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A global business fit for the future

Anglo American’s strategy is to become the leading global mining company. To realise that ambition, the Group is striving to become the investment, partner and employer of choice

Investment of choice

Anglo American seeks to outperform its competitors in delivering value to shareholders. Everything that the Group hopes to achieve for all other stakeholders – particularly host governments, communities and employees – must be built on a platform of sector leading financial performance.

To achieve this, Anglo American is:

  • uplifting the performance of its long life asset base through cost and productivity improvements;
  • integrating a stronger performance culture across the organisation and streamlining its management model; and
  • prioritising capital expenditure towards those businesses and development projects that are expected to perform most strongly in the near term.

Uplifting the performance of the asset base

In 2007, a major drive was initiated to improve cost and productivity performance along with a substantial cost reduction programme, targeting $1 billion of cost savings from procurement and shared services by 2011.

The Asset Optimisation programme involves a thorough review of all key mining operations and includes benchmarking the Group’s assets and processes relative to best in class performance along key performance drivers. The benefits of this programme will have a particular impact on the coal and platinum businesses, where some of the best value enhancing potential lies.

Integrating a stronger performance culture

To meet its strategic goals, the Group’s organisational culture is being changed to ‘One Anglo’. This includes capitalising on the Group’s global scale, with increased integration in areas such as shared services and supply chain management, knowledge sharing between sites and across business units and adherence to common standards and policies.

Furthermore, the Group is embedding a performance culture throughout the organisation, and building a management team driven by value maximisation. As part of this process, there have been significant changes to the executive teams, including new chief executives for the base metals, coal and platinum businesses since April 2007.

Growth

Anglo American’s portfolio is strategically positioned for growth in the near, medium and long term, through both organic growth and targeted acquisitions across a number of geographies. The Group’s approved project pipeline is of the order of $17 billion. The pipeline is focused on the most attractive commodity markets, such as copper, iron ore and export coal and capitalises on Anglo American’s unique position in platinum.

The projects offer scale and are positioned in the lower half of the industry cost curves. The pipeline has the potential to deliver strong production growth and market share gains in all core market segments. The rapid and steep decline in the prices of, and demand for, the majority of the commodities produced by the Group in the second half of 2008 as a consequence of global economic uncertainty has presented a significantly changed near term outlook for Anglo American. As a result, the Company has recently completed a wide ranging review of its capital expenditure programmes. The review focused particularly on prioritising projects that are expected to perform most strongly in the near term, with little detrimental effect on projects that are already at an advanced stage of development.

Planned capital expenditure for 2009 was reduced by more than 50% to $4.5 billion. This substantial reduction will be achieved principally by rescheduling capital spend on many of the Group’s major development projects. The $3.2 billion of capital expenditure that will be spent on the Group’s projects in 2009 will enable their continuing development without causing undue delays or penalties that may impact their investment case, balancing essential short term action in the context of the long term nature of the mining industry. These projects are a key driver of Anglo American’s long term growth and several are well timed to enter production from 2011 onwards. Stay-in-business capital expenditure for 2009 was reduced to $1.3 billion, equal to 64% of depreciation.

In addition to organic growth plans, the Group continues to pursue targeted, value enhancing acquisitions. In assessing acquisitive growth opportunities, it takes a rigorous and value based approach, looking for assets that:

  • are in the most attractive market segments;
  • have scale, long lives and future growth options;
  • are cost competitive; and
  • offer significant value creation potential.

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Inspecting a load haul truck in the vehicle workshop at Kumba Iron Ore’s Sishen mine in South Africa’s Northern Cape province. An improved maintenance planning process is creating additional production capacity for the truck fleet

Inspecting a load haul truck in the vehicle workshop at Kumba Iron Ore’s Sishen mine in South Africa’s Northern Cape province. An improved maintenance planning process is creating additional production capacity for the truck fleet