Interim Results

RNS Number : 2113Q

Anglo American PLC

30 July 2010

Anglo American announces operating profit of $4.4 billion and reinstates dividend

Financial highlights

· Group operating profit⁽¹⁾ of $4.4 billion ($4.1 billion from core operations⁽²⁾)

· Underlying earnings⁽³⁾ of $2.2 billion and underlying earnings per share of $1.84

· Profit attributable to equity shareholders of $2.1 billion

· Net debt⁽⁴⁾ at $10.9 billion at 30 June 2010

· Committed undrawn bank facilities and cash of over $12 billion at 30 June 2010

Operational performance and strategic delivery

· Asset optimisation and procurement programmes ahead of expectations, with run rate of $1 billion from core businesses for the six month period

- Asset optimisation: $796 million, including one-off benefits

- Procurement: $205 million

· Platinum operational turnaround to position in lower half of cost curve - cash operating costs controlled; full year production of 2.5 million ounces on track; labour productivity increased 11%

· $2.2 billion of expected proceeds from agreed divestments announced to date

- $1.3 billion sale of zinc business

- $0.5 billion sale of undeveloped Australian coal assets

- $0.4 billion sale of Tarmac's European businesses

Near term growth a clear differentiator

· Barro Alto 36 ktpa nickel project - to more than double nickel production - on budget and on schedule for first production in Q1 2011

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

· Kolomela 9 Mtpa iron ore project on budget and on schedule for first production in Q2 2012

· Minas Rio 26.5 Mtpa iron ore project - good progress; key regulatory approvals remain outstanding, impacting timing and capital expenditure

· Further growth projects pending approval: Quellaveco (Peru, 225 ktpa copper) and Grosvenor (Australia, 4.3 Mtpa metallurgical coal)

Further safety achievements

· New safety practices embedded and delivering further improved results

- 38% reduction in fatalities vs. H1 2009

- 30% improvement in lost time injury rates vs. H1 2009

Dividend reinstated

· Interim dividend of $0.25 per share

· Progressive dividend policy to maintain or steadily increase dividends in dollar terms

HIGHLIGHTS FOR SIX MONTHS ENDED 30 JUNE 2010 US$ million, except per share amounts	6 months ended 30 June 2010	6 months ended 30 June 2009	Change
Group revenue including associates⁽⁵⁾	15,015	11,132	35%

Operating profit including associates before special items and remeasurements - core operations⁽¹⁾⁽²⁾	4,071	1,900	114%

Operating profit including associates before special items and remeasurements⁽¹⁾	4,361	2,136	104%

Underlying earnings⁽³⁾	2,212	1,096	102%

EBITDA⁽⁶⁾	5,414	2,985	81%

Net cash inflows from operating activities	2,686	1,520	77%

Profit before tax⁽⁷⁾	3,903	3,626	8%

Profit for the financial period attributable to equity shareholders⁽⁷⁾	2,061	2,970	(31)%

Earnings per share (US$):
Basic earnings per share⁽⁷⁾	1.71	2.47	(31)%
Underlying earnings per share⁽³⁾	1.84	0.91	102%

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

⁽²⁾Operations considered core to the Group are Copper, Nickel, Platinum, Iron Ore and Manganese (Kumba Iron Ore, Iron Ore Brazil and Samancor), Metallurgical Coal, Thermal Coal, Diamonds, Exploration and Corporate Activities. See the Financial review of Group results section for a reconciliation of operating profit from core operations to Group operating profit. Due to the portfolio and management structure changes announced in October 2009, operations considered core have changed from those reported at 30 June 2009. The comparatives have been adjusted accordingly.

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

⁽⁴⁾Net debt includes related hedges and net debt in disposals groups. In the current period net debt has been updated to include related hedges, being derivative instruments that provide an economic hedge of assets and liabilities included in net debt. The comparative has been adjusted accordingly. See note 12 to the Condensed financial statements.

⁽⁵⁾ Includes the Group's attributable share of associates' revenue of $2,425 million (six months ended 30 June 2009: $1,840 million). See note 3 to the Condensed financial statements.

⁽⁶⁾ EBITDA is operating profit before special items, remeasurements, depreciation and amortisation in subsidiaries and joint ventures and includes the attributable share of EBITDA of associates. See note 14 to the Condensed financial statements.

⁽⁷⁾ Stated after special items and remeasurements, the six months ended 30 June 2009 includes the profit on the disposal of the Group's interest in AngloGold Ashanti of $1,139 million.

Cynthia Carroll, Chief Executive, said, "Anglo American has made further significant progress during the first six months of 2010, delivering on our strategic objectives. Our businesses are operating strongly under our new organisational structure, our cost and efficiency programmes continue to deliver ahead of expectations, our divestment programme is well under way and we continue to make further progress on our safety performance. We achieved a strong operating performance across our businesses against still uncertain global economic conditions, with operating profit of $4.4 billion and underlying earnings of $2.2 billion.

We continue to extract substantial synergies as a result of our organisational structure and scale. By the end of June, our asset optimisation and procurement programmes had achieved a run rate of $1 billion of benefits, well ahead of expectations, and are making excellent progress towards our stated target of $2 billion from our core businesses alone by 2011.

The restructuring of both Platinum and De Beers is generating a new level of operational performance in both businesses. Platinum has achieved labour productivity gains of 11%, is showing a 27% increase in productivity since the first half of 2008 and continues to control its cash operating unit costs, despite high energy and wage inflation. At De Beers, significant sustainable cost savings have been embedded, enabling the company to benefit fully from the improved demand and pricing environment for diamonds.

Our near term production growth is a clear differentiator for Anglo American and will be delivered by four major strategic projects that we are developing. The first of these is the Barro Alto nickel project in Brazil, which is on schedule for first production in the first quarter of 2011 and will more than double our nickel production capacity when it reaches full production of 36,000 tonnes per year. The expansion of our Los Bronces copper operation in Chile is also on schedule for first production in the fourth quarter of next year, increasing our low cost production at this world class mine to 490,000 tonnes per year over the first three years. Furthermore, as we announced last year, two recent discoveries nearby are expected to enable considerable further expansion in due course. In South Africa, the 9 million tonne per annum Kolomela iron ore project is making excellent progress towards first production in the second quarter of 2012.

At Minas Rio, our 26.5 million tonne per annum phase one iron ore project in Brazil, we have made good progress on those areas of the project where the necessary approvals have been secured, in the context of what has become an increasingly rigorous and more complex environmental permitting process in Brazil in recent years. A number of key approvals remain outstanding and these are on the critical path of the project, therefore impacting the time and cost to complete. We have considerable resource deployed to resolve these issues, including constructive high level dialogue with the authorities in Brazil. Once the remaining initial approvals are granted, we believe it will take 27 to 30 months to construct and commission the mine and plant and to deliver the first ore on ship.

Following our initial announcement in October, the divestment of our non-core businesses is well under way. The announced sales of our zinc portfolio, several of Tarmac's European businesses and five undeveloped coal assets in Australia are expected to generate proceeds in excess of $2.2 billion. As we stated from the outset, we will sell the balance of our divestment portfolio in a manner and on a timetable that maximises value for our shareholders. We have seen a lot of interest in these assets.

I am pleased to announce the resumption of dividend payments with an interim dividend of 25 cents per share, reflecting the Group's improved operating performance and financial position, as well as progress on non-core asset sales and a supportive medium term outlook.

Our safety performance has shown further considerable improvement in the first half, with both fatality and lost time injury rates continuing to reduce. While these results represent a step change from the position in 2007, we will continue to strive to achieve our goal of zero harm.

The short term outlook for the world economy has become more uncertain in recent months, with certain less favourable leading economic indicators. However, in the medium to long term, we remain confident about prospects for Anglo American with the process of industrialisation and urbanisation in China, India, Brazil and other emerging countries continuing to drive demand for our key commodities."

Review of the six months ended 30 June 2010

Financial results

Anglo American's underlying earnings for the first half of 2010 were $2.2 billion, double the $1.1 billion for the same period in 2009, with operating profit of $4.4 billion, up from $2.1 billion. Strong demand for steel raw materials, driven by Chinese led consumption, resulted in favourable demand environments in the iron ore and metallurgical coal markets, where the Group realised the benefit of meaningful production increases. Earnings were further supported by a resurgence of demand and prices for base metals, most notably in the copper market, where Anglo American's portfolio of world class assets delivered substantial earnings. Demand recovery in the Platinum Group Metal (PGM) and rough diamond markets, where the Group holds market leadership positions, further bolstered earnings. The Group realised the benefit of a continued focus on cost reduction, most notably through the significant restructuring initiatives in the Platinum, Metallurgical Coal and Diamond businesses, while asset optimisation initiatives across all businesses continued to improve the effectiveness and efficiency of operations, and to drive down costs.

Copperdelivered an operating profit of $1,185 million, 96% higher than the first half of 2009 as a result of stronger prices, while volumes were in line with the same period in 2009.

Nickel reported an operating profit of $68 million, $79 million higher principally as a result of higher prices. Volumes remained in line despite the adverse impact on production of power restrictions on the Venezuelan operation.

Platinumgenerated an operating profit of $418 million, $431 million higher, driven by a 67% increase in the dollar basket price of metals sold, and the on-going benefits of restructuring.

