- Title:
Anglo American interim results 2020 - Time:
07:00:07 - Date:
30 Jul 2020 - Category:
Results - ID:
5345U
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HALF YEAR FINANCIAL REPORT
for the six months ended 30 June 2020
30 July 2020
Anglo American Interim Results 2020
Operational agility underpins underlying EBITDA of $3.4 billion
Mark Cutifani, Chief Executive of Anglo American, said: "The first half of 2020 has tested society to its limits and I am encouraged by - and proud of - how our people have pulled together to do what's right for each other, our business and for society as a whole. Anglo American acted quickly at the onset of the pandemic to protect both the health of our people and host communities through our global "WeCare" lives and livelihoods programme. At the same time, we secured the continuity and integrity of our operations.
"The pandemic did materially impact production, with varying degrees of lockdown being the main driver for our 11% overall reduction in output(1) and 16% decrease in revenue, alongside operational incidents at PGMs and Met Coal. These reductions were partially offset by strong performances from our Brazilian iron ore and Chilean copper operations. By the end of June, we were back at c.90% capacity across the portfolio(1) and the significant transformation of our underlying operational capabilities that has made the business more resilient helped to deliver $3.4 billion of underlying EBITDA*.
"The safety of our people comes first, no matter what. We have made so much progress, yet we are acutely aware that serious incidents continue in our business, none more alarming than at our Grosvenor underground mine in Australia in May. Across the global business, we recorded another all-time low injury frequency rate, representing a further 3% improvement compared to the record low of 2019 and a 62% improvement since 2013.
"Looking beyond the near term, we continue to invest in high quality growth. We still expect first production at our world class Quellaveco copper project in Peru in 2022, despite the prolonged slowdown through the national quarantine, reflecting the excellent progress achieved prior to March. The trajectory of our portfolio is towards later cycle products, with development of our recently acquired Tier 1 Woodsmith polyhalite fertiliser project continuing to progress well, while in May we set out our plans to exit our remaining South African thermal coal operations.
"During the second half, I expect our product diversification and Operating Model to continue to serve us well. As the global economy recovers, PGMs, copper and iron ore are all particularly well positioned, while De Beers, as the world's leading diamond business, is taking all appropriate steps to address the effects of acute disruption. As a company, we are continuing to invest and grow, with our products increasingly geared towards a fast growing population and a cleaner, greener, more sustainable world."
Financial highlights - six months ended 30 June 2020
• Generated underlying EBITDA* of $3.4 billion, a 39% decrease
• Profit attributable to equity shareholders of $0.5 billion (30 June 2019: $1.9 billion)
• Net debt* increased to $7.6 billion (21% gearing), due to investment in growth and temporary working capital build-up at De Beers and PGMs
• Interim dividend of $0.28 per share, consistent with our 40% payout policy
• Investing in high quality growth in later cycle products, including Quellaveco (copper) and Woodsmith (fertiliser)
• Working towards exit from remaining South African thermal coal operations
• Targeting carbon neutrality across operations by 2040
| Six months ended |
30 June 2020 |
30 June 2019 |
Change |
|||
| US$ million, unless otherwise stated |
|
|
|
|||
| Revenue |
12,474 |
|
14,772 |
|
(16) |
% |
| Underlying EBITDA* |
3,350 |
|
5,451 |
|
(39) |
% |
| Mining EBITDA margin* |
38 |
% |
46 |
% |
|
|
| Attributable free cash flow* |
(1,257) |
|
1,342 |
|
(194) |
% |
| Profit attributable to equity shareholders of the Company |
471 |
|
1,883 |
|
(75) |
% |
| Underlying earnings per share* ($) |
0.72 |
|
1.58 |
|
(54) |
% |
| Earnings per share ($) |
0.38 |
|
1.48 |
|
(74) |
% |
| Dividend per share ($) |
0.28 |
|
0.62 |
|
(55) |
% |
| Group attributable ROCE* |
11 |
% |
22 |
% |
|
|
Terms with this symbol * are defined as Alternative Performance Measures (APMs). For more information on the APMs used by the Group, including definitions, please refer to page 66.
SUSTAINABILITY PERFORMANCE
Safety
The safety of our people is always front of mind. Making sure every employee returns home at the end of each day, better for having worked at Anglo American, is our vision for safety and health across the business. In this context, there have been no fatal incidents at our managed operations in the first six months of 2020 - a significant achievement, particularly during a period of major operational disruption with the need for wholesale logistical changes on site due to Covid-19 related health measures.
