (0)11 638 2592

Notes to editors:

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

Webcast of presentation:

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

Note: Throughout this half year financial report '$' denotes United States dollars and 'cents' refers to United States cents; operating profit includes associates' operating profit, is before special items and remeasurements and refers to continuing operations, unless otherwise stated; special items and remeasurements are defined in note 6 and results of discontinued operations are presented in note 14. Underlying earnings refers to continuing operations unless otherwise stated and is calculated as set out in note 9 to the condensed financial statements. EBITDA is operating profit before special items and remeasurements, depreciation and amortisation in subsidiaries and joint ventures and share of EBITDA of associates and refers to continuing operations unless otherwise stated. EBITDA is reconciled to total profit from operations and associates in note 13 to the condensed financial statements and to cash inflows from operations in the primary statements.

Financial review of Group results*

Group operating profit was a record $6,181 million, with operating profit from core operations of $5,974 million up 30% compared to the corresponding period in 2007. There was a significantly increased contribution from Ferrous Metals' core businesses and from Coal, as well as increased contributions from Diamonds and Base Metals where operating profit was higher than in the same period in 2007. Platinum's operating profit was slightly lower than the corresponding period in 2007, although contribution to underlying earnings increased. The main driver for the increase in Group operating profit was higher prices realised in the period, including copper, iron ore, manganese, coal and phosphate fertilisers. Increased volumes from copper, phosphate fertilisers, coal, iron ore and manganese ore also contributed to the increase. Coal production in Australia in the first half was up 20% on 2007, with record production in the latter months of the first half of 2008. Industrial Minerals' contribution was lower as a result of the weakening housing market in the UK.

Group underlying earnings per share on a continuing basis for the period were $2.90, an increase of 45% compared with 2007. Record Group underlying earnings were $3,483 million, with underlying earnings from core operations up 28% to $3,314 million.

Underlying earnings $ million		6 months ended 30 June 2008	6 months ended 30 June 2007⁽¹⁾
Profit for the financial period attributable to equity shareholders		4,281	3,034
Operating special items including associates		26	(4)
Operating remeasurements including associates		(8)	(13)
Net profit on disposals including associates		(643)	(195)
Financing remeasurements including associates:
	Foreign exchange gain on De Beers preference shares	(18)	(1)
	Unrealised net gains on non-hedge derivatives	(182)	(27)
Tax on special items and remeasurements including associates		8	43
Minority interests on special items and remeasurements including associates		19	(33)
Underlying earnings – continuing operations		3,483	2,804
Underlying earnings – discontinued operations		–	254
Underlying earnings – total Group		3,483	3,058
Underlying earnings – core continuing operations		3,314	2,590
Underlying earnings per share ($) – continuing operations		2.90	2.00
Underlying earnings per share ($) – discontinued operations		–	0.18
Underlying earnings per share ($) – total Group		2.90	2.18

(1) Comparatives have been adjusted to reclassify amounts relating to discontinued operations

Profit for the period attributable to equity shareholders after special items and remeasurements increased by 41% to $4,281 million compared with $3,034 million in the corresponding period in the prior year. The increase relates mainly to strong operational results, as discussed above and in the Chief Executive's statement, and an increase in net profit on disposals as well as a higher net unrealised gain on non-hedge derivatives related to net debt.

Net profit on disposals of $643 million including associates, was $448 million higher than in the same period in 2007, and includes the net profit of $551 million arising on sale of the investment in China Shenhua Energy.

* Throughout the financial review, the Group results are presented on a continuing basis unless otherwise stated

The Group's results are influenced by a variety of currencies owing to the geographic diversity of the Group. The South African rand on average weakened against the US dollar compared with the same period in 2007, with an average exchange rate of R7.66 compared with R7.16. Currency movements positively impacted underlying earnings by $66 million. The weaker rand benefited operating results, although this was partly offset by the stronger Brazilian real, Chilean peso and Australian dollar. There was a significant beneficial effect on underlying earnings from increased prices amounting to $1,265 million, particularly in respect of platinum, palladium, rhodium, copper, iron ore, manganese, coal and phosphates.

Summary income statement $ million	6 months ended 30 June 2008	6 months ended 30 June 2007⁽¹⁾
Operating profit before special items and remeasurements	5,121	4,496
Operating special items	(22)	7
Operating remeasurements	25	19
Operating profit from subsidiaries and joint ventures	5,124	4,522
Net profit on disposals	640	175
Share of net income from associates⁽²⁾	658	321
Total profit from operations and associates	6,422	5,018
Net finance costs before special items and remeasurements	(159)	(65)
Financing special items and remeasurements	205	21
Profit before tax	6,468	4,974
Income tax expense	(1,590)	(1,480)
Profit for the financial period – continuing operations	4,878	3,494
Minority interests	(597)	(460)
Profit for the financial period attributable to equity shareholders – continuing operations	4,281	3,034
Profit for the financial period attributable to equity shareholders – discontinued operations	–	345
Profit for the financial period attributable to equity shareholders – total Group	4,281	3,379
Basic earnings per share ($) – continuing operations	3.56	2.17
Basic earnings per share ($) – discontinued operations	–	0.24
Basic earnings per share ($) – total Group	3.56	2.41

Group operating profit including associates before special items and remeasurements – continuing operations	6,181	4,990
Group operating profit including associates before special items and remeasurements – discontinued operations	–	462
Group operating profit including associates before special items and remeasurements – total Group	6,181	5,452
⁽¹⁾Comparatives have been adjusted to reclassify amounts relating to discontinued operations

⁽²⁾Operating profit from associates before special items and remeasurements – continuing operations	1,060		494
Operating special items and remeasurements	(21)		(9)
Operating profit from associates after special items and remeasurements – continuing operations	1,039		485
Net profit on disposals	3		20
Net finance costs (before remeasurements)	(41)		(40)
Financing remeasurements	(5)		7
Income tax expense (after special items and remeasurements)	(313)		(130)
Minority interests (after special items and remeasurements)	(25)		(21)
Share of net income from associates – continuing operations	658		321

In this document, reference has been made to core continuing operations. Operations considered core to the Group are Base Metals, Platinum, Ferrous Metals' core businesses (Kumba Iron Ore, Scaw Metals, Samancor Manganese and Minas-Rio), Coal and Diamonds. The tables below reconcile operating profit and underlying earnings from core operations to total Group operating profit and underlying earnings.