Iron Ore and Manganese recorded an operating profit of $1,628 million, 126% higher. Kumba Iron Ore delivered a strong operating performance, increasing production to meet higher demand from its traditional markets of Europe, Japan and South Korea, with continued strong demand from China, during a period of high market prices. Kumba Iron Ore generated an operating profit of $1,470 million, 103% higher than in the same period during 2009.

Metallurgical Coal delivered an operating profit of $263million, an 18% decrease on the first half of 2009, primarily due to the impact of lower realised prices and a strong Australian dollar. A focus on delivery of core high quality coal products resulted in increased production, despite the negative impact of the Queensland cyclone. Asset optimisation and cost reduction initiatives continued to improve operational effectiveness.

Thermal Coal'soperating profit of $351 million was 10% lower, as a result of the stronger rand, and lower volumes due to challenging weather-related and geological conditions facing South African operations. Cerrejón provided a strong operating performance, despite lower prices in the Med-Atlantic market.

Diamonds recorded an attributable operating profit of $261 million, $257 million higher, reflecting improved trading conditions, with higher production in response to an improvement in demand for diamonds, as well as the ongoing benefit of cost restructuring initiatives.

Other Mining and Industrial generated an operating profit of $290million, 23% higher, despite the sale of the Group's shareholdings in Tongaat Hulett and Hulamin in 2009. The zinc business delivered an operating profit of $150 million, 275% higher, mainly due to higher zinc and lead prices, but also through improved zinc production and tightly controlled costs. There were further strong performances from the Scaw Metals and Copebrás businesses. Catalão's operating profit decreased 45% to $28 million, primarily due to the impact of lower grades on niobium production.

Production

The first half of 2010 saw strong demand across Anglo American's core commodity markets. In response to continued robust demand from the steel sector in particular, the Group markedly increased its output of steel-making raw materials. Iron ore production from the Sishen mine in South Africa increased by 17% as the Jig plant continued to ramp up. Production of metallurgical coal in Australia increased by 25%, driven by a strong supply response from the Capcoal and Moranbah complexes.

Production of export thermal coal from South Africa decreased by 6% as a result of heavy rains and geological challenges, while Cerrejón production was in line with 2009 and Australia increased thermal coal production by 5%.

Copper production was maintained at 2009 levels. The earthquake in Chile caused a brief loss of power supply to those operations close to the epicentre, but did not materially impact operating performance. Nickel production from the Nickel Business Unit in South America was also flat, whilst nickel output from Platinum's South African mines increased by 6%. Zinc production increased by 5% compared to the first half of 2009.

Equivalent refined platinum production decreased by 4% from 2009, largely attributable to the closure of three high cost shafts at the Rustenburg operations during 2009.

The recovery in demand for diamonds continued and, accordingly, De Beers increased output by 134% compared to the first half of 2009.

Capital structure

Net debt, including related hedges, of $10,930 million was $350 million lower than at 31 December 2009, and $672 million lower than at 30 June 2009.

Cash flows from operations of $3.7 billion funded capital investment of $2.1 billion principally in the Group's core assets, including combined investment in excess of $1.0 billion in the Los Bronces, Barro Alto, Minas Rio and Kolomela near-term strategic growth projects during the first six months of the year. In February, the Group participated in the De Beers rights issue, resulting in a $0.5 billion increase in net debt. This was offset by $0.4 billion of cash inflows from non-controlling investors participating in Anglo Platinum Limited's rights issue.

Special items and remeasurements

Operating special items and remeasurements, including associates, amounted to a charge of $145 million. This principally related to a net loss on non-hedge derivatives of $100 million, restructuring costs of $59 million and accelerated depreciation in Loma de Níquel of $36 million. This was partially offset by a net realised gain on derivatives relating to capital expenditure of $69 million.

The net loss on disposals of $88 million, including associates, comprises a $86 million charge recognised on disposal of a 27% interest in Anglo Inyosi Coal (Proprietary) Limited in a black economic empowerment transaction, a loss of $81 million on the disposal of Tarmac's French and Belgian concrete products business, partially offset by a profit of $107 million on the disposal of Platinum's 37% interest in the Western Bushveld joint venture.

Financing special items, including associates, relate to costs of $13 million associated with the De Beers refinancing.

Financing remeasurements, including associates, include an unrealised net gain of $130 million on non-hedge derivatives, principally comprising an unrealised gain on an embedded interest rate derivative.

Tax remeasurements amounted to a loss of $62 million related to the foreign currency impact on deferred tax balances.

Dividends

An interim dividend of 25 US cents per share has been declared. Anglo American intends to follow a progressive dividend policy which seeks to maintain or steadily increase dividends in dollar terms over time, taking into account the earnings potential, investment needs and resultant cash flows of the Group.

Delivering value through operational performance

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

At the end of the first six months of 2010, a run rate benefit of $1 billion was achieved from the core businesses ($1.2 billion from the total Group), including one-off benefits. Of that amount, asset optimisation contributed $720 million of sustainable value ($840 million from the total Group) towards its $1 billion target. In addition, one-off benefits of $95 million were reported ($76 million from the core businesses). Global procurement contributed $205 million from the core businesses ($242 million from the total Group).

Near term growth from strategic projects

Anglo American has a clear strategy of deploying its capital in those commodities that deliver long term, through-the-cycle returns for its shareholders, and which have strong fundamentals and the most attractive risk-return profiles. Those commodities are copper, diamonds, iron ore, manganese, metallurgical coal, nickel, platinum and thermal coal.

Anglo American has developed a portfolio of world class operating assets and development projects focused on these commodities, with the benefits of scale, expansion potential and cost position. Anglo American's project management systems and processes have been further enhanced to ensure closer collaboration between the Group's technical and project teams, thereby creating improved oversight of project execution and future capital allocation.

The Group's pipeline of approved projects spans its core commodities and is expected to deliver significant organic production growth by 2013. In addition, Anglo American is progressing towards approval decisions in relation to the development of two further high quality growth projects - the 225 ktpa Quellaveco copper project in Peru and the 4.3 Mtpa Grosvenor metallurgical coal project in Australia. Submission to the Board for approval is expected for the Quellaveco project in the second half of 2010 and for the Grosvenor project in the second half of 2011.

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

Barro Alto

The Barro Alto nickel project in Brazil is on schedule towards first production in the first quarter of 2011, with the overall development 94% complete at 30 June. This project, which has further potential from an extensive resource base, leverages an existing operation and proven technology and is positioned in the lower half of the cost curve. Barro Alto will produce an average of 41 ktpa of nickel over the first five years of full production and 36 ktpa of nickel over the life of the mine.

Los Bronces

Anglo American's Los Bronces copper expansion project in Chile remains on schedule for commissioning in the fourth quarter of 2011, despite the impact of the Chilean earthquake in February 2010. Production at Los Bronces is scheduled to increase to 490 ktpa over the first three years of full production following project completion and average 400 ktpa over the first ten years. At peak production levels, Los Bronces is expected to be the fifth largest producing copper mine in the world, with highly attractive cash operating costs and reserves and resources that support a mine life of over 30 years, with further expansion potential. In 2009, Anglo American also announced two very significant and high quality new discoveries at Los Sulfatos and San Enrique Monolito close to its Los Bronces mine in Chile. These two new copper prospects together increase the Group's copper resources (excluding reserves) by approximately 50%.

Kolomela

Kumba Iron Ore's Kolomela project in South Africa continues to make good progress and remains on budget and on schedule to deliver initial production during the first half of 2012. Kolomela is situated 80 km to the south of Kumba's world class Sishen mine and, when full production is achieved in 2013, will produce 9 Mtpa of high quality iron ore, with further potential for expansion.

Minas Rio

At the 26.5 Mtpa Minas Rio iron ore project, progress continues to be well executed on those areas of the project where the necessary approvals have been secured. The development of the port at Açu, for example, is ahead of schedule and the installation of the pipeline from the mine site to the port is under way. However, a number of key approvals remain outstanding, principally the award of the second part of the Installation licence, which would enable the construction of the beneficiation plant to begin, the land clearance permit for a section of the pipeline and land access for certain areas around the mine site and at specific sections along the pipeline route.

It is clear that the environmental permitting processes and standards in Brazil have become increasingly rigorous and more complex in recent years. Considerable resource has been deployed to resolve these issues, in addition to ongoing constructive high level dialogue with local and federal authorities in Brazil.

Given the stage of development that the project has reached, the grant of the approvals affects the critical path of the project towards the delivery of first ore. Following a thorough review of the project, Anglo American estimates that from the date of securing the remaining initial approvals, it should take between 27 and 30 months to construct and commission the mine and plant, complete the project and deliver the first ore on ship.

Due to the inherent uncertainty around the timing of the award of key licences and permits, it is not possible at this stage to forecast an accurate final capital expenditure figure for the project. However, it is expected that there will be an increase in cost to the project relating to changes in scope and licensing conditions of $210 million. In addition, based on a range of potential outcomes and in order to give as complete a picture as possible, it is currently estimated that on the basis of initial approvals being awarded within a nine month period from June 2010, increased schedule-related costs to the project will be incurred, equivalent to a quarterly amount of approximately $180 million. As further clarity on licensing is achieved, an updated capital expenditure figure and final completion date will be published, in line with normal practice.

