PORTFOLIO - Anglo American
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STRATEGIC REPORT PORTFOLIO The quality and long life of our mineral assets are the foundations of our global business. We actively manage our asset portfolio to improve its overall competitive position, continuing our trajectory towards products that support a fast growing population and a cleaner, greener, more sustainable world. Material matters discussed in this section Macro-economic environment Operational and cost performance Meeting our commitments to business stakeholders and society Political and regulatory At Unki mine in Zimbabwe, PGMs commissioned this smelter in 2018 to treat concentrates from the mine on site.
HIGHLIGHTS
$1.2 billion
Underlying EBITDA contribution
from Minas-Rio in 2019
Up to 30 Mtpa
Potential long term production from
Minas-Rio, once all aspects of the
operation have been optimised
~3.2 bn ROM tonnes
Minas-Rio Ore Reserves at 33.5% Fe
Ultrafine feeding of iron ore in concentrate at the Minas-Rio mine site in Minas Gerais, Brazil.
Pillars of value Minas-Rio’s remarkable recovery performance, and have reduced the intervals
Environment Minas-Rio mine in Brazil taps into a large scale for future inspections from five to two years.
iron ore deposit, the resource base of which we Further refinements were made in ore processing
Socio-political have steadily extended since acquiring the asset to enhance recoveries. We brought forward
more than a decade ago. Current estimates equipment and vehicle maintenance, and we
Financial
indicate Ore Reserves of approximately 3.2 billion retrained our workforce so that they were fully
or our KPIs:
F ROM tonnes at 33.5% Fe(1) – and indications are prepared for the resumption of activities.
See pages 50-51 that this highly prospective area has considerably As part of the spillage clean-up operation and
more potential. subsequent rehabilitation process, and working
Minas-Rio’s final product is around 67% Fe grade with the authorities and our local communities,
content, significantly higher than the industry we continued to supply water to the communities,
average, with low levels of contaminants. With while simultaneously taking action to prevent
growth in population and economic output ore slurry entering the nearby river. Today, the
needing to be met by growth in the supply of steel, communities now have two water-supply options
Minas-Rio’s low impurities pellet feed is greatly and the condition of the watercourse is better than
in demand, being ideally suited for a cleaner before the spillages occurred. We also worked on
steelmaking world. Furthermore, the value we rolling out emergency-preparedness plans, such
attract for the product is being enhanced through as community-emergency drills and installing
our Marketing team’s expertise, which is focused warning alarms in households, so that everyone
on ensuring that we are a reliable and competitive is fully prepared in the unlikely event of another
provider of customer-specific, tailored products. pipeline breach.
Minas-Rio is making a growing contribution to the It was also a prerequisite for us to put safety
Group, reflecting not only the strong ramp-up first in the raising of the dam crest at the tailings
Minas-Rio’s low impurities following the restart of operations in December storage facility. This facility uses a downstream
construction design and takes the form of an
pellet feed is greatly in demand, 2018, but also cost efficiencies associated
with higher ore recoveries. Our original 2019 earth-fill embankment dam, built using
being ideally suited for a compacted fill materials, with no tailings used
production guidance was revised upwards during
cleaner steelmaking world.” the year, with total output reaching 23.1 Mt by year in its construction. Our comprehensive safety
end. We have begun work to take production management programme for the tailings dam
beyond nameplate capacity of 26.5 Mtpa towards includes routine internal geo-technical
a potential 30 Mtpa by optimising all aspects of inspections, geo-technical instrumentation,
the operation. instrumentation-data analysis, bathymetric
surveys, and audits. The facility also incorporates
During the suspension of the operation in 2018, a new technique, which we developed in-house,
when leakages were found in the 529-kilometre that provides real-time information on the amount
pipeline that transports the iron ore to the coast, of water contained, as well as fibre-optic
we took the opportunity to review the whole installations that provide real-time monitoring of
operation so that, once we were able to restart, any strain, deformation and seepage.
we could maximise our production ramp-up
while maintaining operational stability. In securing the Operating Licence for the
tailings dam raise in December 2019, Minas-Rio
We carried out a comprehensive internal has achieved yet another major milestone on
inspection of the entire pipeline, replacing sections its journey to become a sustainably profitable,
where necessary. We have installed a fibre-optic globally cost-competitive producer of high
(1)
See Ore Reserves and Mineral Resources Report 2019 system with a variety of sensors along critical grade iron ore products.