Operating profit $ million	6 months ended 30 June 2008	6 months ended 30 June 2007(1)
Base Metals	2,454	2,165
Platinum	1,467	1,517
Ferrous Metals - core businesses(2)	1,252	546
Coal	731	319
Diamonds	328	266
Corporate and Exploration(3)	(258)	(205)
Operating profit including associates before special items and remeasurements - core continuing operations	5,974	4,608
Industrial Minerals	163	209
Ferrous Metals - other businesses(2)	44	173
Operating profit including associates before special items and remeasurements - continuing operations	6,181	4,990
Operating profit including associates before special items and remeasurements - discontinued operations	-	462
Operating profit including associates before special items and remeasurements - total Group	6,181	5,452

Underlying earnings $ million	6 months ended 30 June 2008	6 months ended 30 June 2007(1)
Base Metals	1,494	1,504
Platinum	850	717
Ferrous Metals - core businesses	675	236
Coal	543	242
Diamonds	166	156
Corporate and Exploration(3)	(414)	(265)
Underlying earnings including associates before special items and remeasurements - core continuing operations	3,314	2,590
Industrial Minerals	139	181
Ferrous Metals - other businesses	30	33
Underlying earnings including associates before special items and remeasurements - continuing operations	3,483	2,804
Underlying earnings including associates before special items and remeasurements - discontinued operations	-	254
Underlying earnings including associates before special items and remeasurements - total Group	3,483	3,058

(1) In the second half of 2007, Yang Quarry was reclassified from Industrial Minerals to Coal to align with internal management reporting. As such, the comparative data has been reclassified

(2) See Ferrous Metals and Industries operations review

(3) Corporate includes corporate activities, unallocated costs and insurance costs

Special items and remeasurements

	6 months ended 30 June 2008			6 months ended 30 June 2007(1)
$ million	Excluding associates	Associates	Total	Excluding associates	Associates	Total
Operating special items	(22)	(4)	(26)	7	(3)	4
Operating remeasurements	25	(17)	8	19	(6)	13
Operating special items and remeasurements	3	(21)	(18)	26	(9)	17

(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations

Operating special items and remeasurements, including associates, amounted to $18 million. The $8 million operating remeasurement gain relates to net gains on non-hedge derivatives, principally due to a net gain on foreign currency instruments held by MMX Minas-Rio and LLX Minas-Rio, partially offset by an unrealised loss on an embedded derivative at Minera Loma de Níquel and net losses on non-hedge derivatives from associates. This was offset by operating special items of $26 million which included costs associated with the "One Anglo" restructuring initiatives amounting to $24 million.

Net profit on the sale of operations, including associates, amounted to $643 million (2007: $195 million), and arises mainly on the sale of the Group's investment in China Shenhua Energy which generated a profit on disposal of $551 million.

Financing remeasurements, including associates, are made up of unrealised net gains of $182 million on non-hedge derivatives related to net debt and a $18 million foreign exchange gain on De Beers dollar preference shares held by a rand denominated entity. The unrealised net gains on non-hedge derivatives principally comprise an unrealised gain on an embedded interest rate derivative.

The De Beers US dollar preference shares held by a rand functional currency entity are classified as 'financial asset investments' and are retranslated at each period end. The resulting rand:US dollar foreign exchange gains and losses are reported through the income statement as a financing remeasurement.

Discontinued operations

On 2 July 2007 the Paper and Packaging business was demerged from the Group by way of a dividend in specie paid to shareholders.

On 2 October 2007 the Group sold 67.1 million shares in AngloGold Ashanti which reduced the Group's shareholding from 41.6% to 17.3%. The Group's representation on the company's board was also withdrawn at this time. The remaining investment is accounted for as a financial asset investment. At 30 June 2008, the Group's percentage shareholding was 16.6%. On 7 July 2008, the Group subscribed for 11,172,254 additional shares in AngloGold Ashanti Limited as part of a rights issue. The total cash paid for the subscription was $280 million and the Group's shareholding in AngloGold Ashanti Limited reduced from 16.6% to 16.3%.

Both of these operations were considered discontinued in the financial statements for the year ended 31 December 2007.

$ million	6 months ended 30 June 2008	6 months ended 30 June 2007
Profit for the financial period - discontinued operations	-	288
Special items and remeasurements	-	91
Profit for the financial period after special items and remeasurements- discontinued operations	-	379
Minority interests - discontinued operations	-	(34)
Profit for the financial period attributable to equity shareholders - discontinued operations	-	345

Please refer to note 14 for further details of the discontinued operations.

Net finance costs

Net finance costs from continuing operations, excluding a $205 million gain on special items and remeasurements (2007: gain of $21 million), increased from $65 million in 2007, to $159 million. The increase reflects higher interest costs due to an increase in average net debt.

Taxation

	6 months ended 30 June 2008			6 months ended 30 June 2007⁽¹⁾
$ million	Before special items and remeasurements	Associates’ tax and minority interests	Including associates	Before special items and remeasurements	Associates’ tax and minority interests	Including associates
Profit before tax	5,643	338	5,981	4,737	148	4,885
Tax	(1,582)	(313)	(1,895)	(1,440)	(127)	(1,567)
Profit for financial period	4,061	25	4,086	3,297	21	3,318
Effective tax rate including associates %			31.7%			32.1%

(1) Comparatives have been adjusted to exclude amounts relating to discontinued operations

IAS 1 Presentation of Financial Statements requires income from associates to be presented net of tax on the face of the income statement. The associates' tax is therefore not included within the Group's total tax charge. Associates' tax before special items and remeasurements included within 'Share of net income from associates' for the period ended 30 June 2008 was $313 million (2007: $127 million).

The effective rate of tax before special items and remeasurements including share of associates' tax was 31.7%. This was a decrease from the equivalent effective rate of 32.1% in the six months ended 30 June 2007. The main reason for this net decrease was the relative impact of the statutory tax rates, on a fully distributed basis where appropriate, of the countries in which the Group's operations are based, and a reduction of the statutory tax rate in South Africa. In future periods it is expected that the effective tax rate, including associates' tax, will remain above the UK statutory tax rate.