Divestment portfolio update

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

During the first six months of 2010, Anglo American announced a number of divestments, with expected total proceeds of $2.2 billion.

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

In May 2010, Anglo American announced the sale of its portfolio of zinc assets to Vedanta for $1,338 million on an attributable, debt and cash free basis. Of the total consideration, $698 million relates to the Skorpion mine, $308 million relates to the Lisheen mine and $332 million relates to Anglo American's 74% interest in Black Mountain Mining (Proprietary) Limited (which holds 100% of the Black Mountain mine and the Gamsberg project). The customary regulatory approval and competition clearance processes to complete this transaction are under way. Completion of the transaction is expected to be in stages, with separate completion dates for Skorpion, Lisheen and Black Mountain Mining (Proprietary) Limited.¹

In early July 2010, Anglo American announced that it had entered into an agreement with a consortium to sell its interests in five undeveloped coal assets in Australia, with expected proceeds of approximately $500 million. The transaction is subject to satisfaction of certain conditions and is expected to be completed in stages from the fourth quarter of 2010.

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

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

Outlook

The near term outlook for the world economy has become more uncertain in recent months. In 2009, there was a rapid bounce in global industrial activity in response to the unprecedented policy stimulus and a turn in the inventory cycle. More recently, leading indicators have indicated less favourable conditions. Inevitably, there will be some consolidation after the initial bounce-back, as the positive effects from the stimulus and inventory cycle fade.

Anglo American remains confident about the outlook for the industry in the medium to long term, with the process of industrialisation and urbanisation in China, India, Brazil and other emerging countries continuing to drive demand for its key commodities.

For further information, please contact:

United Kingdom

James Wyatt-Tilby, Media Relations

Tel: +44 (0)20 7968 8759

Caroline Metcalfe, Investor Relations

Tel: +44 (0)20 7968 2192

Leisha Wemyss, Investor Relations

Tel: +44 (0)20 7968 8607

South Africa

Pranill Ramchander, Media Relations

Tel: +27 (0)11 638 2592

Anna Mulholland, Investor Relations

Tel: +27 (0)11 373 6683

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

Webcast of presentation:

A live webcast of the results presentation, starting at 9.00am UK time on 30 July, can be accessed through the Anglo American website at www.angloamerican.com.

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

Forward-looking statements

This announcement includes forward-looking statements. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding Anglo American's financial position, business and acquisition strategy, plans and objectives of management for future operations (including development plans and objectives relating to Anglo American's products, production forecasts and reserve and resource positions), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such forward-looking statements are based on numerous assumptions regarding Anglo American's present and future business strategies and the environment in which Anglo American will operate in the future. Important factors that could cause Anglo American's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the availability of mining and processing equipment, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or safety, health, environmental or other types of regulation in the countries where Anglo American operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American's most recent Annual Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this announcement. Anglo American expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers (the "Takeover Code"), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Services Authority, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SWX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and any other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Anglo American's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Nothing in this announcement should be interpreted to mean that future earnings per share of Anglo American will necessarily match or exceed its historical published earnings per share.

Certain statistical and other information about Anglo American included in this announcement is sourced from publicly available third party sources. As such it presents the views of those third parties, but may not necessarily correspond to the views held by Anglo American.

Financial review of Group results

Group operating profit was $4,361 million, with operating profit from core operations of $4,071 million, 114% higher than the first half of 2009. This improvement in operating profit was driven primarily by significant increases in realised prices of most commodities. Price increases included a 67% increase in the platinum basket, a 44% increase in realised copper, a weighted average 73% increase in realised export iron ore prices, a 93% increase in average realised nickel and a 25% increase in realised South African export thermal coal.

Copper's operating profit was 96% higher than 2009, with production maintained at 2009 levels and a 44% increase in the realised price of copper. Nickel's profits increased by $79 million driven by increased prices, while Platinum benefited from significantly higher average prices compared to the first half of 2009. Kumba Iron Ore doubled operating profit, driven by a combination of production increases at Sishen and a higher realised export price for iron ore. Samancor's profits increased due to higher production in response to growing demand. Metallurgical Coal's operating profits were lower due to the stronger Australian dollar and lower average benchmark coking coal prices in the period, and Thermal Coal's profits decreased as a result of the stronger rand, and a decline in South African production, coupled with lower prices in Colombia. De Beers performed strongly, recording an attributable $257 million increase in operating profit on the back of significantly stronger sight revenue relative to the first half of 2009.

Other Mining and Industrial's operating profit increased overall driven by increases at the zinc operations, which recorded a more than three-fold increase in operating profit, and at Scaw Metals.

Group underlying earnings were $2,212 million, a 102% increase on 2009. This includes a net finance costs charge, before remeasurements, of $130 million, which was $68 million lower than the first half of 2009. The effective tax rate, before special items and remeasurements and including attributable share of associates' tax, marginally increased in the period from 31.8% to 31.9%.

Group underlying earnings per share were $1.84 compared with $0.91 in the first half of 2009.

Reconciliation of profit for the period to Underlying earnings $ million	6 months ended 30 June 2010	6 months ended 30 June 2009
Profit for the financial period attributable to equity shareholders of the Company	2,061	2,970
Operating special items including associates	104	87
Operating remeasurements including associates	41	(544)
Net loss/(profit) on disposals including associates	88	(1,441)
Financing special items including associates	13	-
Financing remeasurements including associates:
Exchange (gain)/loss on De Beers preference shares	(3)	17
Net (gain)/loss on non-hedge derivatives	(130)	60
Other financing remeasurements	(21)	-
Tax remeasurements	62	(309)
Tax on special items and remeasurements including associates	(6)	178
Non-controlling interests on special items and remeasurements including associates	3	78
Underlying earnings	2,212	1,096
Underlying earnings per share ($)	1.84	0.91

The Group's results are influenced by a variety of currencies owing to the geographic diversity of the Group. For the first half of 2010, there was a negative exchange variance in underlying earnings of $399 million compared to the first half of 2009. The Group results were impacted negatively by the strengthening of the South African rand, Chilean peso, Brazilian real and Australian dollar, relative to the first half of 2009.

Summary income statement $ million	6 months ended 30 June 2010	6 months ended 30 June 2009
Operating profit from subsidiaries and joint ventures before special items and remeasurements	3,715	1,824
Operating special items	(93)	(87)
Operating remeasurements	(33)	456
Operating profit from subsidiaries and joint ventures	3,589	2,193
Net (loss)/profit on disposals	(92)	1,442
Share of net income from associates (see reconciliation below)	384	266
Total profit from operations and associates	3,881	3,901
Net finance costs before remeasurements	(130)	(198)
Financing remeasurements	152	(77)
Profit before tax	3,903	3,626
Income tax expense	(1,216)	(355)
Profit for the financial period	2,687	3,271
Non-controlling interests	(626)	(301)
Profit for the financial period attributable to equity shareholders of the Company	2,061	2,970
Basic earnings per share ($)	1.71	2.47
Group operating profit including associates before special items and remeasurements⁽¹⁾	4,361	2,136

Operating profit from associates before special items and remeasurements	646	312
Operating special items and remeasurements	(19)	88
Net profit/(loss) on disposals	4	(1)
Net finance (costs)/income (before special items and remeasurements)	(56)	23
Financing special items	(13)	-
Financing remeasurements	2	-
Income tax expense (after special items and remeasurements)	(171)	(137)
Non-controlling interests (after special items and remeasurements)	(9)	(19)
Share of net income from associates	384	266

⁽¹⁾Operating profit before special items and remeasurements from subsidiaries and joint ventures was $3,715 million and the attributable share from associates was $646 million. For special items and remeasurements, see note 6 to the Condensed financial statements.

Towards the beginning of this document, reference has been made to core operations. Operations considered core to the Group are Copper, Nickel, Platinum, Iron Ore and Manganese (Kumba Iron Ore, Iron Ore Brazil and Samancor), Metallurgical Coal, Thermal Coal and Diamonds. The table below reconciles operating profit from core operations to total Group operating profit.

Operating profit $ million	6 months ended 30 June 2010	6 months ended 30 June 2009
Copper	1,185	606
Nickel	68	(11)
Platinum	418	(13)
Iron Ore and Manganese	1,628	720
Metallurgical Coal	263	321
Thermal Coal	351	388
Diamonds	261	4
Exploration	(57)	(70)
Corporate Activities and Unallocated costs	(46)	(45)
Operating profit including associates before special items and remeasurements - core operations	4,071	1,900
Other Mining and Industrial	290	236
Operating profit including associates before special items and remeasurements	4,361	2,136
Underlying earnings - core operations⁽¹⁾	1,994	927

⁽¹⁾See note 4 to the Condensed financial statements

Special items and remeasurements

	6 months ended 30 June 2010			6 months ended 30 June 2009
$ million	Excluding associates	Associates	Total	Excluding associates	Associates	Total
Operating special items	(93)	(11)	(104)	(87)	-	(87)
Operating remeasurements	(33)	(8)	(41)	456	88	544
Operating special items and remeasurements	(126)	(19)	(145)	369	88	457

Operating special items and remeasurements, including associates, amounted to a charge of $145 million. Operating special items include restructuring costs in Other Mining and Industrial of $44 million and $15 million within Platinum, as well as accelerated depreciation of $36 million at Loma de Níquel.