for full details. sections of the pipe to continuously monitor
Anglo American plc Integrated Annual Report 201921
STRATEGIC REPORT PORTFOLIO
PORTFOLIO
CONTINUED
Anglo American’s portfolio of The lack of significant kimberlite discoveries The copper industry is expected to struggle
world class mining operations and globally over recent years, combined with the to meet longer term demand growth,
ongoing growth in consumer demand for including from hybrid and electric vehicles
undeveloped resources – spanning
diamond jewellery in both mature and and renewable energy, as declining grades
diamonds (through De Beers), developing markets, points to good prospects and more challenging physical and
copper, platinum group metals, for the diamond business. The addition of the environmental conditions, along with tougher
iron ore, coal, nickel and manganese Chidliak Diamond Resource in Canada, and licensing and permitting requirements, are
– provides the metals and minerals the continued investment in diamond mining expected to limit the industry’s ability to
that enable a cleaner, greener, more support technologies, will enhance De Beers’ deliver new copper supply.
sustainable world. portfolio of high quality and high margin assets
and the ability of the business to flex Platinum Group Metals (PGMs)
production to prevailing demand. Our Platinum Group Metals (PGMs) business
The scale and diversity of the portfolio
(held through an effective 79.4% interest in
allow us to leverage our financial resources, Through its differentiated rough diamond Anglo American Platinum Limited) is a leading
technical expertise and supplier relationships distribution model, which comprises term producer of platinum, palladium and the other
towards delivery on our potential, and to the contract Sightholders, Accredited Buyers and PGMs. It mines, processes and refines the
benefit of our customers. The portfolio’s depth Auction Sales customers, De Beers has a platinum basket of metals from its high quality
and breadth create a measured risk profile and range of insights into its customers’ demand resource base, located in one of the biggest
support strong returns through spreading our patterns. De Beers seeks to stimulate PGM deposits – the Bushveld Complex in
investments across diverse asset geographies consumer demand for diamonds through its South Africa. It also has a significant stake
and end markets. Forevermark™ and De Beers Jewellers brands in Unki – one of the world’s largest PGM
and through its participation in the Diamond deposits outside of South Africa, on the
Building strategic advantage Producers Association. Great Dyke in Zimbabwe.
The primary source of competitive advantage Copper Our flagship mine, Mogalakwena, is the
in the mining industry is to own high quality, Anglo American has a world class asset highest margin PGM producer in the industry
high margin, long life assets of scale, with position in copper, built around its interests and, as the only large open-pit PGM mine
positions that can be further enhanced if in two of the world’s largest copper mines – globally, is at the centre of a more flexible,
those assets deliver products into structurally Los Bronces (a 50.1% owned operation) competitive and lower risk business.
attractive markets. and Collahuasi (44% owned joint operation),
We are continuing to reposition the business
In assessing our asset portfolio, we consider: with Reserve Lives of 35 years and 51 years,
around a leaner, best-in-class operating
respectively. The resource base of these
••The stand-alone quality of individual assets, footprint at the Mogalakwena, Amandelbult
assets underpins our future near-asset
including their relative cost position and and Mototolo mines in South Africa, and
growth opportunities, in addition to the tier
growth potential Unki mine in Zimbabwe, alongside our joint
one Quellaveco project we are developing
operation interests in the Kroondal and
••Our global competitive position within the in Peru – one of the world’s largest untapped
Modikwa mines in South Africa.
individual product groups copper orebodies, and the polymetallic
Sakatti deposit in Finland. Demand for platinum is forecast to increase
••The additional value potential generated over time, given the ongoing trend towards
through our dedicated marketing expertise. cleaner-emission vehicles, driven by
more stringent global emissions legislation.
Our product groups ASSET QUALITY: DIFFERENTIATED PORTFOLIO
Diamonds
De Beers has a global leadership position in Revenue by product(1) Capital employed by geography(2)
diamonds, producing around a third of the 23% 5%
world’s rough diamonds, by value. Within its
11%
portfolio, De Beers (Anglo American: 85% 26%
interest), in partnership with the Government
24%
of the Republic of Botswana, has one of the
richest diamond mines, by value, in the world
at Jwaneng, and one of the largest resources, 16% 14%
in terms of total carats, at Orapa.
