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27 October 2022

Anglo American plc

Production Report for the third quarter ended 30 September 2022

Duncan Wanblad, Chief Executive of Anglo American, said: "Our performance stepped up 16%(1) quarter-on-quarter amid a challenging operating environment, driven by the ongoing ramp-up of our Steelmaking Coal longwall operations and continued strong performance at De Beers. Our new world-class copper mine in Peru, Quellaveco, continues to ramp-up production with shipments to customers now under way. Production in the third quarter was broadly flat(1) compared to the same period in 2021, as higher production from Quellaveco, Steelmaking Coal and De Beers was offset primarily by expected lower copper ore grades in Chile and some operational challenges at our Kumba iron ore business.

"As we move through the final quarter, we are focused on maintaining this operational momentum to deliver our full year guidance. The continued safe ramp-up of our steelmaking coal operations, as well as further performance improvements at our iron ore businesses, are priorities to set the platform for delivery into next year. We do continue to feel the effects of dislocations in the global economy on our business - in energy and across supply chains and labour markets - and are planning accordingly for 2023, confident in the strategic position of our business.

"We continue to make important progress towards our holistic sustainability commitments. With renewable electricity supply secured for all our South America operations, we have now formed our renewable energy partnership with EDF Renewables in South Africa. Our new jointly owned company, Envusa Energy, is developing its first phase of more than 600 MW of wind and solar projects, a major step towards our vision of a 3-5 GW renewable energy ecosystem in the region by 2030. The issuance of our first sustainability-linked bond, a first of its kind from a major diversified mining company, re-affirms our commitment to our targets to reduce greenhouse gas emissions and fresh water abstraction and to support job creation in the communities where we operate."

Q3 2022 highlights

•Rough diamond production increased by 4%, principally reflecting the treatment of higher grade ore at Orapa (Botswana) as well as continued strong performance in Namibia.

•Steelmaking coal production increased by 28%, reflecting the ongoing ramp-up of the longwall operations. Continuing to do so in a safe and stable way is our first priority.

•Copper production decreased by 6%, due to planned lower grades at all our operations in Chile, as well as unfavourable ore characteristics at Los Bronces, partly offset by the first production of copper from Quellaveco in Peru.

•Metal in concentrate production from our Platinum Group Metals (PGMs) operations decreased by 6%, due to the impact of Eskom load-shedding (power outages) primarily in September, infrastructure closures at Amandelbult and lower grade at Mogalakwena.

•Iron ore production decreased by 5% primarily due to Kumba, which was impacted by the slow ramp-up after the safety intervention in the second quarter and Eskom load-shedding, primarily in September, while production at Minas-Rio was flat.

•Nickel production decreased by 4%, primarily due to lower grades.

(1)Copper equivalent production basis. Copper equivalent production decreased by 1% compared to Q3 2021.

(2)De Beers Group production is on a 100% basis, except for the Gahcho Kué joint venture which is on an attributable 51% basis.

(3)Contained metal basis. Reflects copper production from the Copper operations in Chile and Peru only (excludes copper production from the Platinum Group Metals business unit).

(4)Reflects nickel production from the Nickel operations in Brazil only (excludes nickel production from the Platinum Group Metals business unit).

(5)Produced ounces of metal in concentrate. 5E+Au (platinum, palladium, rhodium, ruthenium and iridium plus gold). Reflects own mine production and purchase of concentrate.

(6)Wet basis.

Production and unit cost guidance summary

Rough diamond production increased by 4% to 9.6 million carats, primarily due to the treatment of higher grade ore at both Orapa (Botswana) and in South Africa, and continued strong performance in Namibia.

In Botswana, production increased by 4% to 6.6 million carats, primarily driven by treatment of higher grade ore at Orapa, partly offset by processing lower grade ore at Jwaneng.

Namibia production increased by 33% to 0.5 million carats, primarily driven by continued strong performance from the Benguela Gem vessel.

South Africa production increased by 5% to 1.7 million carats, driven by the treatment of higher grade ore and the benefit of plant upgrades.

Production in Canada decreased by 7% to 0.7 million carats, due to the treatment of lower grade ore and the impact of tight labour markets.