Serious safety incidents are still an issue we need to eliminate; and while their frequency may be much reduced, the impact on individuals and their families is real and sometimes lifelong. The gas ignition at our underground Grosvenor metallurgical coal mine in Australia in May, in which five of our colleagues were seriously injured, reminds us again how we must continue to improve the safety of everyone associated with Anglo American. This critical work includes going beyond regulatory requirements and industry best practice, while using every available technology - and developing new technologies - to keep people safe.
Across the global business, we recorded another all-time low total recordable case frequency rate, representing a further 3% improvement on the record low we achieved in 2019 and a 62% improvement at our managed operations since 2013. By being unconditional about safety, major safety incidents should be consigned to history, as we have shown to be possible across most of our working locations. And while the first half of 2020 was our best overall safety performance in our history, our progress strengthens our determination to deliver on our clear commitment to zero harm.
Environment
Our environmental performance improved significantly in 2019, and we continue to improve in 2020. However, we did record one Level 3 environmental incident at PGMs' base metals refinery in South Africa, relating to an overflow from a storage pond due to excessive rainfall. Appropriate short term corrective and remedial actions were completed and we are implementing further actions to prevent repeat incidents of this nature across the Group.
Our Sustainable Mining Plan includes commitments to be a leader in environmental stewardship. By 2030, we aim to: reduce GHG emissions by 30% against a 2016 baseline; improve energy efficiency by 30%; achieve a 50% net reduction in freshwater abstraction; and deliver net-positive impacts in biodiversity wherever we operate. In addition, by 2040, we are aiming to be carbon neutral across our operations.
WeCare - our global response to the pandemic
Anglo American acted quickly at the onset of the pandemic to support the lives and livelihoods of our workforce and host communities through the health, social and economic effects of the Covid-19 pandemic - through our global "WeCare" response programme. Our mines and host communities, which are also often home to much of our workforce, operate as an ecosystem and both must be healthy to prosper. Across our operational footprint and in those communities that are local to our operations, our "WeCare" programme provides information and extensive practical support across four pillars of: physical health, mental health, living with dignity, and community response:
Physical health - education and behavioural change to support personal health and hygiene; health screening and testing; PPE and medical equipment and facilities.
Mental health - employee support programmes to assist with mental health management, including via our employee app and online events and other digital materials.
Living with dignity - direct employee and community support to combat gender-based and domestic violence; work with health authorities to identify abuse cases and referrals to support mechanisms.
Community response - wide-ranging livelihoods programme to support communities through the social and economic effects of the pandemic, including: public information campaigns aimed at health and hygiene; health screening and Covid-19 testing; support for health service provision; continuation of essential services (e.g. water, energy, accommodation); food package distribution; employee match-giving programme; support for SMEs and entrepreneurs; support for teachers and students; job training for post-pandemic employability; regional development planning to enhance local economic activity for the long term.
(1) On a copper equivalent basis.
Operational and financial review of Group results for the six months ended 30 June 2020
OPERATIONAL PERFORMANCE
Continued strong performances from our Minas-Rio iron ore operation in Brazil and the Collahuasi copper operation in Chile helped mitigate our overall decrease in production to 11% on a copper equivalent basis. The Covid-19 lockdowns across southern Africa affected production at PGMs, De Beers, Kumba and Thermal Coal, with production also affected by operational issues at Metallurgical Coal and PGMs. Ramping up from a production level of around 60% of capacity in April, operations across the Group continued to increase to around 90% of production capacity by the end of June.
De Beers' rough diamond production decreased by 27% to 11.3 million carats (30 June 2019: 15.6 million carats), primarily as a result of the impact of Covid-19 lockdowns on production at its southern African operations.
Copper production decreased by 2% to 313,900 tonnes (30 June 2019: 320,200 tonnes). At Los Bronces, production decreased by 18% to 149,400 tonnes (30 June 2019: 182,900 tonnes) due to expected lower water availability impacting plant throughput, partly offset by planned higher grades. Attributable production from Collahuasi increased by 27% to a record of 142,200 tonnes (30 June 2019: 112,000 tonnes) on the back of higher throughput and record copper recovery, reflecting plant improvement projects implemented in 2019. Disruption to operations from Covid-19 has been limited, with measures in place to help safeguard the workforce and local communities.
At our PGMs business, platinum and palladium production (metal in concentrate) decreased by 25% to 748,300 ounces (30 June 2019: 992,200 ounces), and by 21% to 531,600 ounces (30 June 2019: 673,800 ounces), respectively. The decrease in production was primarily due to the Covid-19 related lockdowns in southern Africa which reduced operating capacity for most of the second quarter, although Mogalakwena had ramped up towards normal levels by the end of June 2020, with Amandelbult expected to reach 85% production levels by the end of the year.