De Beers’ major diamond mining assets have
large, long life and scalable resources and 5%
we are continuing to invest in the existing 24%
6% 13%
operations to extend mining activities. The
20%
Cut-9 expansion of Jwaneng will increase 13%
the depth of the mine to 800 metres to extend
Diamonds Copper Iron Ore Brazil Botswana and Namibia
the life of the mine; Debmarine Namibia has an (De Beers)
Met coal Nickel and
additional custom-built diamond mining vessel Manganese
South Africa Australia
PGMs Thermal coal
in construction; and in South Africa, Venetia is Chile, Colombia and Peru Other
transitioning underground, extending the life of (1)
Revenue by product based on business unit. Excludes sales of products purchased from third parties
mine to 2046. by our Marketing business.
(2)
Attributable basis.
22 Anglo American plc Integrated Annual Report 2019
Increasing demand from the automotive
industry is likely to be augmented by growing
opportunities for emerging new applications,
including hybrid and hydrogen fuel cell electric
vehicles, while emerging countries such as
India offer the potential of developing, from a
relatively low base, into significant platinum
jewellery markets.
We are well positioned to proactively stimulate
demand for platinum, including through
targeted campaigns in emerging jewellery
markets; creating new investment demand
for the metal as a store of value; and through
direct investment in a number of companies
developing new technologies that are
expected to drive industrial demand for PGMs.
Iron ore
Anglo American’s iron ore operations provide
customers with high iron content ore, a large
percentage of which is direct-charge product
for steelmaking blast furnaces. In South Africa,
we have a 69.7% shareholding in Kumba Iron
Ore, whose Sishen and Kolomela mines
produce high grade and high quality lump ore Truck operator Ricardo Guerra surveys a section of the future mining area of the Los Bronces Integrated Project.
and also a premium fine ore.
In Brazil, we have developed the Minas-Rio A win-win project and no effect on actual water supplies. This
operation (100% ownership), consisting of an Los Bronces is located in the Andes, underground phase will replace low grade ore
3,500 metres above sea level, some from the current open-pit mine with higher
open-pit mine and beneficiation plant, which
65 kilometres north east of Chile’s capital, grade ore and will utilise the existing processing
produces a high grade pellet feed product,
Santiago. It has been mined for more than plant’s capacity.
with low levels of contaminants. The iron ore is
transported through a 529-kilometre pipeline 150 years and is one of the country’s major What’s more, we will use our current tailings
to the iron ore handling and shipping facilities copper producers, producing 335,000 tonnes facilities and use similar levels of water and
at the port of Açu, in which Anglo American of copper in 2019. energy as we do today. Currently, 70%-80%
has a 50% shareholding. But to maintain or increase copper production of total water used in processing activities
from current levels, Los Bronces will need is recycled – we plan to upgrade the water-
As steel producers in China and elsewhere recirculation system to further increase the
access to higher grade ore. So, in July 2019,
face ever-tighter emissions legislation and are amount of water we recycle, with no adverse
Anglo American submitted an environmental
seeking ways to make their furnaces cleaner impact study to the Chilean authorities for the impact on water quality in the region as a
and more efficient, so the demand for higher Los Bronces Integrated Project, and has result of our operations. At the same time, as
quality iron ore products increases. The lump recently started the environmental part of our FutureSmart Mining™ approach
iron ore produced from Kumba’s operations permitting process. to technology and sustainability, we are
is in particular demand and commands a integrating enabling technologies in fields such
premium price, owing to its excellent physical Los Bronces’ location in a region with as bulk ore sorting and coarse particle recovery
strength and high iron content (64%-65% glaciers means that current and future mining to precisely target the metal and mineral, with
operations must not affect the surface of any less water, energy and waste.
average Fe content). Minas-Rio’s pellet feed
protected area or have an impact on nearby
product also commands a premium price, We have spent six years of study, and three
glaciers. For the current open-pit mine, our
as its ultra-low contaminant levels and high years consulting with government, local
operational continuity plans involve expanding
iron content (c. 67% Fe content) are sought its surface by pushing back the perimeter to communities, NGOs and other stakeholders to
after by steel producers who are seeking to access better quality mineral-bearing ore. We make sure we can safeguard nearby protected
minimise emissions while boosting productivity. are extremely careful to make sure that we have areas and surrounding glaciers, and will not
no impact on glaciers, biodiversity areas or increase freshwater use, or raise traffic levels
Coal: metallurgical and thermal on local roads – and that the project will have
other water resources in the region.