Balance sheet

Equity attributable to equity shareholders of the Company was $23,250 million compared with $22,461 million at 31 December 2007.

The share buyback programme of $4 billion, announced in August 2007 is 35% complete, with around $1.4 billion of shares having been repurchased at 30 July 2008.

Net debt, excluding hedges, was $5,400 million, an increase of $161 million from 31 December 2007. The increase reflects the impact of the acquisition of the Foxleigh joint venture in Queensland, Australia, increased planned capital expenditure on projects in Base Metals and Ferrous Metals, the share buyback and the acquisition of a larger stake in Anglo Platinum Limited.

Net debt at 30 June 2008 comprised $8,745 million of debt, offset by $3,345 million of cash and cash equivalents. Net debt to total capital(1) at 30 June 2008 was 20.1%, compared with 20.0% at 31 December 2007.

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

Cash flow

$ million	6 months ended 30 June 2008	6 months ended 30 June 2007
Net cash inflows from operating activities - continuing operations	3,822	3,218
Net cash inflows from operating activities - discontinued operations	-	460
Net cash inflows from operating activities - total Group	3,822	3,678

Net cash inflows from operating activities on a continuing operations basis were $3,822 million compared with $3,218 million in the first half of 2007.

Acquisition expenditure from continuing operations accounted for an outflow of $1,495 million compared with $58 million in the same period in 2007. This included $605 million in respect of the Group's acquisition of a 70% interest in the Foxleigh joint venture in Queensland, Australia and $578 million in respect of the purchase of additional Anglo Platinum Limited shares.

Cash outflow from the purchases of tangible assets amounted to $1,998 million, an increase of $394 million compared to the same period in 2007. Increased capital expenditure by Platinum, Base Metals, Ferrous Metals and Industrial Minerals was partly offset by lower spend at Coal.

Proceeds from disposals on a continuing basis totalled $707 million and include net proceeds of $704 million from the sale of our holding in China Shenhua Energy.

Capital expenditure on tangible assets and biological assets

$ million	6 months ended 30 June 2008	6 months ended 30 June 2007(1)
Platinum	697	643
Base Metals	554	148
Ferrous Metals and Industries	268	250
Coal	352	444
Industrial Minerals	118	104
Other	9	15
Investment in biological assets - continuing operations	-	-
Capital expenditure on tangible assets and biological assets - continuing operations	1,998	1,604
Paper and Packaging	-	186
Investment in biological assets - discontinued operations	-	26
Capital expenditure on tangible assets and biological assets - discontinued operations	-	212
Capital expenditure on tangible assets and biological assets - total Group	1,998	1,816

(1) In the second half of 2007, Yang Quarry was reclassified from Industrial Minerals to Coal to align with internal management reporting. As such, the comparative data has been reclassified

Capital expenditure shown above comprises cash expenditure on tangible assets and biological assets. Segmental capital expenditure shown in note 3 includes accruals, expenditure on acquisitions and intangible assets and capitalised interest, but excludes expenditure on biological assets.

Weighted average number of shares

The weighted average number of shares used to determine earnings per share in 2008 was 1,203 million compared with 1,400 million in the same period in 2007. This reflects the effect of the share buyback programme as well as the Anglo American share consolidation on demerger of Mondi which, on 2 July 2007, resulted in every 100 existing Anglo American ordinary shares being exchanged for 91 new Anglo American ordinary shares.

Dividends

An interim dividend of 44 US cents per share, to be paid on 18 September 2008, has been declared.

Principal risks and uncertainties

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

The principal risks and uncertainties facing the Group at the year end were set out in detail in the Operating and financial review section in the Annual Report 2007, and remain appropriate in 2008. Key headline risks relating to the following were identified:

Safety, health and environmental
Treasury and capital, which includes currency and commodity prices
Suppliers
Contractors
Political, legal and regulatory
Inflation
Natural events and damage to assets by fire or machinery breakdown
Reserves and resources
Exploration
Employees
Operational performance, including project execution
Community relations
Acquisitions
Infrastructure
Critical accounting judgements and key sources of estimation and uncertainty

The Group is exposed to changes in the economic environment, as with any other business. This is discussed throughout the Principal risks and uncertainties section of the Annual Report 2007.

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

The Annual Report 2007 is available on our website www.angloamerican.co.uk.

Forward looking statements

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

Operations review for the six months ended 30 June 2008

In the operations review on the following pages, operating profit includes associates’ operating profit and is before special items and remeasurements unless otherwise stated. Capital expenditure relates to cash expenditure on tangible and biological assets. Share of Group operating profit and share of Group net operating assets for both 2008 and 2007 are based on continuing operations and therefore, in 2007, exclude the contribution of Mondi and AngloGold Ashanti.

BASE METALS

$ million (unless otherwise stated)		6 months ended 30 June 2008	6 months ended 30 June 2007
Operating profit		2,454	2,165
	Copper	1,941	1,428
	Nickel, Niobium, Mineral Sands and Phosphates	425	436
	Zinc	149	345
	Other	(61)	(44)
EBITDA		2,623	2,329
Net operating assets		5,666	4,937
Capital expenditure		554	148
Share of Group operating profit		40%	43%
Share of Group net operating assets		19%	22%

Anglo Base Metals generated its highest ever operating profit of $2,454 million (2007: $2,165 million). The copper and zinc divisions and the phosphate fertiliser operation increased production in an environment of strong copper and fertiliser prices. Labour related disruptions and furnace downtime contributed to lower nickel production. Lower nickel and zinc prices combined with adverse exchange rate movements and further rises in the costs of energy, labour and most key consumables to put pressure on margins.

Markets

Average(1) prices (c/lb)	6 months ended 30 June 2008	6 months ended 30 June 2007
Copper	368	307
Nickel	1,237	2,024
Zinc	103	162
Lead	118	90

(1) Represents average market price for the period

With the exception of copper and lead, the prices of base metals declined over the period, particularly in the second quarter against a backdrop of weakening demand, rising stocks and price induced demand erosion. The copper market remained in balance, with stocks at low levels due to supply side disruptions remaining, for the fourth consecutive year, at the top end of estimates. Phosphate fertiliser prices attained record levels, more than doubling since the comparable period of 2007, due to increased demand following improved agricultural market conditions as soya and corn prices have risen. Demand for agricultural products has been driven by growing demand for food in emerging markets and for biofuels worldwide.