At Kumba, iron ore production decreased by 11% to 17.9 Mt (30 June 2019: 20.1 Mt), mainly due to lower workforce levels in response to the Covid-19 lockdown. Both Sishen and Kolomela had ramped up to normal run rates by the end of June 2020.
Minas-Rio production increased by 17% to 12.6 Mt (30 June 2019: 10.8 Mt), reflecting a continued strong performance, with P101 productivity initiatives supported by sustained operational stability. The Covid-19 measures put in place to safeguard the workforce and communities did not significantly affect production in the period.
Metallurgical coal production decreased by 22% to 7.8 Mt (30 June 2019: 10.0 Mt), principally as a result of two incidents underground that affected Moranbah and Grosvenor, as well as longwall moves at Grosvenor and Grasstree. Disruption to operations from Covid-19 has been limited, with measures in place to help safeguard the workforce and local communities. Open cut operations have been scaled back at Dawson and Capcoal in response to reduced demand for lower quality metallurgical coal.
Thermal coal total export production decreased by 20% to 10.5 Mt (30 June 2019: 13.2 Mt), largely due to the impact of Covid-19 lockdown restrictions. In South Africa, operations operated at 50% throughout the lockdown period and have ramped up to operate at c.80% since June. In Colombia, operations restarted in May and are progressively ramping up towards normal levels in the third quarter.
Nickel's production increased by 11% to 21,700 tonnes (30 June 2019: 19,600 tonnes) owing to improved operational stability and the planned stoppage at Barro Alto having been completed in the first half of 2019. Manganese ore production was 4% lower at 1.6 Mt (30 June 2019: 1.7 Mt).
Group copper equivalent unit costs decreased by 4% in US dollar terms, largely due to weaker producer currencies, partially offset by the lower production described above.
FINANCIAL PERFORMANCE
Anglo American's profit attributable to equity shareholders decreased by 75% to $0.5 billion (30 June 2019: $1.9 billion). Underlying earnings were $0.9 billion (30 June 2019: $2.0 billion).
UNDERLYING EBITDA*
Group underlying EBITDA decreased by 39% to $3.4 billion (30 June 2019: $5.5 billion). The Group Mining EBITDA margin* was lower than for the first half of 2019 at 38%, due to the decrease in the price for the Group's basket of products and the impact of the Covid-19 pandemic on production across our assets in southern Africa. A reconciliation of 'Profit before net finance costs and tax', the closest equivalent IFRS measure to underlying EBITDA, is provided within note 3 to the Condensed financial statements.
Underlying EBITDA* by segment
|
|
6 months ended |
6 months ended |
||
| $ million |
30 June 2020 |
30 June 2019 |
||
| De Beers |
2 |
|
518 |
|
| Copper |
706 |
|
789 |
|
| PGMs |
610 |
|
824 |
|
| Iron Ore |
1,827 |
|
2,036 |
|
| Coal |
23 |
|
996 |
|
| Nickel and Manganese |
218 |
|
326 |
|
| Crop Nutrients |
4 |
|
- |
|
| Corporate and other |
(40) |
|
(38) |
|
| Total |
3,350 |
|
5,451 |
|
Underlying EBITDA* reconciliation for the six months ended 30 June 2019 to six months ended 30 June 2020
The reconciliation of underlying EBITDA from $5.5 billion in the six months ended 30 June 2019, to $3.4 billion in the six months ended 30 June 2020, shows the controllable factors (e.g. cost and volume), as well as those outside of management control (e.g. price, foreign exchange, inflation and the impact of the pandemic), that drive the Group's performance.
| $ billion |
|
|
| H1 2019 underlying EBITDA* |
5.5 |
|
| Price |
(0.6) |
|
| Foreign exchange |
0.6 |
|
| Inflation |
(0.2) |
|
| Covid-19 volume impact |
(1.1) |
|
| Net cost and volume |
(0.6) |
|
| Other |
(0.2) |
|
| H1 2020 underlying EBITDA* |
3.4 |
|
Price
Average market prices for the Group's basket of products decreased by 2%, reducing underlying EBITDA by $0.6 billion. Realised prices decreased across most of the Group's products, but principally for metallurgical coal (36% decrease), Kumba's iron ore (14% decrease), and copper (11% decrease). These reductions were partly offset by the price achieved for the PGMs basket, which increased by 106%, largely due to palladium and rhodium increasing by 53% and 216%, respectively.