Our coal portfolio is geographically diverse, significant and widespread economic and
with metallurgical coal assets in Australia, Five kilometres away, we are proposing to other benefits.
and thermal coal assets in South Africa and develop an underground mine to exploit a
contiguous deposit. We plan to use an At Anglo American, we believe that mining,
Colombia. Since 2012, we have more than
internationally proven mining method of which is vital to the Chilean economy, can
halved our thermal coal production footprint.
extracting mineral by underground blocks, which co-exist with the conservation of the
are then filled in with mainly rock and around environment and particularly the presence
Metallurgical coal – Australia
3% of cement mixture to ensure surface stability. of glaciers, while at the same time making a
We are the world’s third largest exporter of
long-lasting contribution to the development
metallurgical coal for steelmaking and our We have built in environmental considerations of the surrounding communities and the
operations serve customers throughout Asia, from the earliest planning stage to guarantee country as a whole.
Europe and South America. the project will have no impact on the surface
Anglo American plc Integrated Annual Report 201923STRATEGIC REPORT PORTFOLIO
PORTFOLIO
CONTINUED
Our tier one metallurgical coal assets include operational self-help and other efficiency work, Projects
the Moranbah North (88% ownership) and together with the sale, placing onto care and Strict value criteria are applied to the
Grosvenor (100% ownership) metallurgical maintenance, and closure of less attractive assessment of Anglo American’s portfolio of
coal mines, both located in Queensland. The assets, resulting in a step-change in our future growth options. Where appropriate, we
mines are underground longwall operations operational performance, profitability and cash aim to seek partners for the development of
and produce hard coking coal. More stringent flow generation. major greenfield projects at the right time and
environmental and safety regulations in China for value, and are likely to not commit to the full
have led to a number of domestic coal mine Portfolio management
In 2019, the Group commenced, or development of more than one such project at
closures and a requirement for steel producers any given time. The Group will continue to
to run cleaner, larger and more efficient blast completed, a number of transactions.
We entered into a transaction, expected maintain optionality to progress with value-
furnaces, resulting in increased demand and accretive projects.
prices for high quality coking coal, such as to complete in 2020, to provide for the
that produced by our Australian mines. equalisation of ownership across our Project execution at Quellaveco is on track,
integrated metallurgical coal operations at with all key milestones for 2019 achieved
Export thermal coal – South Africa Moranbah North and Grosvenor through the on schedule.
We have refocused our South African coal sale of 12% in Grosvenor mine to the minority
portfolio to concentrate on export markets, shareholders in Moranbah North. The The project is expected to deliver first
having successfully completed the sale of the Grosvenor mine uses Moranbah North’s coal production in 2022, within the $5.0-$5.3 billion
majority of our domestic coal mines, more processing infrastructure, where numerous capital expenditure estimate (100% basis;
than halving our production footprint since debottlenecking, expansion and product Anglo American share: $2.5-$2.7 billion), with
2012. We supply around 19 million tonnes of blending options offer considerable cost, ramp-up in 2023. Quellaveco expects to deliver
thermal coal per year to export markets. productivity and margin benefits for the around 300,000 tonnes per annum of copper
integrated operation. equivalent production (on a 100% basis) on
Coal South Africa’s export product is derived average in the first 10 years of operation.