Operating performance

Copper division

6 months ended

30 June 2008

6 months ended

30 June 2007

Operating profit ($m)

1,941

1,428

Attributable production (tonnes)

320,700

308,300

Collahuasi production on an attributable basis was 98,500 tonnes or 18% above 2007 as a result of anticipated higher sulphide ore grades and higher sulphide ore processed (mainly as a result of the Q1 2007 shutdown of the mill to replace the SAG mill 3 motor stator), partially offset by lower cathode production from heaps due to a decline in oxide ore grade processed. Los Bronces production was marginally higher, at 117,300 tonnes largely as a result of sulphide ore feed grade.

Mantos Blancos saw cathode production fall as a result of reduced purchases of third party solutions, but was able to partially offset this as a result of increased sulphide mill throughput, with the net effect that production fell 9% to 41,700 tonnes. El Soldado production decreased as a result of lower grades and ore treated and first half production was 29,600 tonnes (2007: 35,800).

Mantoverde production rose 9% to 32,300 tonnes with increased heap leach ore treated and improved heap leach recoveries offsetting slightly lower heap and dump leach grades.

Chagres production was 75,000 tonnes, 9% down on the same period in 2007 largely as a result of a scheduled 10 day maintenance shutdown and lower concentrate grades.

Anglo American inherited a 1978 agreement with Empresa Nacional de Minería (Enami), the Chilean state mining company, when it acquired Disputada de Las Condes (since renamed Anglo American Sur) in 2002. The agreement grants Enami the right, subject to certain conditions and limitations, to acquire up to a 49% minority interest in Anglo American Sur, the wholly owned Group company that owns the Los Bronces and El Soldado copper mines and the Chagres smelter. These conditions include limiting the window for exercising the right to once every three years in the month of January until January 2027. Whilst not exercised in the past, the next such window for exercising the right is January 2009, although it is not known whether Enami will choose to exercise its right then or during any subsequent window. The calculations of the price at which Enami can exercise its right are complex and confidential but do, inter alia, take account of company profitability over a five year period and the exercise price would therefore reflect the highly favourable pricing environment for copper in the five years to 31 December 2008.

Nickel, Niobium, Mineral Sands and Phosphates

6 months ended

30 June 2008

6 months ended

30 June 2007

Operating profit ($m)

425

436

Attributable nickel production (tonnes)

9,600

12,900

Falling nickel prices, combined with significant cost and exchange rate pressures, impacted nickel operating profits, but was largely offset by a record performance from the phosphate operations at Copebrás. Codemin output increased marginally to 4,900 tonnes due to higher grades and recoveries. Loma de Níquel had a difficult first half year with production falling by 43% to 4,700 tonnes. Strike action in February and March was followed by a number of ramp up difficulties. Heavy rains in the second quarter and ongoing unplanned refractory and equipment failures further impacted production. Sales performance at 5,900 tonnes (2007: 7,700) fared better than production.

At Catalão, niobium production was flat.

Copebrás continues to operate at satisfactory levels and, despite cost (particularly sulphur) and foreign exchange pressures, reported record profits on the back of improved sales volumes (an average of around 5% across the various fertiliser product lines) and prices that have more than doubled over the past year.

In January 2008, Minera Loma de Níquel ("MLdN") was notified of the intention of the Venezuelan Ministry of Basic Industries and Mining ("MIBAM") to cancel 13 of its exploration and exploitation concessions due to MLdN's alleged failure to fulfil certain conditions of the concessions. These concessions do not include the concessions where the current mining operations and metallurgical facilities are located. MLdN believes that it has complied with the conditions of these concessions and has lodged administrative appeals against the notices of termination. Since the MIBAM has not ruled on these appeals within the applicable statutory time periods, MLdN is now entitled to file further appeals with the Tribunal Supremo de Justicia, a course of action which it is currently considering. Operations are continuing as normal. Anglo American and MLdN continue to strive to resolve the matter by way of constructive dialogue; however Anglo American and MLdN believe that there is a valid legal basis to reverse the notices of termination and will pursue all appropriate legal and other remedies and actions to protect their respective interests both under Venezuelan and international law.

At 30 June 2008, Anglo American's interest in the book value of MLdN, including its mineral rights, was $571 million (as included in the Group's balance sheet). In the six months ended June 2008, MLdN's production and contribution to the Group's operating profits were 4,700 tonnes of nickel in ferronickel and $67 million respectively. The average price of nickel in the six months ended June 2008 was 1,237 c/lb. At 29 July 2008, the price of nickel was 829 c/lb.

Zinc division	6 months ended 30 June 2008	6 months ended 30 June 2007
Operating profit ($m)	149	345
Attributable zinc production (tonnes)	171,100	168,500
Attributable lead production (tonnes)	31,800	30,400

Skorpion produced 68,600 tonnes of zinc in the first half of 2008 (2007: 74,600 tonnes) primarily due to decreased mining throughput arising from power shortages that were experienced in southern Africa in the first quarter of the year. Plant throughput was, however, maintained throughout three weeks of industrial action in May.

Black Mountain produced 15,300 tonnes of zinc, and 23,600 tonnes of lead (14,900 tonnes and 21,400 tonnes respectively, in the first half of 2007). Notwithstanding the aforementioned power shortages, ore mined and ore milled were higher than last year as the Deeps Shaft continued to ramp up production. Zinc grades were lower than the same period in 2007, largely due to lower tonnages of higher grade Gamsberg ore being processed, while lead grades rose.

Lisheen produced 87,200 tonnes of zinc and 8,200 tonnes of lead in six months ended 30 June 2008 (79,000 tonnes and 9,000 tonnes respectively, in the first half of 2007). Ore production was impacted by poor ground conditions but zinc head grades increased as higher grade stopes in the Bog Zone orebody were brought into production.

Projects

The Barro Alto project, which will result in the construction of a 36,000 tpa ferronickel operation in Brazil, is currently 40% complete in terms of major milestones and remains on track to achieve first metal-tap in the first quarter of 2010, with 70% of orders now having been placed.

The Los Bronces expansion project remains on schedule to enter production in early 2011. The project is contending with significant cost pressures and efforts to limit their impact are ongoing.