Demand for rough diamonds remained steady, with rough diamond sales totalling 9.1 million carats (8.5 million carats on a consolidated basis)(2) from three Sights, compared with 7.8 million carats (7.0 million carats on a consolidated basis)(2) from two Sights in Q3 2021 and 9.4 million carats (8.3 million carats on a consolidated basis)(2) from three Sights in Q2 2022. While consumer demand for natural diamonds continues to be robust, a deterioration of global economic conditions, reduced consumer spending and continued Chinese Covid-19 lockdowns have the potential to impact demand for diamond jewellery.

2022 Guidance

Production guidance(1) for 2022 is unchanged at 32-34 million carats (100% basis), subject to trading conditions and the extent of further Covid-19 related disruptions.

In line with normal seasonal trends, we anticipate that sales in the final quarter of the year will be affected by the normal temporary closure of cutting and polishing factories for the religious holidays in India.

Unit cost guidance for 2022 is unchanged at c.$65/ct.

(1)De Beers Group production is on a 100% basis, except for the Gahcho Kué joint venture which is on an attributable 51% basis.

(2)Consolidated sales volumes exclude De Beers Group's JV partners' 50% proportionate share of sales to entities outside De Beers Group from the Diamond Trading Company Botswana and the Namibia Diamond Trading Company, which are included in total sales volume (100% basis).

(1)De Beers Group production is on a 100% basis, except for the Gahcho Kué joint venture which is on an attributable 51% basis.

(2)Orapa constitutes the Orapa Regime which includes Orapa, Letlhakane and Damtshaa.

(3)Consolidated sales volumes exclude De Beers Group's JV partners' 50% proportionate share of sales to entities outside De Beers Group from the Diamond Trading Company Botswana and the Namibia Diamond Trading Company, which are included in total sales volume (100% basis).

(4)Due to the completion of Sight 3 in April 2022, the sales were recognised in Q2 2022.

Copper

(1)Copper production shown on a contained metal basis. Reflects copper production from the Copper operations in Chile and Peru only (excludes copper production from the Platinum Group Metals business unit).

Copper production decreased by 6% to 147,000 tonnes, primarily due to a decrease of 19% in Chile, partly offset by the first production of copper in concentrate from Quellaveco in Peru.

Chile - Copper production decreased by 19% to 126,500 tonnes due to planned lower grades at all operations, and unfavourable ore characteristics and unplanned stoppages at Los Bronces.

Production from Los Bronces decreased by 29% to 56,900 tonnes, primarily due to lower ore processed as a result of the impact of increased ore hardness and unplanned stoppages, as well as planned lower grades (0.58% vs 0.70%).

At Collahuasi, attributable production decreased by 8% to 60,400 tonnes driven by planned lower grades (1.08% vs 1.28%).

Production from El Soldado decreased by 21% to 9,200 tonnes due to planned lower grades (0.59% vs 0.73%).

Chile´s central zone continues to face severe drought conditions, with the last two years up to June 2022 being the driest years since records began. While the rain and snowfall deficit decreased during the third quarter, the outlook remains very dry and these conditions place pressure on water availability in 2023. In the short term, various management initiatives to improve water efficiency and secure alternative sources of water continue to partly mitigate the impact on production.

The average realised price of 377 c/lb, includes 135,000 tonnes of copper provisionally priced on 30 September at an average of 346 c/lb.

Peru - First production of copper in concentrate from the Quellaveco mine was on 12 July 2022, with 20,300 tonnes successfully produced by the end of the third quarter. On 26 September 2022, we announced the start of commercial operations following receipt of final regulatory clearance, with sales commencing in the subsequent days. Quellaveco is expected to ramp-up fully over the next 9-12 months.

5,100 tonnes of copper from Quellaveco were provisionally priced on 30 September at an average realised price of 341 c/lb.

2022 Guidance

Production guidance for 2022 is unchanged at 640,000-680,000 tonnes (Chile 560,000-580,000 tonnes; Peru 80,000-100,000 tonnes). Production is subject to the extent of further Covid-19 related disruptions and, in Peru, progress on ramp-up of operations.

Unit cost guidance for 2022 is unchanged at c.159c/lb (Chile c.160c/lb; Peru c.150c/lb).

(1)Excludes copper production from the Platinum Group Metals business unit. Units shown are tonnes unless stated otherwise.

(2)Anglo American ownership interest of Los Bronces, El Soldado and the Chagres Smelter is 50.1%. Production is stated at 100% as Anglo American consolidates these operations.

(3)TCu = total copper.

(4)Copper contained basis.

(5)Total copper production includes Anglo American's 44% interest in Collahuasi.