from three wholly owned and wholly operated We also completed the two-phased
mines – Goedehoop, Greenside and restructuring plan of Atlatsa (PGMs), which In May 2019, we announced the approval by
Khwezela; Zibulo (73% owned); as well as entailed, among others, the acquisition of Debmarine Namibia, a 50:50 joint operation
from Mafube colliery, a 50:50 joint operation. the exploration properties adjacent to between De Beers and the Namibian
Mogalakwena mine. government, for the construction of a new
Our operations route all export coal through custom-built diamond recovery vessel. At
the Richards Bay Coal Terminal, in which we Namdeb Holdings, a joint operation between an expected total capital cost of $0.5 billion
hold a 23.2% stake. the Namibian government and De Beers, ($0.2 billion attributable to Anglo American),
announced the sale of Elizabeth Bay in this new vessel will become the seventh in the
Export thermal coal – Colombia September 2019. Debmarine Namibia fleet. It is expected to
In Colombia, Anglo American, BHP and begin production in 2022, with the capacity
Glencore each have a one-third shareholding In January 2020, Anglo American announced
that an agreement has been reached with the to add 500,000 high quality carats of annual
in Cerrejón, one of the country’s largest production, a 35% increase above Debmarine
thermal coal exporters. board of Sirius Minerals Plc (‘Sirius’) on the
terms of a recommended cash acquisition for Namibia’s current levels.
Nickel and manganese the entire issued and to be issued share capital In July 2019, the Board approved the Aquila
Nickel of Sirius. Anglo American identified Sirius’s project to extend the life of the Capcoal
Our Nickel business has the capacity to Woodsmith polyhalite project in North Yorkshire underground hard coking coal operations in
produce around 45,000 tonnes per year of (the ‘Project’) as being of potential interest given Queensland, Australia, by six years, to 2028.
nickel, whose primary end use is in the global the quality of the underlying asset in terms of At an expected attributable capital cost of
stainless steel industry. Our assets (both scale, resource life, operating cost profile and $0.2 billion, Aquila offers a high-margin
100% owned) are in Brazil, with two ferronickel the nature and quality of its product. The extension to the mine, with an average annual
production sites: Barro Alto and Codemin. Project has the potential to fit well with our saleable production of 3.5 Mt (attributable)
established strategy of focusing on world of premium quality hard coking coal.
Manganese class assets, particularly in the context of Development work began in September 2019
We have a 40% shareholding in Samancor Anglo American’s portfolio trajectory towards and first longwall production is expected in
joint venture (managed by South32, which later-cycle products that support a fast growing early 2022.
holds 60%), with operations based in global population and a cleaner, greener,
South Africa and Australia. more sustainable world. The proposed Longer term, the Group has a number of future
transaction is subject to regulatory and Sirius organic growth options under consideration,
shareholder approval. including expansions at Collahuasi and
Portfolio restructuring in the year Los Bronces copper mines in Chile, the
We will continue to refine and upgrade our Anglo American Platinum completed the Mogalakwena PGMs complex in South Africa,
asset portfolio as a matter of course to ensure disposal of its 33% interest in the Bafokeng and the Moranbah/Grosvenor metallurgical
that our capital is deployed effectively to Rasimone Platinum Mine associate to coal complex in Australia.
generate enhanced and sustainable returns Royal Bafokeng Resources Proprietary Limited or more on the progress of our Quellaveco project:
F
for our shareholders. (RBR) in December 2018, for a total See page 63
consideration of around $150 million, of
Anglo American has transformed the quality which approximately $110 million was Discovery
and performance of its portfolio since 2012, deferred. The outstanding consideration,
halving the number of assets while producing Discovery and Geosciences, including our
including accumulated interest, was settled
more physical product. This transformation exploration activities, is consolidated across
in full by RBR in January 2020.
has been achieved through extensive the Group, covering near-asset and greenfield
24 Anglo American plc Integrated Annual Report 2019discovery, projects, and operations. The Innovation and technology are at the heart airborne geophysical system, and the
integrated function is supporting a greater of a differentiated discovery strategy Low-Temperature Superconducting Quantum
technical understanding of our world class By applying leading scientific understanding of Interference Device (LT-SQUID) ground-based
assets, a strategic advantage that is being how world class mineral systems are formed geophysical system, both developed through
applied to maximise realisation of value from at all scales, we aim to identify and create Anglo American-driven collaborations.
them, and to gain significant benefit in both material value through discovery in the earth’s SPECTREMPLUS collects high-resolution
near-asset and greenfield discovery work. most prospective ground. A combination of electromagnetic, magnetic, radiometric and
established and novel proprietary technologies gravity information about the sub-surface in
Anglo American was founded on world class
is crucial to Anglo American’s track record of a single airborne platform. The LT-SQUID is
mineral discoveries. Building on the Group’s
mineral discoveries in new settings and a highly sensitive magnetometer that is
strategy and long track record of discovery
beneath the cover of overlying material, such particularly useful for sensing metallic sulphide
success, we are implementing a fundamentally
as younger rock sequences or desert sands. deposits in complex geological environments
revitalised discovery strategy that is shaping a
Innovative discovery technologies employed that otherwise lack expression at surface.
global, diversified, risk-balanced portfolio
by Anglo American include the SPECTREMPLUS
focused on new discovery search spaces. This
effort is enhancing our position as a discoverer
of superior-value deposits that have the
potential to improve our production profile,
over time.