The debottlenecking project at Collahuasi, which will result in increasing sulphide mill throughput to 140,000 tpd, will enter production in October 2008. The phase 1 expansion, up to a level of circa 170,000 tpd, will be presented for approval in the second half of 2008 with commissioning currently forecast for 2010. With the significant exploration success at Rosario Oeste, studies are under way targeting a phase 2 expansion to increase production to around the 1 million tpa level within a five to seven year time horizon.

The 200,000 tpa Quellaveco project revised feasibility study remains on target for completion before year end.

Both Mantoverde (sulphide ore life extension) and Chagres (refinery plus possible expansion) have pre-feasibility and conceptual studies under way.

Following the successful $403 million tender for Michiquillay in April 2007, the focus has been on developing a productive relationship with the local communities, culminating, in June 2008, in reaching formal agreements with those communities. As a result, a four year programme comprising exploration, pre-feasibility study and feasibility study has now commenced.

Progress is being made at the 50% owned Pebble project with the aim of completing a pre-feasibility study and then assessing all options during 2009. The objective is to obtain permits and to engineer, construct and operate a world class mine which operates to the highest environmental standards and which contributes to the sustainable development of the Alaskan economy.

Following the success of exploration drilling at Gamsberg East and the supply side outlook for the zinc industry, a decision has been made to commence an optimisation evaluation of Gamsberg. This evaluation, which will take 18 months to complete, will consider the 2000 feasibility study but will also look at other options as to scale as well as opportunities arising from technological evolution since 2000.

A feasibility study is under way at Copebrás for an expansion project that will more than double fertiliser production to approximately 2.3 Mtpa. The feasibility study is expected to be completed by late 2009.

Scoping studies, examining what will be the first phase of the Jacaré nickel project in Brazil, have commenced and preliminary indications of the project scale and economics are anticipated in 2009.

Outlook

Production of copper, zinc, lead, niobium and fertilisers are all forecast to be higher than in 2007, while nickel production will be lower, primarily as a result of the first half performance of Loma de Níquel. Exchange rate and cost pressures remain, while power constraints in northern Chile and southern Africa remain of concern. A balanced market is forecast for copper as a result of the magnitude of supply side disruptions.

PLATINUM

$ million (unless otherwise stated)	6 months ended 30 June 2008	6 months ended 30 June 2007
Operating profit	1,467	1,517
EBITDA	1,714	1,737
Net operating assets	9,369	7,617
Capital expenditure	697	643
Share of Group operating profit	24%	30%
Share of Group net operating assets	31%	34%

Anglo Platinum's operating profit for the first six months of 2008 was $1,467 million, a decrease of 3% when compared with the same period in 2007. The decrease was attributable to lower production volumes, offset by higher US dollar prices realised on metals sold and a weaker rand / US$ exchange rate.

Strong demand together with constrained supply to the market by major producers resulted in Anglo Platinum achieving significantly higher US dollar metal prices on its sales. The average dollar price realised for the basket of metals sold equated to $3,115 per platinum ounce, 19% higher than in 2007, with firmer platinum, rhodium and palladium prices making the largest contribution to the increase. The average prices achieved on platinum, palladium and nickel sales for the half year were $1,906 per ounce, $436 per ounce and $12.14 per pound respectively. The contract sales terms for rhodium were successfully renegotiated in the first quarter of 2008. As a result of the revised contract terms, the specific details of which are subject to contractual confidentiality the sales price of rhodium will move closer towards market prices during 2008 and 2009. Consequently, the average price achieved on rhodium sales in the first six months of 2008 increased to $5,833 per ounce.

Equivalent refined platinum production from the mines managed by Anglo Platinum and its joint venture partners for the first half of 2008 was 1,128,200 oz, a decrease of 11%, or 145,800 oz, when compared with the first half of 2007. Factors contributing to the decrease include:

the disruption of operations at the Amandelbult mine as a result of underground working areas being flooded. Production has now been restored;
lower throughput at the Mogalakwena South concentrator;
the suspension of operations to rehabilitate shaft steelwork at the Turffontein shaft of Rustenburg Mine;
an overall expected reduction in built-up head grade;
the electricity supply constraints in January and the associated ramp up period when supply resumed.

Repair work at the Polokwane Smelter, following a minor run-out in February, was completed in the first half of 2008 and normal smelting operations have recommenced. When combined with the scheduled rebuild of Mortimer furnace and slag cleaning furnace repairs, this resulted in an increase in pipeline stocks in the first half of 2008.

Consequently, refined platinum of 1,001,100 oz for the first half of 2008 represents a decrease of 16% when compared to the same period in 2007. To ensure that Anglo Platinum met contractual delivery of refined platinum to its customers, some 111,000 oz were sold from normal working levels of refined stock, resulting in refined platinum sales for the six months ended 30 June 2008 of 1,112,000 oz.

The cash operating cost per equivalent refined platinum ounce in rand terms increased by 46% due primarily to reduced mining production and expected lower grades than achieved in the strong first half of 2007, intensified by above inflation pressures experienced in key input costs, including diesel, chemicals, steel grinding media, explosives and cement.

Anglo Platinum remains confident of continued robust demand for platinum and is continuing with its expansion programme. In the first half of 2008, Anglo Platinum approved a number of projects including Amandelbult No.4 Shaft, the Twickenham Platinum Mine project and the Waterval Slag Cleaning Furnace 2 project.

The $1.6 billion Amandelbult No.4 Shaft project will replace 271,000 oz of refined platinum per annum from 2019. The project will co-extract the Merensky and UG2 reefs and will partially replace diminishing Merensky reserves while providing a moderate increase in UG2 production. The lengthy process of shaft sinking and build up to steady state volumes results in an overall project duration of 12 years, with first production expected at the end of 2015.

The $800 million Twickenham platinum mine project, at steady state, will contribute an additional 180,000 oz of refined platinum from 2016. The project will expand current operations and exploit the UG2 reef horizon.

The $134 million Slag Cleaning Furnace will double the existing Waterval Converter Slag smelting capacity during 2010. The increased capacity requirement is a direct result of Anglo Platinum's expansion strategy and the requirement to maintain current recoveries.

The $80 million MC Plant capacity expansion project (phase 1) will increase the current capacity from 64 ktpa Waterval Converter Matte to 75 ktpa during 2009.