Foreign exchange
The favourable foreign exchange impact on underlying EBITDA of $0.6 billion was due to weaker local currencies in our countries of operation, principally the South African rand, Brazilian real and Chilean peso.
Inflation
The Group's weighted average CPI for the first half of the year was 3.1%, compared with 3.3% in the first six months of 2019. The impact of inflation on costs reduced underlying EBITDA by $0.2 billion.
Covid-19 volume impact
The volume impact of Covid-19 related disruption to production and the supply chain and the impact of reduced diamond demand decreased underlying EBITDA by $1.1 billion.
Across southern Africa, operational disruptions as a result of the Covid-19 pandemic were primarily due to the implementation of a national lockdown by the South African government from 26 March and the Botswana government taking similar action from 2 April. These restrictions affected PGMs, Kumba, De Beers and Thermal Coal significantly throughout the second quarter. Since the imposition of the restrictions, however, the Group's operations have built up production levels from around 60% of total capacity in April, to approximately 90% by the end of June.
The Covid-19 outbreak has had a major impact on the diamond market, affecting all stages of the diamond supply chain and resulting in a 45% decrease in rough diamond sales volumes at De Beers.
Net cost and volume
The net impact of cost and volume was a $0.6 billion reduction in underlying EBITDA, as continued strong performance at Minas-Rio and cost-saving initiatives at Copper and De Beers were more than offset by operational issues at Metallurgical Coal and PGMs.
Metallurgical coal operations were affected by two incidents underground. In January, a fall of ground at Moranbah delayed the completion of a longwall move and, at Grosvenor, operations have been suspended since the beginning of May following a gas ignition incident.
Refined production at PGMs was impacted by a force majeure incident at the Anglo Converter Plant (ACP), leading to closure of both Phase A and Phase B units from 6 March, with Phase B returning to steady state on 12 May. Following a subsequent closure during the first two weeks of June, the Phase B unit has since ramped up and is operating at full capacity. Repairs to Phase A are ahead of schedule with completion estimated by the year end.
Other
The $0.2 billion decrease in underlying EBITDA was driven by Victor mine (De Beers) reaching the end of mine life in 2019. Also included are charges to the income statement in respect of increases in the environmental restoration provisions at Metallurgical Coal and Copper as a result of recent market volatility influencing the discount rate.
UNDERLYING EARNINGS*
Profit for the financial period decreased by 67% to $0.8 billion (30 June 2019: $2.5 billion). Group underlying earnings decreased to $0.9 billion (30 June 2019: $2.0 billion), driven by the decrease in underlying EBITDA.
Reconciliation from underlying EBITDA* to underlying earnings*
|
|
6 months ended |
6 months ended |
||
| $ million |
30 June 2020 |
30 June 2019 |
||
| Underlying EBITDA* |
3,350 |
5,451 |
||
| Depreciation and amortisation |
(1,266) |
|
(1,436) |
|
| Net finance costs and income tax expense |
(849) |
|
(1,354) |
|
| Non-controlling interests |
(349) |
|
(656) |
|
| Underlying earnings* |
886 |
|
2,005 |
|
Depreciation and amortisation
Depreciation and amortisation decreased by 12% to $1.3 billion (30 June 2019: $1.4 billion), reflecting the effect of weaker local currencies and lower production at Metallurgical Coal as a result of the operational issues at Moranbah and Grosvenor.
Net finance costs and income tax expense
Net finance costs, before special items and remeasurements, were $0.3 billion (30 June 2019: $0.2 billion). The increase was principally driven by fair value losses on the revaluation of deferred consideration balances at PGMs relating to the Mototolo acquisition.
The underlying effective tax rate was 30.9% (30 June 2019: 29.7%). The effective tax rate in the first half of 2020 was impacted by the relative levels of profits arising in the Group's operating jurisdictions. The tax charge for the period, before special items and remeasurements, was $0.5 billion (30 June 2019: $1.0 billion).
Non-controlling interests
The share of underlying earnings attributable to non-controlling interests of $0.3 billion (30 June 2019: $0.7 billion) principally relates to minority shareholdings in Kumba, PGMs and Copper.
SPECIAL ITEMS AND REMEASUREMENTS
Special items and remeasurements are a net charge of $0.4 billion (30 June 2019: net charge of $0.1 billion) and include deferred tax remeasurements of $0.3 billion, driven by the weaker Brazilian real.
Full details of the special items and remeasurements recorded are included in note 9 to the Condensed financial statements.