Quality discovery portfolio
We are concentrating on the discovery
of mineral deposits in existing and new
districts that are capable of delivering
sustainable returns on a material scale,
and which provide greater diversification
and optionality for the business.
We maintain a robust and diverse discovery
portfolio, including:
••Near-asset discovery projects: focused
on the extensive mineral tenure around
Anglo American’s existing operations, The Sakatti polymetallic project north of the Arctic Circle in Finland is currently at pre-feasibility stage.
including those producing copper,
PGMs, nickel, diamonds, iron ore and Sakatti – responsible resource For example, in collaboration with Finnish
metallurgical coal. development drilling contractor Oy Kati Ab, we developed a
closed-loop drilling system that is designed to
••These have yielded, for example, several Sakatti is a wholly owned project, located 150
kilometres north of the Arctic Circle in Finnish operate in an environmentally sensitive
discoveries in the Los Bronces district in
Lapland, which we discovered in 2009. It lies environment. The system has substantially
Chile. Notably, at Los Bronces Underground,
on a rich polymetallic deposit containing base reduced waste and water use and thus
discovered in 2006, ongoing drilling over the minimises our overall environmental footprint.
past five years has yielded an increase in metals such as copper, nickel and cobalt, and
also platinum, palladium, gold and silver. The And we have decided to build an access tunnel
reported Mineral Resources by more than with the entrance five kilometres away from the
250% to c. 3.9 Bt @ 1.14% TCu (see Ore high concentrations of these metals, combined
with consistency of the deposit’s mineralisation, ore deposit in order to reduce disturbance to
Reserves and Mineral Resources Report the land above ground and the impact on
make Sakatti a highly attractive deposit, with
2019 for full details). In other districts such reindeer herders.
significant further exploration potential.
as Quellaveco (Peru) and Mogalakwena
Though still at the pre-feasibility stage, Sakatti We also worked closely with all of our
(South Africa), significant new copper and
has seen substantial progress over the past stakeholder groups – residents, land and water
PGM prospects respectively have been
decade in geological modelling, mineral rights holders, reindeer herders, environmental
identified and are currently being explored
resource estimation, updating of environmental groups and recreational users, and municipal
and evaluated.
studies, and an ongoing drilling programme authorities and business – to identify the most
••Greenfield discovery projects: identifying over the asset’s 240-kilometre2 area. suitable place to locate the mine’s waste
and securing district-scale mineral tenure storage facilities and processing plant in order
covering strategic, highly prospective search Given the location of the Sakatti deposit, in a to protect the natural resources within the
biodiversity-protected area, Anglo American is boundaries of the protected area and deliver
space in established and frontier settings.
acutely aware of its responsibility to ensure net positive impact on biodiversity.
The greenfield discovery focus includes
minimal impact on the environment. We have
copper, diamonds (through De Beers), nickel As the world shifts to cleaner energy, copper
established partnerships with Flora & Fauna
and PGMs. The Group has active greenfield International and Finnish biodiversity experts, may well have the best fundamentals of any
programmes in Australia, Canada, as well as local and regional representatives, mined commodity for our cleaner, greener,
Greenland, South America (Brazil, Chile, and continue to engage with NGOs who are more sustainable world of the future. Sakatti
Ecuador, and Peru), Europe (Finland), and concerned about the impact of a mine in such may still have a long way to go before it
southern Africa (Angola, Botswana, Namibia a pristine area, in order to ensure that we are becomes an operating mine, but we believe it
and Zambia). implementing best practice in our biodiversity represents another big step, post-Quellaveco,
management approach. in augmenting Anglo American’s impressive
copper-volume growth profile.
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