Operating remeasurements, including associates, of $41 million principally related to a net loss of $100 million on non-hedge derivatives, partially offset by a net realised gain of $69 million on derivatives relating to capital expenditure. The net loss on non-hedge derivatives includes a net unrealised loss on derivatives relating to capital expenditure at Iron Ore Brazil (Iron Ore and Manganese segment) and Los Bronces (Copper segment). The net gain of $69 million was realised in the period principally in respect of the Iron Ore Brazil and Los Bronces capital expenditure derivative portfolios.

The net loss on disposals of $88 million, including associates, comprises a $86 million charge recognised on disposal of a 27% interest in Anglo Inyosi Coal (Proprietary) Limited (Thermal Coal segment) in a black economic empowerment transaction, a loss of $81 million on the disposal of Tarmac's French and Belgian concrete products business (Other Mining and Industrial segment), partially offset by a profit of $107 million on the disposal of the 37% interest in the Western Bushveld joint venture (Platinum segment).

A loss on financing special items of $13 million, including associates, relates to costs associated with the De Beers refinancing.

Financing remeasurements, including associates, totalled a net gain of $154 million. This amount includes a net gain of $130 million on non-hedge derivatives, principally comprising an unrealised gain on an embedded interest rate derivative.

Tax remeasurements amounted to a loss of $62 million related to the foreign currency impact on deferred tax balances.

Net finance costs

Net finance costs, before remeasurements, excluding associates, decreased to $130million (six months ended 30 June 2009: $198 million). This was primarily due to reduced interest expense on borrowings, partially offset by lower interest capitalised.

Tax

	6 months ended 30 June 2010			6 months ended 30 June 2009
$ million (unless otherwise stated)	Before special items and remeasurements	Associates' tax and non-controlling interests	Including associates	Before special items and remeasurements	Associates' tax and non-controlling interests	Including associates
Profit before tax	3,991	184	4,175	1,819	142	1,961
Tax	(1,159)	(172)	(1,331)	(493)	(130)	(623)
Profit for the financial period	2,832	12	2,844	1,326	12	1,338
Effective tax rate including associates (%)			31.9			31.8

IAS 1 (Revised) Presentation of Financial Statements requires income from associates to be presented net of tax on the face of the income statement. Associates' tax is therefore not included within the Group's income tax expense. Associates' tax included within 'Share of net income from associates' for the six months ended 30 June 2010 was $171 million (six months ended 30 June 2009: $137 million; year ended 31 December 2009: $286 million). Excluding special items and remeasurements, this becomes $172 million (six months ended 30 June 2009: $130 million; year ended 31 December 2009: $235 million).

The effective rate of tax before special items and remeasurements including attributable share of associates' tax for the six months ended 30 June 2010 was 31.9%. This was in line with the equivalent effective rate of 31.8% in the six months ended 30 June 2009. In future periods it is expected that the effective tax rate, including associates' tax, will remain above the United Kingdom statutory tax rate.

Balance sheet

Equity attributable to equity shareholders of the Company was $27,362 million at 30 June 2010, increased from $26,121 million at 31 December 2009, reflecting increased profitability in the underlying businesses. Investments in associates were $715 million higher than at 31 December 2009 principally as a result of the Group's $450 million contribution towards De Beers' $1 billion rights issue in March 2010, and a significant improvement in earnings at both De Beers and Samancor. Tangible assets decreased by $495 million compared to 31 December 2009, due to the significant progress made in the Group's divestment programme during the half year. Assets classified as held for sale, net of associated liabilities, were $804 million at 30 June 2010 compared to $429 million at 31 December 2009 principally due to the classification of zinc assets as held for sale in the period. The $547 million increase in inventories and current receivables combined was driven by the impact of higher commodity prices and a weaker dollar during the first half of 2010.

Cash flow

Net cash inflows from operating activities were $2,686 million compared with $1,520 million in the six months ended 30 June 2009. EBITDA was $5,414 million, an increase of 81% from $2,985million in the six months ended 30 June 2009.

Net cash used in investing activities was $2,397 million compared to $554 million in the six months ended 30 June 2009. In the first half of 2009, proceeds from sale of financial asset investments were $1,988 million (six months ended 30 June 2010: $4 million), principally from the sale of the Group's residual interest in AngloGold Ashanti. During the six months ended 30 June 2010 $504 million was paid with respect to investment in associates which mainly relates to the Group's share of the De Beers rights issue. This is partially offset by cash inflows from derivatives of $77 million compared to outflows of $172 million in the equivalent period in 2009 and $160 million proceeds from disposals (six months ended 30 June 2009: $1 million). Proceeds in the current period are from disposals in the Platinum and Other Mining and Industrial segments.

Purchases of tangible assets amounted to $2,065 million, a decrease of $75 million, with major spend on the Group's strategic projects in development.

Net cash used in financing activities was $616 million compared to $1,252 million in the six months ended 30 June 2009. During the period the Group repaid $634 million of short term borrowings compared to $4,150 million in the prior period and the Group received $355 million proceeds from non-controlling interests for Anglo Platinum Limited's rights issue. In the first half of 2009, $3,677 million net proceeds were received on issue of convertible and US bonds.

Liquidity and funding

Net debt, including related hedges, was $10,930 million, a decrease of $350 million from $11,280 million at 31 December 2009. The decrease in net debt, excluding the impact of exchange rates, reflects strong operating cash flows, partially offset by the Group's subscription to the De Beers rights issue, capital expenditures and movement in financing activities as detailed in the cash flow.

Net debt at 30 June 2010 comprised $13,197 million of debt, partly offset by $2,956 million of cash and cash equivalents (net of bank overdrafts), $6 million current financial asset investments, and the current position of derivative liabilities related to net debt of $695 million. Refer to note 12c of the Condensed financial statements. Net debt to total capital⁽¹⁾ at 30 June 2010 was 26.6%, compared with 28.7% at 31 December 2009.

At 30 June 2010, Anglo American had undrawn bank facilities of $9.5 billion. In addition, the Group has a dedicated, committed financing facility for Minas Rio of $1.3 billion, subject to certain disbursement conditions and the granting of the remaining Installation Licence.

In the six months ended 30 June 2010 the Group raised $100 million through the issuance of a floating rate note, due April 2012, under the Euro Medium Term Note programme, Rand 1 billion ($131 million) through the issuance of a bond, due in May 2015, under the South African Domestic Medium Term Note programme (DMTN) and Rand 392 million ($51 million) from the issuance of commercial paper under the DMTN programme.

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

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

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

Group corporate cost allocation

As a result of the Group's restructuring announced in October 2009 certain activities previously performed within the divisions are now undertaken at the corporate centre, certain are undertaken in the new business units and the remainder are no longer performed. Consequently those corporate costs which are considered to be value-adding to the business units are allocated to each business unit and costs reported externally as Group corporate costs only comprise costs associated with parental or direct shareholder related activities. The Group corporate costs, as included within the notes to the accounts, can be reconciled to the historical basis of presentation as shown in the table below.

Group corporate costs $ million	6 months ended 30 June 2010	6 months ended 30 June 2009
Corporate costs as previously reported	-	105
Costs previously reported within divisional results	-	41
Corporate costs as reported under new structure before costs allocation	154	146
Corporate costs allocated to business units	(108)	(101)
Corporate costs as reported under new structure after costs allocation	46	45

Dividends

Related party transactions

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

Principal risks and uncertainties

Anglo American is exposed to a variety of risks and uncertainties which may have a financial, operational 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 of the Annual Report 2009, and remain appropriate in 2010. Key headline risks relate to the following:

· Commodity prices

· Liquidity and counterparty risk

· Currency risk

· Inflation

· Health and safety

· Environment

· Political, legal and regulatory

· Supplier risk

· Reserves and resources

· Exploration

· Natural events and damage to assets by fire or machinery breakdown

· Employees

· Contractors

· Business integrity

· Operational performance and project delivery

· Acquisitions

· Infrastructure

· Community relations

· Joint venture relationships

· Critical accounting judgements and key sources of estimation and uncertainty

The Group is exposed to changes in the economic environment, as with any other business.

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

The Annual Report 2009 is available on the Group's website www.angloamerican.com.

Operations review for the six months ended 30 June 2010

In the operations review on the following pages, operating profit includes the attributable share of associates' operating profit and is before special items and remeasurements unless otherwise stated. Capital expenditure relates to cash expenditure on tangible assets. Due to the portfolio and management structure changes announced in October 2009, the segments have changed from those reported at 30 June 2009. Comparatives have been reclassified to align with current presentation.

COPPER

$ million (unless otherwise stated)	6 months ended 30 June 2010	6 months ended 30 June 2009
Operating profit	1,185	606
EBITDA	1,312	715
Net operating assets	5,152	4,185
Capital expenditure	615	561
Share of Group operating profit	27%	28%
Share of Group net operating assets	13%	11%

Copper generated an operating profit of $1,185 million, an increase of 96% compared to the same period in 2009, underpinned by higher prices and sales, and the benefit of increased molybdenum by-product revenues. Unit costs increased only marginally despite a 10% strengthening of the Chilean peso.