NET DEBT*
| $ million |
2020 |
2019 |
||
| Opening net debt* at 1 January |
(4,626) |
|
(2,848) |
|
| Underlying EBITDA* from subsidiaries and joint operations |
3,050 |
|
4,936 |
|
| Working capital movements |
(1,439) |
|
(725) |
|
| Other cash flows from operations |
(87) |
|
36 |
|
| Cash flows from operations |
1,524 |
|
4,247 |
|
| Capital repayments of lease obligations |
(75) |
|
(101) |
|
| Cash tax paid |
(451) |
|
(1,143) |
|
| Dividends from associates, joint ventures and financial asset investments |
132 |
|
301 |
|
| Net interest(1) |
(184) |
|
(155) |
|
| Dividends paid to non-controlling interests |
(395) |
|
(421) |
|
| Sustaining capital expenditure(2) |
(1,171) |
|
(1,281) |
|
| Sustaining attributable free cash flow* |
(620) |
|
1,447 |
|
| Growth capital expenditure(2) |
(637) |
|
(105) |
|
| Attributable free cash flow* |
(1,257) |
|
1,342 |
|
| Dividends to Anglo American plc shareholders |
(557) |
|
(652) |
|
| Acquisitions |
(515) |
|
(8) |
|
| Disposals |
187 |
|
26 |
|
| Foreign exchange and fair value movements |
(53) |
|
21 |
|
| Other net debt movements(3) |
(796) |
|
(1,292) |
|
| Total movement in net debt*(4) |
(2,991) |
|
(563) |
|
| Closing net debt* at 30 June |
(7,617) |
|
(3,411) |
|
See next page for footnotes.
(1) Includes cash inflows of $15 million (30 June 2019: outflows of $38 million), relating to interest receipts (30 June 2019: interest payments) on derivatives hedging net debt, which are included in cash flows from derivatives related to financing activities.
(2) Included within sustaining capital expenditure is $21 million of capitalised operating cash flows relating to life-extension projects. Included within growth capital expenditure is $1 million of capitalised operating cash flows relating to growth projects.
(3) Includes Mitsubishi's share of Quellaveco capital expenditure of $277 million; $253 million of debt recognised on the acquisition of Sirius Minerals Plc; the purchase of shares under the buyback of $223 million; and the purchase of shares for other purposes (including for employee share schemes) of $117 million. 2019 includes the IFRS 16 Leases transition adjustment of $469 million, capital expenditure on the Quellaveco project funded from the 2018 syndication transaction of $454 million and the purchase of shares for employee share schemes of $225 million.
(4) Net debt excludes the own credit risk fair value adjustment on derivatives of $2 million (31 December 2019: $1 million).
Net debt (including related derivatives) of $7.6 billion has increased by $3.0 billion since 31 December 2019, driven by attributable free cash outflows of $1.3 billion, the acquisition of Sirius Minerals Plc (including debt acquired) of $0.7 billion, the payment of dividends to Anglo American plc shareholders of $0.6 billion and the purchase of ordinary shares, including the completion of the share buyback programme announced in July 2019, of $0.3 billion. Net debt at 30 June 2020 represented gearing of 21% (31 December 2019: 13%), comprising cash and cash equivalents of $6.3 billion (31 December 2019: $6.3 billion) and gross debt (including related derivatives) of $13.9 billion (31 December 2019: $11.0 billion).
On 26 February 2020, South Africa's Minister of Finance announced in his Budget Speech that the country would shift from a policy of exchange controls to a risk-based capital flow management system, in line with international best practice and in order to facilitate cross-border financial transactions in support of trade and investment. This change aligns South Africa with the foreign direct investment criteria implemented by other OECD nations and removes the previous restrictions on the Group's ability to permanently remit cash earned from operating activities in South Africa, aligning the Group with other global companies that operate in South Africa. Separate disclosure of the Group's South African cash and debt balances will no longer be relevant once these changes become effective. This is currently expected to be no later than February 2021.
CASH FLOW
Cash flows from operations
Cash flows from operations decreased to $1.5 billion (30 June 2019: $4.2 billion), reflecting a decrease in underlying EBITDA from subsidiaries and joint operations and a build-up in working capital.
Cash outflows on working capital were $1.4 billion (30 June 2019: outflows of $0.7 billion). Inventory increased by $1.2 billion, largely due to the impact of Covid-19 on demand for diamonds, repairs at the ACP affecting refining activity at PGMs and weather impacts in late June on vessel loading at both Copper and Kumba. Receivables increased by $221 million, owing to increased metal borrowing activity within PGMs. Payables decreased by $38 million due to reduced expenditure at operations related to Covid-19 disruptions, partly offset by an increase in a customer prepayment within PGMs, reflecting increased metal prices.