(6)Relates to sales of copper not produced by Anglo American operations.

(7)Anglo American ownership interest of Quellaveco is 60%. Production is stated at 100% as Anglo American consolidates this operation.

Nickel

Nickel production decreased by 4% to 10,000 tonnes, primarily due to planned lower ore grades, partly offset by the deferral of planned annual maintenance to the fourth quarter of 2022.

The year to date average realised price for nickel of $10.68/lb was 9% lower than the market price, primarily reflecting the ferronickel discount to LME grade nickel.

2022 Guidance

Production for 2022 is expected to be towards the lower end of the guidance range of 40,000-42,000 tonnes, subject to the extent of further Covid-19 related disruptions and weather related impacts.

Unit cost guidance for 2022 is unchanged at c.495c/lb.

(1)Excludes nickel production from the Platinum Group Metals business unit.

Platinum Group Metals (PGMs)

(1)Ounces refer to troy ounces. PGMs consists of 5E+Au (platinum, palladium, rhodium, ruthenium and iridium plus gold).

(2)Includes managed operations and 50% of joint operation production.

(3)Includes the other 50% of joint operation production, as well as the purchase of concentrate from third parties.

(4)Refined production excludes toll refined material.

Metal in concentrate production

Own mined production decreased by 5% to 683,200 ounces, due to Eskom load-shedding (power outages) primarily in September, infrastructure closures at Amandelbult during Q4 2021 and lower grade at Mogalakwena, partially offset by strong performances at Unki and Mototolo.

Production at Amandelbult decreased by 12% to 192,600, primarily due to infrastructure closures during Q4 2021 as well as the impact of Eskom load-shedding. Mogalakwena production decreased by 6% to 259,300 ounces as a result of mining in a lower grade area. Joint operations decreased by 16% to 96,000 ounces due to areas of Kroondal coming to the end of life and the impact of Eskom load-shedding, as well as planned lower grade at Modikwa. These were partially offset by a 41% increase in production at Unki to 59,900 ounces, following the debottlenecking project at the concentrator, completed in Q4 2021. Production at Mototolo increased by 9%, reflecting the benefit of higher grade.

Purchase of concentrate was 8% lower at 362,900 ounces, due to the lower production from joint operations as well as lower third party receipts.

Refined production

Refined production decreased by 30% to 994,800 ounces, as the Polokwane smelter was decommissioned for its first full structural rebuild in twelve years. The rebuild is expected to be completed towards the end of Q4 2022. Eskom load-shedding also impacted the smelters, leading to an inventory build-up of 40,400 ounces.

Sales

Sales volumes decreased by 31%, in line with refined production.

The year to date average realised basket price of $2,627/PGM ounce reflects lower market prices, partially offset by a more normal sales mix compared with the same period in 2021, which had elevated sales volumes of lower priced ruthenium.

2022 Guidance

Production guidance (metal in concentrate) for 2022 is unchanged at 3.9-4.3 million ounces(1). Refined production guidance for 2022 is unchanged at 3.7-3.9 million ounces, subject to the impact of Eskom load-shedding. Both are subject to the extent of further Covid-19 related disruption.

Unit cost guidance for 2022 is unchanged at c.$950/PGM ounce.

(1)Metal in concentrate production is expected to be 1.8-2.0 million ounces of platinum, 1.2-1.3 million ounces of palladium and 0.9-1.0 million ounces of other PGMs and gold. With own-mined output accounting for ~65%.

(1)M&C refers to metal in concentrate. Ounces refer to troy ounces. PGMs consists of 5E+Au (platinum, palladium, rhodium, ruthenium and iridium plus gold).

(2)The joint operations are Modikwa and Kroondal. Platinum owns 50% of these operations, which is presented under 'Own mined' production, and purchases the remaining 50% of production, which is presented under 'Purchase of concentrate'.

(3)Refined production excludes toll material.

(4)Ounces refer to troy ounces. Tolled volume measured as the combined content of: platinum, palladium, rhodium and gold, reflecting the tolling agreements in place.

(5)PGMs sales volumes from production are generally ~65% own mined and ~35% purchases of concentrate though this may vary from quarter to quarter.

(6)Relates to sales of metal not produced by Anglo American operations.

(7)4E: the grade measured as the combined content of: platinum, palladium, rhodium and gold, excludes tolled material. Minor metals are excluded due to variability.

Iron Ore

(1)Total iron ore is the sum of Kumba and Minas-Rio.