Markets

6 months
ended

30 June 2010

6 months
ended

30 June 2009

Average market prices (c/lb)

323

184

Average realised prices (c/lb)

308

214

Copper prices rose strongly for much of the first six months of the year, reflecting improving global economic conditions. However, despite this, there was high price volatility in the period as risk aversion increased in the market, most notably in February and then again in late May and into June. This followed specific concerns over sovereign debt (especially in Europe), the tightening of Chinese policy to rein in the property sector and the softening of certain leading economic indicators. The copper price at the end of June 2010 was 295 c/lb, while the LME cash price averaged 323 c/lb over the first half, a 76% increase compared to the first half of 2009.

The decline in price towards the end of the period and the resulting adjustments to provisional pricing, meant that the average realised price of 308 c/lb was 5% lower than the LME average price. This is in contrast to the prior period, when rising prices throughout the period had a positive impact on provisional pricing, delivering an average realised price of 214 c/lb, being 16% higher than the LME average price during that period.

Operating performance

6 months
ended

30 June 2010

6 months
ended

30 June 2009

Attributable copper production (tonnes)

315,500

315,900

Total copper production of 315,500 tonnes was in line with production for the same period in the prior year. The earthquake in Chile in February caused brief loss or reduction of power supply to those operations closest to the epicentre - Los Bronces, El Soldado and Chagres - but did not materially impact operating performance.

At Collahuasi, attributable production increased by 8% to 117,400 tonnes, mainly as a result of higher grades, recovery and throughput, aided by improved concentrator plant performance. Collahuasi's higher production level was achieved in spite of industrial action by contract workers which led to the operation being shut down for a number of days and a consequent loss of 5,000 tonnes of attributable production.

Los Bronces delivered marginally higher production of 111,200 tonnes due to higher grades and recoveries. Production at El Soldado and Mantoverde was marginally lower, at 20,200 tonnes and 29,700 tonnes respectively, while Mantos Blancos production was 17% lower at 37,000 tonnes following a conveyor belt failure.

While a stronger Chilean peso and higher fuel and power costs impacted unit operating costs, their effect was offset by higher by-product revenues, lower prices achieved on key consumables, such as sulphuric acid, and the ongoing benefits being delivered by the asset optimisation and Group procurement programmes. The improved agility and reach of the supply chain function facilitated securing alternative sources of key consumables such as grinding media, which were in short supply immediately following the Chilean earthquake in February.

Projects

Construction of the $2.5 billion Los Bronces expansion project remains on schedule for commissioning in the fourth quarter of 2011 despite the impact from the Chilean earthquake. Production at Los Bronces is scheduled to increase to 490 ktpa over the first three years of full production following project completion and to average 400 ktpa over the first ten years. At peak production levels, Los Bronces is expected to be the fifth largest producing copper mine in the world, with highly attractive cash operating costs and reserves and resources that support a mine life of over 30 years, with further expansion potential.

At Collahuasi, an expansion project to increase sulphide processing capacity to 150,000 tonnes per day by early 2011 continues. Collahuasi has announced the increase of its copper reserves and resources (combined) by 40%, or by more than 2 billion tonnes, to 7.094 billion tonnes at 0.82% copper. A concept study to evaluate the next phases of expansion at Collahuasi, to ultimately increase production to at least 1 Mt of copper per annum, is expected to be completed in the first quarter of 2011.

At Mantos Blancos, studies to evaluate an extension to the life of the operation continue.

In Peru, good progress was made towards completing the feasibility study for the Quellaveco project prior to expected submission of the project for Board approval in the second half of 2010. The Engineering Procurement and Construction Management contract negotiation is in progress, as well as preparations for works to commence, to ensure that the scheduled project completion date of the second half of 2014 is maintained.

Early stage work continues at the Michiquillay project, also in Peru. Drilling relating to the geological exploration programme remains on hold pending resolution of certain social agreement issues under discussion with the local communities.

Activity at the Pebble project in Alaska has continued in 2010, with the focus on engineering work to advance towards a pre-feasibility study, further environmental study work towards completion of an environmental baseline document, and additional geological exploration drilling.

Outlook

Lower ore grades forecast for the second half of the year are expected to lead to lower full year production levels compared to 2009, despite targeted improvements in plant throughput. Copper production levels are then expected to see a step increase in late 2011 following the commissioning of the Los Bronces expansion project.

Ongoing market uncertainty from concerns over the global economic recovery and sovereign debt issues in a number of countries may lead to continued price volatility in the short term. However, the medium to long term fundamentals for copper remain strong.

NICKEL

$ million (unless otherwise stated)	6 months ended 30 June 2010	6 months ended 30 June 2009
Operating profit/(loss)	68	(11)
EBITDA	81	2
Net operating assets	1,988	1,671
Capital expenditure	223	251
Share of Group operating profit	2%	(1)%
Share of Group net operating assets	5%	4%

Nickel generated operating profit of $68 million, compared to a loss of $11 million in 2009. This increase was driven largely by a higher nickel price in the first half of 2010.

Markets

6 months
ended

30 June 2010

6 months
ended

30 June 2009

Average market prices (c/lb)

962

531

Average realised prices (c/lb)

969

502

The average nickel price was 81% higher than the same period in 2009. However, nickel prices fell sharply towards the end of the second quarter of 2010 to a low of 814 c/lb during June, after reaching a peak of more than 1,250 c/lb in April, amid European sovereign risk concerns.

Global nickel supply remained constrained during the first half of the year due to strike action and delays to new supply projects experienced by a number of nickel producers.

LME nickel stocks decreased by 23% from a high of 166,000 tonnes at the end of January to approximately 129,000 tonnes in June, indicative of the underlying physical demand for nickel. This was one of the key, visible fundamental indicators that helped to support the nickel price rally during March and April, as well as stainless steel restocking.

Operating performance

	6 months ended 30 June 2010	6 months ended 30 June 2009
Attributable nickel production (tonnes)	10,100	10,100

Nickel production of 10,100 tonnes was in line with 2009 owing to marginally higher production at Codemin, partly offset by marginally lower production at Loma de Níquel.

Loma de Níquel produced 5,500 tonnes of nickel, a decrease of 2%. The EF2 furnace, which was shut down in May 2009 due to a metal run out, restarted operations in the first quarter after the rebuild was completed. However, production was impacted by electricity rationing imposed by the Venezuelan government as a result of significant shortfalls in power generation. The operation is pursuing a staged mitigation process, initially with the hiring of on site generators, with a further phase planned if severe rationing persists.

Due to uncertainty over the renewal of three mining concessions, which have not been cancelled but which will expire in 2012, and over the renewal of 13 concessions that were cancelled in 2008, an accelerated depreciation charge of $36 million has been recorded in the current year against Loma de Níquel mining properties. This has been recognised as an operating special item. Refer to note 6 to the Condensed financial statements.

Production at Codemin increased by 2% to 4,600 tonnes. Production in the first half of 2009 was impacted by maintenance stoppages at a reduction furnace.

Projects

The world class Barro Alto ferronickel project in Brazil was 94% complete at the end of the first half of 2010 and is on schedule for first production in the first quarter of 2011, and full production in the second half of 2012. The Barro Alto project will produce an average 36 ktpa of nickel at full production, and 41 ktpa during the first five years.

A conceptual study began on the unapproved Jacaré project during the first half of 2010 and a pre-feasibility study of the unapproved Morro Sem Boné project will begin in the second half of 2010. These two projects have the potential to significantly further strengthen Anglo American's position in the nickel market, with the potential to add at least 66 ktpa to nickel production.

Outlook

Production of nickel is expected to be higher in the second half of the year, reflecting an increase at Loma de Níquel due to the use of on site power generators, partially offset by a decrease in production at Codemin due to the shutdown of an electric furnace for planned maintenance.

For the full year, forecast global refined nickel primary consumption is estimated to be 10% higher than in 2009, mostly because of improved stainless steel melt rates put in place at the mills since the beginning of the year. While there are short term concerns about the sustainability of current stainless steel demand strength, nickel's fundamentals remain attractive.

PLATINUM

$ million (unless otherwise stated)	6 months ended 30 June 2010	6 months ended 30 June 2009
Operating profit/(loss)	418	(13)
EBITDA	785	263
Net operating assets	12,169	11,658
Capital expenditure	431	579
Share of Group operating profit	10%	(1)%
Share of Group net operating assets	31%	30%

Platinum recorded an operating profit of $418 million, compared to an operating loss of $13 million in the comparative period in 2009. The increase in operating profit is attributable to significantly higher metal prices, offset by lower sales volumes and a stronger rand / dollar exchange rate.

Markets

The achieved dollar price for platinum, averaging $1,593 per ounce for the period, was $508 per ounce higher than the $1,085 per ounce achieved in 2009. The average prices achieved for palladium and rhodium sales for the half year were $462 and $2,600 per ounce respectively. The average price achieved on nickel sales in the first six months of 2010 was $9.52 per pound. The overall basket price achieved was 67% higher at $2,540 per platinum ounce sold.