Capital expenditure*
|
|
6 months ended |
6 months ended |
||
| $ million |
30 June 2020 |
30 June 2019 |
||
| Stay-in-business |
622 |
|
653 |
|
| Development and stripping |
390 |
|
505 |
|
| Life-extension projects(1) |
141 |
|
126 |
|
| Proceeds from disposal of property, plant and equipment |
(3) |
|
(3) |
|
| Sustaining capital |
1,150 |
|
1,281 |
|
| Growth projects(1) |
636 |
|
105 |
|
| Total |
1,786 |
|
1,386 |
|
| Capitalised operating cash flows(1) |
22 |
|
- |
|
| Total capital expenditure |
1,808 |
|
1,386 |
|
(1) Collectively referred to as expansionary capital expenditure
Capital expenditure increased to $1.8 billion for the first six months of the year (30 June 2019: $1.4 billion).
Sustaining capital expenditure decreased to $1.2 billion (30 June 2019: $1.3 billion), due to higher stripping and development costs in the prior year, principally at De Beers, favourable foreign exchange rates, and deferrals as a result of Covid-19 related restrictions.
Growth capital expenditure increased to $0.6 billion (30 June 2019: $0.1 billion), owing to increased expenditure at Quellaveco of $0.4 billion, net of Mitsubishi funding (capital expenditure on a 100% basis at Quellaveco was $0.7 billion), and at the Woodsmith polyhalite project (acquired in March 2020) of $0.1 billion.
Attributable free cash flow*
The Group's attributable free cash flow decreased to an outflow of $1.3 billion (30 June 2019: cash inflows of $1.3 billion) due to the decline in cash flows from operations to $1.5 billion (30 June 2019: $4.2 billion) and increased capital expenditure of $1.8 billion (30 June 2019: $1.4 billion), partially offset by reduced tax payments of $0.5 billion (30 June 2019: $1.1 billion).
Dividends
In line with the Group's established dividend policy to pay out 40% of underlying earnings, the Board has proposed a dividend of $0.28 per share for the period to 30 June 2020 (30 June 2019: $0.62 per share), equivalent to $0.3 billion (30 June 2019: $0.8 billion).
Acquisition of Sirius Minerals
On 17 March 2020, the Group completed the acquisition of Sirius Minerals Plc for a cash consideration of $0.5 billion. As part of the acquisition, the Group recognised borrowings and lease liabilities with a fair value of $0.3 billion.
Share buyback
In July 2019, the Board approved an additional return of up to $1 billion to shareholders via an on-market share buyback programme. This additional return recognised the resilience of our balance sheet, and our confidence in funding our portfolio of highly attractive near and medium term growth opportunities. Following the return of $0.8 billion to shareholders in 2019, the remaining $0.2 billion of the buyback programme had been completed by March 2020.
BALANCE SHEET
Net assets decreased by $2.5 billion to $28.9 billion (31 December 2019: $31.4 billion), reflecting the effect of foreign exchange on operating assets denominated in local currency and dividend payments to Company shareholders and non-controlling interests, partially offset by higher inventory.
ATTRIBUTABLE ROCE*
Attributable ROCE decreased to 11% (30 June 2019: 22%). Annualised attributable underlying EBIT was $3.2 billion (30 June 2019: $6.1 billion), reflecting the impact of Covid-19 related disruptions across our southern African assets, operational issues at Metallurgical Coal and PGMs and lower realised prices for many of the Group's products. Average attributable capital employed increased to $29.8 billion (30 June 2019: $27.9 billion), primarily due to the acquisition of Sirius Minerals Plc and increased capital expenditure, partly offset by weaker producer currencies.
LIQUIDITY AND FUNDING
Group liquidity remains conservative at $15.5 billion (31 December 2019: $15.0 billion), comprising $6.3 billion of cash (31 December 2019: $6.3 billion) and $9.2 billion of undrawn committed facilities (31 December 2019: $8.7 billion).
In April 2020, the Group signed a new $2.0 billion revolving credit facility with an initial maturity date of April 2021. The Group has, at its sole discretion, two options to extend the facility for a further six months to October 2021 and April 2022.
As part of our routine funding schedule, in April 2020, the Group issued $750 million of 5.375% Senior Notes due 2025 and $750 million of 5.625% Senior Notes due 2030. These new bonds helped to maintain the weighted average maturity on the Group's bonds at 4.5 years (31 December 2019: 4.5 years).