Markets

High platinum prices will continue to be supported by lower than anticipated supplies from South Africa, the weak US dollar and investment demand.

Platinum auto and industrial demand remains firm, with the switch to smaller cars in the US impacting palladium more than platinum. Automobile growth in emerging markets continues, offsetting some of the weakness in the major markets.

Consistently high prices coupled with price volatility this year have reduced confidence in platinum jewellery at the trade level, despite strong consumer demand. Evidence of such strong demand is seen through the increasing levels of recycling of platinum jewellery in China.

Outlook

Management continues to vigorously address unit costs. The emphasis on increasing volumes and improving operating efficiencies remains a key driver of performance at operations. Risks affecting future production include the impact of constrained electricity supply on production and expansion projects, the ongoing skills shortage and production stoppages related to safety.

Anglo Platinum's commitment to employee safety will continue to be an area of focus. Mining output in the second half of the year will increase significantly as Amandelbult and the Turffontein shaft have returned to full production and the Mogalakwena North project ramp up is almost complete. Smelter availability for the balance of 2008 will assist in reducing pipeline stocks accumulated at the half-year. Consequently, the outlook for refined platinum production remains 2.4 million ounces for 2008.

FERROUS METALS AND INDUSTRIES

$ million (unless otherwise stated)	6 months ended 30 June 2008	6 months ended 30 June 2007
Operating profit	1,296	719
Kumba Iron Ore	677	409
Scaw Metals	121	84
Samancor Manganese	485	57
Minas-Rio	(16)	-
Other	(15)	(4)
Core businesses	1,252	546
Highveld Steel	-	108
Tongaat-Hulett / Hulamin	44	65
Other businesses	44	173
EBITDA	1,359	780
Net operating assets	5,360	1,865
Capital expenditure	268	250
Share of Group operating profit	21%	14%
Share of Group net operating assets	18%	8%

Ferrous Metals achieved a record operating profit of $1,296 million, an increase of 80% on the same period in 2007, with operating profit from core businesses (Kumba Iron Ore, Scaw Metals, Samancor Manganese and Minas-Rio) increasing by 129%, mainly due to higher iron ore and manganese ore sales volumes and prices, and alloy prices.

Kumba Iron Ore achieved a record operating profit of $677 million, an increase of 66% on 2007, due to higher iron ore sales volumes and prices. Operating costs increased owing to inflationary pressures, the rising costs of fuels and lubricants and an increase in maintenance related activities. Production increased 9% to 17.1 million tonnes of iron ore, mainly due to the Sishen Expansion Project which commenced commercial production towards the end of 2007.

Export sales for the first three months of 2008 were based on the 9.5% increase in the iron ore benchmark price for the 2007/2008 iron ore year. Final settlement for 2008/2009 between Kumba and its customers is anticipated in the third quarter of 2008. In preparing the financial results, Kumba has used a prudent estimate of future prices. These price estimates (April to June 2008) are based on settlements announced by the three iron ore majors and take into account Kumba's lump-to-fines ratio, its importance as a supplier to the Asian market and the physical characteristics of its products.

Scaw delivered a record operating profit of $121 million, up 44% on 2007, with strong demand for most products in South Africa and internationally. Margins remained under pressure owing to significant price increases in key raw materials. In June 2008, Scaw South Africa acquired Ozz Industries, a manufacturer of crusher and mill consumable steel wear parts principally for the mining and aggregate industries in Africa, Australia, Europe and North America.

The attributable share of Samancor Manganese operating profit increased more than eight-fold to $485 million, mainly due to significantly higher manganese ore and alloy prices driven by the high demand for steel, as well as higher manganese ore sales volumes.

The Tongaat-Hulett and Hulamin contribution to operating profit declined by 32% to $44 million. These businesses, which were consolidated for the first six months of 2007, were equity accounted for the first half of 2008 following the unbundling of Hulamin from Tongaat-Hulett and related empowerment transactions in June 2007.

Projects

The $782 million, 9 Mtpa Sishen South Project, which involves the development of an opencast mine some 80 kilometres south of Sishen mine, has been approved, with first production anticipated in 2012.

The $754 million, 13 Mtpa Sishen Expansion Project has commenced commercial production. Ramp up continues and full design capacity is expected to be achieved in 2009.

In Brazil, Anglo American has agreed to acquire a 63.3% shareholding in a new company ("IronX"), which holds a 51% interest in the Minas-Rio iron ore project and 70% in the Amapá iron ore system, from Eike Batista and other selling shareholders for $3.5 billion. Subject to the satisfaction of final conditions under the transaction agreements, this transaction will be completed by 5 August 2008. Following completion of this transaction, Anglo American has committed to extend the offer to the minority shareholders in IronX at the same price per share. The successful completion of the offer to the minority shareholders will result in Anglo American owning 100% of the Minas-Rio project, 70% of the Amapá system and 49% of LLX Minas-Rio, the owner of the Port of Açu, at a cost of approximately $5.5 billion in cash for 100% of the issued and outstanding shares in IronX. This would mark a significant step in Anglo American's aim of becoming a substantial player in the global seaborne iron ore trade.

Planned annual capacity of the Minas-Rio iron ore project will be 26.5 Mtpa of iron ore pellet feed, with start up expected during 2010.

Outlook

Global demand for steel is expected to remain strong through 2008, underpinning demand for iron ore. The prospects for iron ore are positive, with strong Chinese demand continuing. Major producers, including Kumba Iron Ore, are expanding production to meet incremental demand.

Manganese ore and alloy demand is forecast to remain strong which, together with constraints in global seaborne supply, will continue to have a favourable impact on prices through 2008.

Demand for Scaw's products is forecast to remain strong, driven by mining demand in Latin America and mining and construction led growth in South Africa and Canada. Increasing input costs will, however, place further pressure on Scaw's margins.

COAL

$ million (unless otherwise stated)	6 months ended 30 June 2008	6 months ended 30 June 2007(1)
Operating profit	731	319
South Africa	369	178
Australia	225	38
South America	157	115
Canada	3	-
Projects and corporate	(23)	(12)
EBITDA	900	441
Net operating assets	5,071	3,388
Capital expenditure	352	444
Share of Group operating profit	12%	6%
Share of Group net operating assets	17%	15%

(1) In the second half of 2007, Yang Quarry was reclassified from Industrial Minerals to Coal to align with internal management reporting. As such, the comparative data has been reclassified.