The platinum market is expected to remain in balance in 2010 due to continued strength from the autocatalyst and industrial segments. Interest in applications for the PGMs remains buoyant as global pressures on environmental issues, energy security and diversification retain political and consumer interest.

Autocatalysts

Auto production consensus forecasts suggest a return to 2008 levels during 2010. During the first half of the year, recovery in diesel auto production in European markets supported platinum demand which was also supported by high growth rates in the Chinese and other international markets. The market has seen a shift towards smaller vehicles across most regions but this is more than offset by the implementation of tighter legislation. Vehicle inventory levels remain lower than historic averages due to higher than predicted sales volumes. This continues to offer upside potential for PGM demand as rebuilding continues. Sales volumes across all other major markets have been significantly higher in the period compared with 2009 levels. This trend is expected to be dampened somewhat in the second half of 2010 as scrappage schemes are phased out and economic uncertainty keeps consumers from making expensive purchases, but growth is expected when compared with the second half of 2009.

Jewellery

Jewellery purchases in China declined in the first half of 2010, compared with the first half of 2009, as inventory levels in the supply chain were at an adequate level following the rebuilding in 2009. The sudden decrease in the platinum price in the second quarter of 2010 saw significant increases in purchases in most markets, as jewellers took advantage of the price opportunity. The increased demand was most notable in the unsaturated Chinese market. Mature markets continue to see growth as economic conditions have improved.

Industrial

Demand for platinum in the industrial sector has recovered during the first half, with capacity utilisation rates in the chemical and petroleum sectors having improved and all major indices seeing significant recovery. Demand for consumer goods has shown a strong rebound in the period as improvements in economic conditions led to greater demand for televisions and electronic goods. Continued focus on cleaner and more sustainable technologies has seen more demand for fuel cell technologies across portable, niche transport and stationery segments.

Investment

The launch of the US-based ETFs supported firm investment demand in the first quarter of 2010 with over 200,000 ounces of additional demand. Despite the recent price correction, ETF holdings for both platinum and palladium held up well.

Operating performance

Equivalent refined platinum production (equivalent ounces are mined ounces expressed as refined ounces) from the mines managed by Platinum and its joint venture partners for the first half of 2010 was 1.196 million ounces, a decrease of 4% when compared to the first half of 2009.

The 73,100 ounce reduction in equivalent refined platinum ounces from Platinum's wholly owned mines (including Union Mine) was primarily due to:

· A 58,000 ounce decrease as a result of placing three Rustenburg shafts onto care and maintenance in 2009; and

· A 15,000 ounce decrease due to:

o the simultaneous intersection of five major potholes at Khomanani Mine during the first quarter of 2010;

o geological conditions at Union Mine's Richard shaft and the implementation of a new shift cycle, cleaning method and changeover to owner maintenance of equipment at Union Mine's decline section;

o shaft and haulage failures and safety stoppages at Tumela Mine; and

o a reduction in mining and stockpile grades at Mogalakwena as mining moves from the Zwartfontein to the North pit.

These events were partly offset by higher output from Bathopele and Thembelani mines, and the joint venture mines BRPM, Mototolo, Kroondal and Marikana and Bokoni associate.

Planned furnace maintenance at the Polokwane and Waterval smelters was carried out during the first quarter of 2010. The Polokwane smelter furnace was rebuilt and the hearth extended, resulting in a shutdown from late December 2009, until first tap in early April. The rebuild was completed within budget and on schedule. Repairs at Waterval smelter were carried out between February and May, with first slag tapped in late June.

Both smelters resumed normal operations in the second quarter. Higher than normal refined metal stocks at the start of the period provided the flexibility to carry out the furnace maintenance.

Refined platinum production at 1 million ounces for the first half of 2010 represents a decrease of 5% when compared to the same period in 2009. The target of 2.5 million ounces of refined platinum production for the full year remains in place.

The cash operating costs per equivalent refined platinum ounce increased by 6.7% but decreased 2.1% compared with cash operating costs in the second half of 2009.

Projects

As announced in 2009, the following projects have been delayed as a result of the global economic downturn: the Amandelbult Number 4 Shaft, the Twickenham Platinum Mine, the Number 2 Slag Cleaning Furnace, the Base Metals Refinery project and the Styldrift Merensky Phase 1 project.

The first phase of the $80 million MC Plant capacity expansion, which will increase the current MC Plant capacity from 64 ktpa Waterval Converter Matte to 75 ktpa, was commissioned during the period and the Unki mine in Zimbabwe is on track to be commissioned in the third quarter of this year. Both the $224 million Dishaba East Upper UG2 project and the $316 million Thembelani 2 shaft replacement project are on track to complete on time and within budget.

Outlook

For the remainder of 2010, the platinum price is expected to average at least $1,500 per ounce if the economic recovery continues, and at that price level, Platinum expects to refine and sell a total of 2.5 million ounces of platinum in 2010 - thereby expecting a stronger second half to the year.

Costs will continue to be managed as a priority by further improving productivity, increasing efficiency and managing supply chain and procurement costs. The cost improvements achieved to date are expected to be sustained and Platinum aims to maintain the unit cash costs per equivalent refined platinum ounce for the year at around the same level as in 2008 and 2009, at just above R11,000 per equivalent refined platinum ounce. Productivity, measured as square metres per total operating employee per month, is expected to increase to an average of 7.0m² for 2010 and an average of 7.3m² for 2011.

Platinum's strategy, based on its current view that the market is adequately supplied, is expected to improve its cost position from the upper half to the lower half of the cost curve. Platinum is in the process of improving the reliability of its production capacity and entrenching cost management as a long term and sustainable culture. This will ensure that Platinum is well positioned to extract full value from its assets as the market recovery continues.

IRON ORE AND MANGANESE

$ million (unless otherwise stated)	6 months ended 30 June 2010	6 months ended 30 June 2009
Operating profit	1,628	720
Kumba Iron Ore	1,470	723
Iron Ore Brazil	(51)	(82)
Samancor	209	79
EBITDA	1,711	753
Net operating assets	10,679	11,048
Capital expenditure	525	412
Share of Group operating profit	37%	34%
Share of Group net operating assets	27%	29%

Operating profit before special items and remeasurements increased by 126% from $720 million to $1,628 million, principally as a result of increased export sales volumes, and the year-on-year weighted average price increase of 73% in export iron ore prices. This was partially offset by a decrease in profit from shipping operations, and the strengthening of the rand.

Markets

The increased demand for iron ore during 2010 is underpinned by higher world crude steel production, which is estimated to increase to 1.37 billion tonnes in 2010, a 4.6% increase. China's crude steel production during the first five months of 2010 increased by 21%, whilst iron ore imports into China over the same period increased by 4.1%. This relatively lower increase in iron ore imports was mainly due to the re-opening of many domestic iron ore mines in China, driven by higher iron ore spot prices, higher freight rates and an increasing demand for iron ore in the traditional markets of Europe, Japan and South Korea, which further reduced the seaborne iron ore available to China.

Having assessed industry developments, Kumba Iron Ore has moved to implement quarterly pricing for its long term contracts. The majority of export sales volumes are currently committed to long term contracts and the remainder is sold at index prices, mainly to annual customers and as additional volume to long term customers in China. Quarterly benchmark prices for the April-June quarter have been negotiated on the basis of average index prices in the period December 2009 to February 2010, and have increased on average by 100% compared to 2009/10 iron ore year benchmark prices. However, a pricing mechanism for future quarters is still under negotiation with customers and changing market conditions have led to significant uncertainty in iron ore prices in the short term.

Operating performance

Kumba Iron Ore

Kumba Iron Ore delivered a strong financial and operating performance, achieved by a 10% increase in total sales volumes and an average increase in contract iron ore export prices of 100% for the second quarter relative to contract prices during the first quarter of 2010. Operating profit before special items and remeasurements increased by 103% to $1,470 million.

Mining activity increased at Kumba Iron Ore's Sishen Mine with a 23% increase in waste mined to mitigate for decreasing geological qualities in the pit and to cater for increased production. Total production at Sishen Mine increased by 17% from 18.0 Mt to 21.1 Mt. Production from the Dense Media Separation (DMS) plant increased by 1.0 Mt or 8%. The Jig plant's production increased by 7% from the 6.0 Mt achieved in the second half of 2009 to 6.4 Mt, and now contributes 30% of Sishen's Mine production.

Kumba Iron Ore increased total sales volumes by 10% from 20.0 Mt to 21.9 Mt. Export sales volumes from Sishen Mine for the period increased by 1.7 Mt or 10% from 17.1 Mt to 18.8 Mt. During the first half of 2010, Kumba Iron Ore sold 5.2 Mt (or 28% of export sales volumes) at index prices, taking advantage of higher prices during this period. Aggregate domestic sales volumes of 3.1 Mt increased by 0.2 Mt.

Iron Ore Brazil

Iron Ore Brazil made an operating loss of $51 million in the first half of 2010, the first financial year that Amapá is considered to be operating commercially. Amapá produced 1.85 Mt, 57% ahead of production in the same period last year. The operation benefited from strong first half iron ore prices and the sale of lower grade sinter feed stockpiles, partly offset by changes in the expected production mix owing to issues experienced with the ore quality, which resulted in a lower proportion of pellet feed production.