On 24 April 2020, Moody's Investors Service affirmed the Group's Baa2 rating and updated the outlook from stable to negative. On 12 May 2020, Standard and Poor's reaffirmed the Group's BBB rating with a stable outlook.
PORTFOLIO UPGRADE
Anglo American continues to grow and evolve its portfolio of competitive, world class assets towards later cycle products that support a cleaner, greener, more sustainable world.
In the first six months of 2020, we completed the acquisition of Sirius Minerals Plc which has been developing a major new polyhalite project in the UK. Anglo American is continuing to develop what is now known as the Woodsmith project in the north east of England to access the world's largest known deposit of polyhalite, a natural mineral fertiliser product containing potassium, sulphur, magnesium and calcium - four of the six nutrients that every plant needs to grow. The mine is being constructed approximately three kilometres south of Whitby and the entire operation is designed to be sympathetic to its natural surroundings. Ore will be extracted via two 1.6 kilometre deep mine shafts and transported to the port at Teesside on a conveyor belt in a 37 kilometre underground tunnel, thereby minimising impact on the surface above. The ore will then be granulated at a materials handling facility to produce a fertiliser product - known as POLY4 - that will be exported to a network of customers in overseas markets. The Woodsmith project, part of our Crop Nutrients business which also incorporates the further development of the global market for POLY4, will be a world class supplier of premium quality fertiliser certified for organic use and with a low carbon footprint, expected to help meet food demand from a fast growing global population.
We have also confirmed our plans to work towards an exit of our South African thermal coal operations, with a demerger being our likely preferred exit option, expected within the next two to three years, with a primary listing on the Johannesburg Stock Exchange for the demerged business. We will continue to consider other exit options as we engage with stakeholders as part of our commitment to a responsible transition.
THE BOARD
Changes during 2020 to the composition of the Board are set out below.
On 1 January 2020, Nonkululeko Nyembezi joined the Board as a non-executive director.
Following the conclusion of the Annual General Meeting on 5 May 2020, Dr Mphu Ramatlapeng stepped down from the Board as a non-executive director after almost seven years.
The names of the directors at the date of this report and the skills and experience our Board members contribute to the long term sustainable success of Anglo American are set out on the Group's website:
www.angloamerican.com/about-us/leadership-team/board
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 have an impact on the achievement of social, economic and environmental objectives.
The principal risks and uncertainties facing the Group relate to the following:
• Catastrophic risks
• Product prices
• Safety
• Health pandemics
• Political and regulatory uncertainties
• Corruption
• Cyber security
• Future demand for diamonds
• Operational performance
• Water
• Future demand for PGMs
• Evolving stakeholder requirements and expectations.
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.
Subsequent to the publication of the Integrated Annual Report 2019, and following the emergence of the Covid-19 pandemic, Anglo American has included a new principal risk: Health pandemics. The principal risks and uncertainties facing the Group at the 2019 year end are set out in detail in the strategic report section of the Integrated Annual Report 2019 on the Group's website www.angloamerican.com.
DE BEERS
Financial and operational metrics(1)
|
|
Production |
Sales |
Price |
Unit cost* |
Group revenue* |
Underlying EBITDA* |
EBITDA margin*(6) |
Underlying |
Capex* |
ROCE* |
||||||||||
|
|
'000 cts |
'000 cts(2) |
$/ct(3) |
$/ct(4) |
$m(5) |
$m |
|
$m |
$m |
|
||||||||||
| De Beers |
11,277 |
|
8,547 |
|
119 |
|
62 |
|
1,223 |
|
2 |
|
49 |
% |
(179) |
|
159 |
|
(4) |
% |
| Prior year |
15,551 |
|
15,547 |
|
151 |
|
62 |
|
2,647 |
|
518 |
|
55 |
% |
324 |
|
278 |
|
7 |
% |
| Botswana |
7,469 |
|
- |
|
124 |
|
36 |
|
- |
|
83 |
|
- |
|
57 |
|
29 |
|
- |
|
| Prior year |
11,668 |
|
- |
|
148 |
|
27 |
|
- |
|
225 |
|
- |
|
198 |
|
42 |
|
- |
|
| Namibia |
869 |
|
- |
|
477 |
|
208 |
|
- |
|
28 |
|
- |
|
14 |
|
30 |
|
- |
|
| Prior year |
818 |
|
- |
|
552 |
|
317 |
|
- |
|
80 |
|
- |
|
62 |