Operating Profit increased by 129% to $731 million. Profits increased in all the regions in which Coal operates.

Markets

The first half of the year has seen historically high prices for both thermal and metallurgical coal export prices.

Metallurgical coal benchmark prices saw a three-fold increase from 2007 on the back of continued high demand, coupled with exceptional supply constraint issues. Queensland experienced its worst floods in more than 10 years and this impacted materially on supplies into the metallurgical coal market. Rail and port constraints continued, albeit at a less disruptive level than in 2007.

Thermal coal prices reached a historical high at the half year mark, double that at the beginning of the year, on the back of tight demand and supply dynamics. Supply into the thermal coal market has been affected by the electricity shortages in South Africa and China’s harsh winter, which resulted in China reducing exports and increasing imports.

Operating performance

South Africa

Operating profit from South Africa sourced coal was $369 million, 107% higher than the corresponding period in the prior year of $178 million. Export prices were 52% higher for the first half of 2008, more than outweighing lower domestic and export sales volumes that were 3% lower than the prior year.

Production for the year to date at 28.0 Mt (29.4 Mt 2007) was 5% lower than prior year. Production at all operations, with the exception of Kleinkopje, Mafube, Greenside and New Vaal, was below the prior year. This was mainly as a result of power supply restrictions in South Africa during the first two months of the year and higher rainfall than in the prior year affecting the opencast operations. At Kleinkopje and Landau, additional tonnes were produced (at 100% yield) for supply to Eskom in response to its shortage of coal stocks, while Mafube is ramping up to full production in the current year.

Total sales for the year to date at 28.0 Mt were 3% lower than prior year reflecting the lower production. Export sales were lower by 0.4 Mt or 5% compared to the prior year as the shipping schedule was negatively impacted by below target performance from Transnet Freight Rail, as well as the lower production. Total domestic sales were 0.4 Mt or 2% below the prior year, with marginally higher Eskom sales being offset by lower domestic non-Eskom sales.

Capital expenditure increased by $31 million due to higher expansionary capital related to the Mafube, Zondagsfontein and MacWest projects, offset by lower stay-in-business capital at the trade collieries.

The construction of the Zondagsfontein project which will produce 6.6 Mtpa of Export and Eskom coal is under way, with production anticipated during 2009.

Australia

Operating profit of $225 million from the Australian operations was significantly higher than 2007. Heavy rainfall limited production early in the year, with the later months achieving record volumes in the second quarter. High sales prices and solid production from the coking coal operations have delivered additional turnover, with a 22% half-on-half increase in coking coal sales. Port constraints which affected the 2007 results have been partly mitigated by securing alternative and additional port entitlements.

The Lake Lindsay project commissioning is progressing successfully, with design rates achieved in week 2 of the commissioning schedule. Year to date milestones have been achieved ahead of plan, with the overland conveyor on target for August. The Dawson expansion project continues to ramp up in 2008, with the implementation of improvement plans and the addressing of short term constraints.

Supply constraints further increased the price of export coal with the heavy rain compounding the infrastructure constraints. The full benefit of the high prices will be realised during the second half of 2008 with coking coal market fundamentals expected to remain firm and the price of thermal coal expected to increase.

South America
Sales volume increased overall, as growth at Cerrejón continued as planned towards the 32 Mt profile. This offset lower sales from Carbones del Guasare (“CDG”) in Venezuela, arising from the ongoing political and social uncertainty. Attributable coal production from Cerrejón rose by 11% to 5.2 Mt, whereas coal production at CDG was marginally lower at 0.6 Mt over the period.

Canada

In Canada, Peace River Coal commenced commercial production in January. Total coal production for the first six months of 2008 was 0.4 Mt.

Outlook

Export prices are expected to remain strong and exceed those of the previous year. Many initiatives have been implemented to maximise production to take advantage of the prevailing strong market conditions.

Metallurgical coal exports from Australia are sold on contracts which are negotiated annually. Many such contracts have commencement dates of April or July. Consequently the prices to be received in the second half will reflect the newer higher price contracted. This will drive a higher level of profitability in the second half of the financial year and the first half of 2009.

DIAMONDS

$ million (unless otherwise stated)	6 months ended 30 June 2008	6 months ended 30 June 2007
Share of associate’s operating profit	328	266
EBITDA	397	310
Group’s aggregate investment in De Beers	1,844	2,201
Share of Group operating profit	5%	5%

The Group’s share of operating profit from De Beers increased by 23% to $328 million as strong demand enabled the Diamond Trading Company (“DTC”) to increase prices steadily during the first half of the year and expansion projects came on stream in the period. Sales of rough diamonds (including those through joint ventures) were 10% higher than the same period in the prior year at $3.3 billion. The DTC completed its Sightholder selection process, appointing 78 clients for the new three year contract period.

De Beers has completed the construction and handover of a new $83 million diamond valuing and sorting facility in Gaborone, home to DTC Botswana, the largest and most sophisticated of its kind in the world. In the first half of 2008, the DTC supplied approximately $637 million worth of rough diamonds to 16 clients operating in Botswana, 11 in Namibia and 17 in South Africa, and approximately $13 million to the State Diamond Trader in South Africa.

The ‘Forevermark’ brand announced plans to launch in selected jewellers in Hong Kong and China in Q4 2008 and in South Africa, Japan, India and Taiwan in the first half of 2009. The ‘Forevermark’ brand will also launch its own independent grading operations, exclusively for its diamonds, in Belgium and the UK, with further new locations planned for 2009 and 2010.

In South Africa, the sale of the Cullinan Diamond Mine and the Kimberley Underground operations to Petra Diamonds Ltd will be finalised in the second half of 2008. New order mining rights have been granted in respect of the Cullinan and Voorspoed mines, and the new order rights for Venetia are in the process of being executed. The applications for conversion of De Beers’ remaining rights are being processed by the South African Department of Minerals and Energy.

Archangel Diamond Corporation (Archangel), 58% owned by De Beers, announced an agreement with LUKoil to purchase 49% of Arkhangelshoe Geologodobychnoe Predpriyatie (AGD), which owns the Verkhotina licence in Russia. The Verkhotina licence area contains the Grib pipe, which is one of the world’s largest known diamond deposits. Completion of the transaction is subject to Russian government approval.