The operational issues experienced in the early part of the year at Amapá have been resolved and therefore production volumes in the second half are expected to be higher than those of the first half; however, the change in product mix referred to above will continue to impact the price that can be obtained in the market.

Samancor

Samancor achieved an operating profit of $209 million, a 165% increase, mainly due to a deliberate reduction of output in 2009 due to prevailing economic conditions. Samancor is now operating at near full capacity. Demand from the steel industry for manganese alloy is expected to grow over the next 18 months and to place upward pressure on prices.

Projects

The development of Kumba Iron Ore's 9 Mtpa Kolomela Mine continues and overall project progress remains on budget and on schedule to deliver initial production during the first half of 2012. To date, 8.2 Mt of waste material has been moved and significant key deliverables and major construction elements are well advanced. $579 million of capital expenditure has been incurred to date, of which $153 million was incurred during the first half of 2010.

Outlook

Waste mining at all the operational sites is anticipated to increase, which is expected to put upward pressure on unit cash costs of production. Kumba remains committed to a 5% increase in annual production volumes during 2010, with the continued ramp-up of the Jig plant.

Due to the large gap between current index prices which are lower than the implied July-September 2010 quarterly benchmark prices, uncertainty exists around future export iron ore pricing mechanisms and price levels for iron ore. In an operating environment where steel production rates are being reduced, it is uncertain whether increased iron ore prices under the quarterly pricing mechanism can be passed on to customers. Chinese steel production and iron ore imports in the second half of 2010 are expected to be marginally below levels achieved during the first half as Chinese steel mills prioritise cost over productivity and therefore focus on the use of domestic iron ore. The momentum of the recovery of Kumba Iron Ore's traditional markets is slowing. Export sales volumes into China are expected to normalise at around 60% of the geographical sales mix.

Kumba Iron Ore's Sishen Iron Ore Company (SIOC) and ArcelorMittal reached an interim pricing agreement on 21 July 2010 in respect of the supply of iron ore to ArcelorMittal from Sishen Mine. The duration of the interim agreement will be retrospective to 1 March 2010, and will endure until 31 July 2011. ArcelorMittal will pay to SIOC a fixed price of $50 per ton of iron ore deliverable to ArcelorMittal's Saldanha Steel plant, and $70 per ton of iron ore deliverable to ArcelorMittal's inland plants, which price is calculated on a free on rail ex-Sishen Mine gate basis. The Group has recognised revenue at cost plus 3% in preparing the financial results for the period ended 30 June 2010. Upon completion of documentation, revenue will be recognised under the interim pricing arrangement for ore supplied since 1 March 2010. For the period ended 30 June 2010, the difference between revenue recognised and amounts outstanding under the interim arrangement amounted to $53 million.

Events occurring after 30 June 2010

On 27 July 2010, Anglo American increased its shareholding in Kumba Iron Ore Limited by 2.8% through the exercise of options purchased in 2008 for $301 million, thereby increasing its shareholding from 62.5% to 65.3%.

METALLURGICAL COAL

$ million (unless otherwise stated)	6 months ended 30 June 2010	6 months ended 30 June 2009
Operating profit	263	321
EBITDA	416	422
Net operating assets	3,172	3,096
Capital expenditure	21	47
Share of Group operating profit	6%	15%
Share of Group net operating assets	8%	8%

Metallurgical Coal delivered an operating profit of $263 million, an 18% decrease on the first half of 2009, primarily due to the impact of lower realised prices and a strong Australian dollar. A focus on delivery of core high quality coal products resulted in increased production, despite the negative impact of the Queensland cyclone. Asset optimisation and cost reduction initiatives continued to improve operational effectiveness.

Markets

Anglo American weighted average achieved FOB sales prices ($/tonne)	6 months ended 30 June 2010	6 months ended 30 June 2009
Australian export metallurgical coal	148	161
Australian export thermal coal	83	78
Australian domestic thermal coal	29	25

Attributable sales volumes ('000 tonnes)	6 months ended 30 June 2010	6 months ended 30 June 2009
Australian export metallurgical coal	7,345	5,138
Australian export thermal coal	3,182	3,099
Australian domestic thermal coal	4,267	4,149

An improved global steel outlook, supply constraints due to infrastructure and weather disruptions in Queensland drove a strong metallurgical coal market in the first six months of 2010. World steel production recovered to pre-global financial crisis levels due to higher blast furnace utilisation rates, increased production in China and restocking. The metallurgical coal market was underpinned by continued high levels of metallurgical coal imports by Chinese mills and sustained high demand from India. Metallurgical coal suppliers appear to have responded strongly to the increased demand and new trade flows emerged, such as significant tonnages of US coal being delivered into China.

Cyclone Ului severely disrupted production and seaborne coal exports in the first quarter and spot prices peaked due to concerns over Australian coal supply. Despite the above challenges, Metallurgical Coal increased its high margin metallurgical coal sales by 43% to 7.3 million tonnes through asset optimisation initiatives and coal logistics chain management.

Operating performance

Attributable production ('000 tonnes)

6 months

ended

30 June 2010

6 months

ended

30 June 2009

Export metallurgical coal

7,080

5,669

Thermal coal

7,320

6,950

Metallurgical Coal delivered record half year saleable production across all coal products and record half year sales for export metallurgical coal. Production of metallurgical coal of 7.1 million tonnes was 25% higher than the prior year in response to stronger demand and the benefits of asset optimisation plans. Thermal coal production of 7.3 million tonnes was 5% higher than the prior year. Successful stock management and asset rotation were key to ensuring that production targets were achieved following the weather disruption.

Australian dollar FOB unit costs reduced by 7% compared to the first half of 2009, but increased by 16% in US dollar terms over the same period as a result of the stronger Australian dollar.

Having assessed the market transition to shorter term pricing, a number of commercial agreements have been agreed. The majority of Metallurgical Coal's sales for 2010 are priced quarterly, though there is some volume with favourable longer term pricing arrangements.

Projects

At the greenfield projects of Grosvenor, Moranbah South, Dartbrook and Drayton South, studies continue in order to meet expectations of growing demand for both metallurgical and thermal coal. It is expected that a Board approval decision in relation to the development of the 4.3 Mtpa Grosvenor metallurgical coal project in Australia will be taken in late 2011.

Outlook

Production volumes are forecast to increase in the second half of the year as asset optimisation programmes ramp up.

The global outlook for hard coking coal remains firm, in particular with 2010 steel output growth of approximately 10% in China and India. Price increases were secured for the third quarter of 2010 under fixed volume agreements, while operational improvements are under way in coal logistics chain management to deliver additional sales in the second half of the year.

THERMAL COAL

$ million (unless otherwise stated)	6 months ended 30 June 2010	6 months ended 30 June 2009
Operating profit	351	388
South Africa	220	233
Colombia	143	171
Projects and corporate	(12)	(16)
EBITDA	433	456
Net operating assets	1,740	1,279
Capital expenditure	140	169
Share of Group operating profit	8%	18%
Share of Group net operating assets	4%	3%

Thermal Coal generated an operating profit of $351 million, a 10% decrease, primarily as a result of lower production volumes in South Africa caused by heavy rains that continued through to the middle of the second quarter, challenging geological conditions and the impact of the stronger rand. These effects were partially offset by higher South African export thermal coal prices. Pricing for Cerrejón's coal was affected by weaker demand in the European and American markets.

Markets

Anglo American weighted average achieved FOB sales prices ($/tonne)	6 months ended 30 June 2010	6 months ended 30 June 2009
South Africa export thermal coal	81	65
South Africa domestic thermal coal	23	20
Colombia export thermal coal	68	77

Attributable sales volumes ('000 tonnes)	6 months ended 30 June 2010	6 months ended 30 June 2009
South Africa export thermal coal ^{(1) (2)}	7,689	7,710
South Africa domestic thermal coal^{(1) (2)}	2,613	3,485
Colombia export thermal coal	5,026	5,033

⁽¹⁾Includes metallurgical coal

⁽²⁾Includes sales from Zibulo mine

South African and Colombian coal exports were in line with the prior year at 7.7 Mt and 5.0 Mt respectively.

In 2010, India is expected to import around 67 Mt of thermal coal, a significant increase from the 57 Mt imported in 2009. In May alone, an additional 550 MW of electricity generation capacity was added to the Indian power grid as the government pursued its target of electrification for all by 2015. The majority of imports into India are sourced from Indonesia and South Africa. In the year to date, a higher than usual proportion of exports from South Africa landed in India.

Operating performance

Attributable production ('000 tonnes)	6 months ended 30 June 2010	6 months ended 30 June 2009
RSA thermal coal ⁽³⁾	9,913	10,807
RSA Eskom coal ⁽³⁾	16,487	17,377
Columbian export thermal coal	5,318	5,352

⁽³⁾Includes production from Zibulo mine

South Africa

Operating profit from South Africa sourced coal decreased by 6% to $220 million, mainly due to the stronger rand and lower volumes, partially offset by higher South African export coal prices. Costs were impacted by the new royalty bill coming into effect from March 2010, as well as higher than inflation cost increases for power and labour. Production for the first half of the year decreased by 7% to 27 Mt, partially due to high rainfall affecting opencast operations, and adverse geological conditions. Export prices for the first half at $81.05 per tonne were 25% higher than the prices achieved in the first half of 2009.