(2)Volumes are reported as wet metric tonnes. Product is shipped with ~1.6% moisture.

(3)Volumes are reported as wet metric tonnes. Product is shipped with ~9% moisture.

Iron ore production decreased by 5% to 16.1 million tonnes, due to an 8% decrease at Kumba, while production at Minas-Rio was flat.

Kumba - Total production decreased by 8% to 10.0 million tonnes, primarily driven by a decrease at Sishen of 6% to 7.1 million tonnes due to Eskom load-shedding (power outages), which had a 0.3 million tonne impact, and plant reliability. Kolomela's production decreased by 11% to 2.9 million tonnes, due to the slow ramp-up following the safety intervention in the second quarter.

Total sales were flat at 10.0 million tonnes(1), due to poor rail performance, offset by a drawdown of finished stock at the Saldanha port. This has resulted in low finished stock levels at the port.

Kumba's iron (Fe) content averaged 63.9% (YTD 2021: 64.1%), while the average lump:fines ratio was 66:34 (YTD 2021: 69:31).

The year to date average realised price of $115/tonne(1) (FOB South Africa, wet basis), was 8% higher than the 62% Fe benchmark price of $106/tonne (FOB South Africa, adjusted for freight and moisture), reflecting the lump and Fe content quality premiums that the Kumba products attract, partly offset by timing on provisionally priced sales volumes, as our products are generally priced in the month after arrival (M+2).

Minas-Rio - Production was flat at 6.1 million tonnes.

The year to date average realised price of $114/tonne (FOB Brazil, wet basis) was lower than the Metal Bulletin 66 price of $117/tonne (FOB Brazil, adjusted for freight and moisture), primarily due to timing on provisionally priced sales volumes (our products are generally priced in the month after arrival (M+2)), which more than offset the premiums for our high quality product, including higher (~67%) Fe content.

2022 Guidance

Production (wet basis) for 2022 is expected to be towards the lower end of the guidance range, which is unchanged at  60-64 million tonnes. Production for Kumba is expected to be towards the lower end of the 38-40 million tonnes guidance range. Production guidance for Minas-Rio is also expected to be towards the lower end of the 22-24 million tonnes guidance range. Both are subject to the extent of further Covid-19 related disruption and weather related impacts, and Kumba is subject to third party rail and port performance, as well as the impact of Eskom load-shedding.

Unit cost guidance (wet basis) for 2022 is unchanged at c.$40/tonne (Kumba c.$44/tonne; Minas-Rio c.$32/tonne).

(1)Sales volumes and realised price are reported on a wet basis and differ to Kumba's standalone results due to sales to other Group companies.

(1)Total iron ore is the sum of Kumba and Minas-Rio and reported in wet metric tonnes. Kumba product is shipped with ~1.6% moisture and Minas-Rio product is shipped with ~9% moisture.

(2)Sales volumes differ to Kumba's standalone results due to sales to other Group companies.

(1)Anglo American's attributable share of production. Includes production relating to processing of third party product.

All three underground longwall operations (Moranbah, Grosvenor and Aquila) were operating in Q3 2022 with the focus on safety and increasing longwall performance through stability; however, Covid-19 related absenteeism, tight labour markets and unseasonal wet weather at the open pits, continue to impact production.

Steelmaking coal production increased by 28% to 5.5 million tonnes, primarily due to the ramp-up of the Grosvenor longwall operation following its restart in February 2022 and the new Aquila longwall operation which began operations in February 2022. Aquila's production was more than offset by the planned end of production at the Grasstree operation in January 2022.

The ratio of hard coking coal production to PCI/semi-soft coking coal was 83:17, in line with Q3 2021 (83:17).

The year to date average realised price for hard coking coal was $324/tonne, which was lower than the benchmark price of $393/tonne. The price realisation was broadly flat at 82% (YTD 2021: 84%) as the contribution of premium hard coking coal from the Grosvenor operation was offset by the end of production at Grasstree.

2022 Guidance

Production for 2022 is expected to be towards the lower end of the guidance range of 15-17 million tonnes, subject to the extent of further unseasonal wet weather, continued tight labour markets and Covid-19 related disruptions.

Unit cost guidance for 2022 is unchanged at c.$110/tonne.

Manganese

(1)Saleable production.

Manganese ore production decreased by 3% to 973,300 tonnes, driven by Covid-19 related absenteeism and some equipment reliability issues at the South African operations.