In May 2008, the United States Federal District Court of New Jersey approved the settlement agreement in respect of the various US class actions. Appeals against the judgement have been filed and are expected to be heard in 2009.

Markets

The first half of 2008 has seen negative to low single digit growth in retail sales of jewellery in the US, as increased fuel prices, high debt burdens, a poor housing market and higher unemployment have restrained consumer confidence and spending. While there is some optimism as inventory levels are being reduced in the better quality categories, markets remain cautious.

In Asia, jewellery sales for the first quarter of 2008 were robust but growth in China is slowing, impacted by the earthquake in Sichuan province and the Chinese stockmarket fall. This slowdown for the Chinese jewellery market is believed to be temporary and the outlook for the year remains bullish.

In Japan, trading conditions continue to be difficult with consumer confidence low, cash earnings down and non-essential spending being reined in, depressing demand further compared with previous years.

In India, the growth in the jewellery market is still close to 7%, with double digit growth expected by the end of the year

Operating performance

In the first half of 2008, De Beers’ production was 24.2 million carats, 4% below production in the same period in 2007 mainly as a result of disruptions to power supplies in southern Africa and high rainfall at Venetia.

De Beers Diamond Jewellers (“DBDJ”) has performed strongly in the first half of 2008, with double digit sales growth on 2007, driven by both the Bridal and High-End diamond categories. DBDJ’s network now stands at 32 stores worldwide, with further expansion planned for the second half of the year.

Projects

In Canada, Snap Lake in the Northwest Territories commenced commercial production in early 2008. Construction of the underground crusher and conveyor was completed in early Q2 and the final phase (the construction of permanent accommodation) is scheduled for completion in 2009. The Victor Mine has been commissioned eight months ahead of schedule, and is expected to reach full production in early Q3, and is exceeding targets. Following an agreement in principle reached with the Government of Ontario, 10% of production by value from Victor will be made available for local cutting and polishing in Canada, an arrangement which mirrors that for Snap Lake.

In South Africa, the commissioning of the Voorspoed mine in the Free State is under way and its first diamonds were recovered in June. Voorspoed is expected to produce 0.7 million carats per year. The commissioning of the Finsch Treatment Plant Upgrade is progressing well and the plant is now officially open.

Outlook

Mass market retail diamond jewellery sales have been impacted by economic issues in the most important market, the United States. While strong growth in China, India, Russia and the Middle East has helped to mitigate the impact of the US slowdown, the overall retail market is likely to be challenging.

Demand for high end diamonds will likely remain robust, while the smaller low and medium qualities which are more dependent upon US demand will remain subdued. Given the current level of supply availability, DTC distribution policies and current high levels of demand for rough diamonds from its clients, De Beers remains positive for the full year 2008.

INDUSTRIAL MINERALS

$ million (unless otherwise stated)	6 months ended 30 June 2008	6 months ended 30 June 2007⁽¹⁾
Operating profit	163	209
Operating profit excluding Tarmac Iberia	169	204
Operating profit – Tarmac Iberia	(6)	5
EBITDA	291	326
Net operating assets	4,574	4,638
Capital expenditure	118	104
Share of Group operating profit	3%	4%
Share of Group net operating assets	15%	21%

⁽¹⁾In the second half of 2007, Yang Quarry was reclassified from Industrial Minerals to Coal to align with internal management reporting. As such, the comparative data has been reclassified.

Tarmac group operating profit decreased by 22% to $163 million compared with the same period in 2007. This decrease reflects some significant cost increases, particularly energy related, and difficult trading conditions in key markets such as the UK and Spanish residential sectors. In spite of these external challenges, Tarmac has maintained market share in most key products in the UK, while continuing to deliver cost savings and operational efficiencies. Excluding the results of Tarmac Spain, the sale of which is due to be completed during Q3, operating profit was 17% below the prior year.

Profits in the UK Aggregate Products business were 9% lower than 2007. Volumes of aggregates and ready-mix concrete declined in line with the overall market, while sales of asphalt increased as a result of some sustained demand from the infrastructure sector, as well as through a strong order book in the National Contracting business. Significant cost inflation was experienced in all areas, particularly transportation and bitumen, although price increases were achieved without losing market share despite a strongly competitive environment.

The UK Building Products division fared less well in the economic conditions, with profits down 46% compared to the prior year. The slump in the UK housing market in particular led to a deterioration in volumes of products such as mortar, blocks and flooring, while hydrocarbon price rises over the past 12 months dramatically increased the cost of energy-intensive products such as lime and cement. These factors were mitigated by price increases, however the dual effects of slowing demand and cost inflation made this difficult to achieve while maintaining a policy of holding market share where possible.

Tarmac International division’s profits were down by 7% for the first half of 2008, although these results were distorted by currency movements and losses in Tarmac Spain. Excluding the impact of foreign exchange and portfolio changes, results were actually 8% better than in the same period in 2007, reflecting strong performances in Central Europe, France Aggregates and the Middle East, where further improvements are anticipated as key investment projects come under way during the second half of 2008.

In January 2008, Tarmac UK successfully completed the acquisition of the remaining 50% of United Marine Holdings Ltd. (a marine aggregates business that had previously been a joint venture with Hanson Quarry Products Europe Ltd., a subsidiary of HeidelbergCement AG) for a consideration of £55 million. Plans to integrate the business into UK Aggregate Products are well under way.

Tarmac’s International division was streamlined in 2008, with the elimination of a layer of management, helping to reduce operating costs. In June 2008, Tarmac announced that an agreement had been signed to sell Tarmac’s business in Spain to Holcim for up to €148 million ($230 million).

During the period, Tarmac’s Building Products division also announced its intention to double its cement production capacity, and a feasibility study for the construction of a second cement facility at its Tunstead site is already in progress.

Tarmac has continued to focus on its cost savings initiatives during the year, which delivered total savings of $36 million, driven by procurement and operational efficiencies. It also has in place a number of initiatives to maximise commercial opportunities from its market positions and product range.

Outlook

The outlook for demand from the construction market in the UK and Europe remains weak, with the effects of inflation, the credit crisis and a general economic slowdown expected to continue for the near term at least. In the longer run, however, the fundamental supply and demand outlook remains favourable in the markets in which Tarmac operates.

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