Columbia

At Cerrejón, operating profit of $143 million was 16% lower, principally due to lower thermal coal prices in the European and American markets as a result of weaker demand, leading to considerable supply-side pressure, as well as the continuation of low gas and energy pricing in the United States. These effects were partially offset by cost reductions and operational efficiencies.

Projects

The 6.6 Mtpa Zibulo project (previously known as Zondagsfontein) in South Africa produced its first coal from the opencast mine in the third quarter of 2009. The project will continue to ramp up during the course of 2010 and is expected to reach full production in 2012.

Outlook

For the full year, Thermal Coal anticipates South African production levels broadly in line with 2009, with increasing contributions from the Mafube and Zibulo operations. Colombian production is expected to increase through the remainder of the year. Market demand continues to be driven by Asia, with India in particular the focus for South African exports. Colombian sales are expected to continue to be supported by opportunities in Asia.

DIAMONDS

$ million (unless otherwise stated)	6 months ended 30 June 2010	6 months ended 30 June 2009
Share of associate's operating profit	261	4
EBITDA	340	75
Group's associate investment in De Beers⁽¹⁾	1,783	1,640
Share of Group operating profit	6%	0.2%

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

Anglo American's first half attributable operating profit from De Beers increased by $257 million to $261 million due to the stabilisation of, and improvement in, trading conditions compared to the first half of 2009.

Markets

The first half of the year saw strong double digit growth in consumer demand from China and India and a modest improvement in demand from the US. Since the 2008 launch, Forevermark (a diamond brand from the De Beers Group) has expanded rapidly across Asia, with 289 doors in China, Hong Kong and Japan. Much of this growth can be attributed to mainland China where the brand has been rolled out to 10 cities with plans for further expansion this year. After a difficult 2009, De Beers Diamond Jewellers, De Beers' joint venture with LVMH, has seen a healthy rebound in sales in the first half of 2010. Element Six had a strong first half with all business lines contributing to the improved performance and profitability. Element Six is also benefiting from restructuring and commercial measures implemented in 2009 and early 2010.

Operating performance

Diamond operations generated an attributable operating profit of $261 million, due to the improvement in trading conditions during the first half of 2010. Attributable sales of rough diamonds by the Diamond Trading Company (DTC), the marketing arm of De Beers, including those through joint ventures, were $1.2 billion, an increase of 84%, as a result of increased demand from retail markets, particularly India and China, and restocking by the trade. Carats recovered amounted to 15.4 million, a 134% increase (2009: 6.6 million carats) in order to meet increased demand from the DTC Sightholders.

Attributable production and operating costs were $315 million (2009: $216 million) as a result of increased production across the Group. However, the focus remains on cash management and continuing the efficiency improvements achieved in 2009. After reducing its cost base globally by 45%, and staffing levels by 25% in 2009, many of those gains are expected to remain permanent without stifling growth.

De Beers' commitment to safety remains the company's most important priority. After a fatality-free year in

2009, there were no fatalities during the first half of 2010.

Projects

Debswana's Cut-8, the major expansion project at Jwaneng mine, has commenced. The Group continues to focus on highly prospective target areas in Canada and Angola, while reconnaissance prospecting for new kimberlite discoveries in Botswana and India is ongoing.

Outlook

While the strengthening demand during the first half of 2010 was encouraging, the global economic climate remains fragile, especially in the important diamond markets of the US, Japan and Europe, and the view for the remainder of the year incorporates a balance of caution and measured optimism. A period of market stabilisation is expected in the second half of the year. With most restocking activity by the trade now largely completed, further demand growth is dependent upon increases in consumer demand, and De Beers remains encouraged by the strength of demand in the emerging markets of Asia, particularly China and India.

OTHER MINING AND INDUSTRIAL

$ million (unless otherwise stated)	6 months ended 30 June 2010	6 months ended 30 June 2009
Operating profit	290	236
Tarmac	29	28
Zinc	150	40
Scaw Metals	83	71
Copebrás	12	5
Catalão	28	51
Coal Americas	(1)	(4)
Other	(11)	45
EBITDA	427	402
Net operating assets	4,213	5,667
Capital expenditure	104	115
Share of Group operating profit	7%	11%
Share of Group net operating assets	11%	15%

Tarmac

Tarmac's operating profit of $29 million was 4% higher than the first half of 2009, however on a directly comparable basis (taking into consideration the impact of suspending depreciation on assets classified as held for sale and disposals) was $9 million lower. Tarmac's directly comparable EBITDA performance, taking into consideration the impact of businesses that have been disposed, was 10% lower. This reflects a resilient performance in a difficult market where European, and in particular UK macroeconomic conditions, continue to be challenging for the industry.

The UK Quarry Materials business experienced robust demand in the first half, with the effect of the adverse weather conditions in the first two months of the year partially mitigated in later months. Volumes increased, with overall demand showing a 5% increase. Pricing pressures remain a key issue for the business, though their effect has been mitigated by continued success in cost saving initiatives.

The UK Building Products business saw a significant turnaround, with EBITDA ahead of 2009, reflecting the results of a major restructuring programme in 2009. The impact of weak demand was partially mitigated by cost reduction initiatives.

The 2010 outlook in the UK remains weak, but further clarity is expected when government spending plans are set out in the coming months.

Zinc

	6 months ended 30 June 2010	6 months ended 30 June 2009
Attributable zinc production (tonnes)	178,700	169,900
Attributable lead production (tonnes)	30,800	31,000
Average market price - zinc (c/lb)	98	60
Average market price - lead (c/lb)	95	60

Zinc generated a 275% increase in operating profit to $150 million, mainly due to higher zinc and lead prices during the year, as well as improved zinc production and tightly controlled costs.

Skorpion produced 75,700 tonnes of zinc in the first half of 2010, in line with production levels in the first half of 2009.

At Lisheen, zinc metal production increased by 6% to 87,300 tonnes, primarily due to an increase in ore tonnes milled, which more than offset lower feed grades. Lead metal production decreased by 700 tonnes as lower feed grades outweighed the favourable throughput.

Black Mountain produced 15,700 tonnes of zinc and 22,600 tonnes of lead, an increase of 29% and 2% respectively compared to the prior year. Tonnes mined increased by 7% as a result of higher machine hours and an increase in workable faces. The increase in contained metal production (metal-in-concentrate production) was primarily due to higher zinc and lead grades. Tonnes milled were lower due to scheduled mill maintenance.

Scaw Metals

The Scaw Metals Group generated an operating profit of $83 million, 17% higher than the 2009 operating profit of $71 million. Revenue increased 4% to $767 million. The main contributors to the improved profitability were the MolyCop and South African Grinding Media operations which benefited from improved demand from mining customers. This was partially offset by the challenging trading conditions in the Cast and Wire Rod products operations, primarily due to weaker demand within the construction sector, a stronger rand and rising production costs. Margins in the South African and Canadian rolling mills remained under pressure as the result of rising input costs. However, a strong focus by management on cost saving initiatives and sales to down-stream businesses mitigated the effects of weak margins. Both performed marginally better than the prior year.

Total production of steel products was 757,800 tonnes, with 379,000 tonnes produced by South African operations and 378,800 tonnes from the international operations.

Copebrás

Copebrás achieved an operating profit of $12 million, a 140% increase, due to higher sales volumes of phosphoric acid, sulphuric acid and animal feed, as well as lower mining costs. This was partially offset by lower achieved prices for certain fertiliser products which were negotiated in late 2009. Prices for high analysis fertilisers and sulphuric acid were strong as a result of higher international index prices for benchmark fertiliser products and sulphur respectively.

Non-fertiliser products, such as acids and animal feed, were important contributors to volume for the first half of 2010 compared with 2009, with higher seasonal fertiliser sales expected in the second half.

Catalão

Catalão achieved an operating profit of $28 million, a 45% decrease, primarily due to reduced niobium output as a result of lower than expected grades compared with 2009, exacerbated by unexpected lower recoveries and grades at Boa Vista mine resulting from changes to the 2010 mine plan after the slope failure towards the end of 2009. The Boa Vista mine revamp project was consequently launched to increase production, which has shown significant improvement in the second quarter of 2010.

Coal - Americas

Canada - Peace River Coal recorded an operating loss of $1 million. Clean metallurgical coal production, at 401,400 tonnes, was 21% higher compared to the first six months of 2009. This reflected the steadier production arising from the new site infrastructure and the transition to owner mining, the implementation of key systems and the further development of the management team. The first phase of the Plant Upgrade Project to stabilise throughput was successfully commissioned in May. The second and third phases of the Plant Upgrade Project commenced in June and are expected to be commissioned by the second quarter of 2011. Environmental approval and mine permitting are progressing on the Roman Mountain deposit, adjacent to Trend Mine, where an integrated 4-5 Mtpa Trend/Roman mining operation is targeted. Relationships continue to be developed and improved with the communities in the area.

Venezuela - Carbones del Guasare continued to be impacted by operational and management issues, which hampered performance in the six months to June 2010. Production volumes of 262,900 tonnes were 12% lower than the first six months of 2009 and remain significantly below the performance potential of the mine.

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