|
27 |
|
- |
|
| South Africa |
1,306 |
|
- |
|
94 |
|
71 |
|
- |
|
26 |
|
- |
|
(20) |
|
58 |
|
- |
|
| Prior year |
953 |
|
- |
|
125 |
|
62 |
|
- |
|
38 |
|
- |
|
26 |
|
128 |
|
- |
|
| Canada |
1,633 |
|
- |
|
56 |
|
39 |
|
- |
|
36 |
|
- |
|
12 |
|
12 |
|
- |
|
| Prior year |
2,112 |
|
- |
|
159 |
|
49 |
|
- |
|
160 |
|
- |
|
121 |
|
24 |
|
- |
|
| Trading |
- |
|
- |
|
- |
|
- |
|
- |
|
(17) |
|
(2) |
% |
(20) |
|
1 |
|
- |
|
| Prior year |
- |
|
- |
|
- |
|
- |
|
- |
|
96 |
|
4 |
% |
93 |
|
- |
|
- |
|
| Other(7) |
- |
|
- |
|
- |
|
- |
|
- |
|
(154) |
|
- |
|
(222) |
|
29 |
|
- |
|
| Prior year |
- |
|
- |
|
- |
|
- |
|
- |
|
(81) |
- |
|
(176) |
57 |
- |
|
|||
(1) Prepared on a consolidated accounting basis, except for production, which is stated on a 100% basis except for the Gahcho Kué joint operation in Canada, which is on an attributable 51% basis.
(2) Total sales volumes on a 100% basis were 9.2 million carats (30 June 2019: 16.5 million carats). Total sales volumes (100%) include De Beers Group's joint arrangement partners' 50% proportionate share of sales to entities outside De Beers Group from Diamond Trading Company Botswana and Namibia Diamond Trading Company.
(3) Pricing for the mining business units is based on 100% selling value post-aggregation of goods. Realised price includes the price impact of the sale of non-equity product and, as a result, is not directly comparable to the unit cost, which relates to equity production only.
(4) Unit cost is based on consolidated production and operating costs, excluding depreciation and operating special items, divided by carats recovered.
(5) Includes rough diamond sales of $1.0 billion (30 June 2019: $2.3 billion).
(6) Total De Beers EBITDA margin shows Mining EBITDA Margin on an equity basis, which excludes the impact of non-mining activities, third-party sales, purchases, trading downstream and corporate.
(7) Other includes Element Six, downstream, acquisition accounting adjustments and corporate.
Markets
All parts of the diamond supply chain were severely impacted by the global lockdown measures introduced in response to the Covid-19 pandemic in the first half of 2020.
After a strong US holiday season at the end of 2019, the rough diamond industry started 2020 positively as the midstream restocked and sentiment improved. However, from February, the Covid-19 outbreak began to have a significant impact on diamond jewellery retail sales and supply chain. Jewellery retailer restocking has therefore been very limited, with many jewellers suspending all polished purchases and/or delaying payments to their suppliers.
In addition to the impact on consumer markets, most of the Indian and southern African diamond cutting and polishing centres closed due to the lockdown restrictions. A gradual opening of diamond cutting and polishing centres started at the end of May; however, Covid-19 restrictions have remained in place, particularly in India, limiting capacity. De Beers and other major suppliers increased flexibility in response to this lower demand.
Rough diamond sales have also been materially affected by lockdowns and travel restrictions, delaying the shipping of rough diamonds into cutting and trading centres and preventing buyers from attending sales events. China has seen strong diamond jewellery sales post-lockdown, with sales for May and June above those for the comparable periods last year. Recovery in the US will be dependent on the reopening of its economy.
Financial and operational overview
Total revenue decreased by 54% to $1.2 billion (30 June 2019: $2.6 billion), with rough diamond sales falling to $1.0 billion (30 June 2019: $2.3 billion). Rough diamond sales volumes decreased by 45% to 8.5 million carats (30 June 2019: 15.5 million carats) due to the significant impact of Covid-19 on the global diamond industry. Consequently, De Beers offered Sightholders the option to defer up to 100% of their allocations at the fourth and fifth Sights and held some viewings for Sight 5 outside of Botswana, following the cancellation of the third Sight of 2020 due to Covid-19 related travel restrictions. The average realised price decreased by 21% to $119/carat (30 June 2019: $151/carat), driven by a higher proportion of lower value rough diamonds being sold in the first two Sights of the year and an 8% decline in the average rough price index.
Underlying EBITDA decreased to $2 million (30 June 2019: $518 million) owing to the impact of the considerably lower sales volumes and the lower rough price index reducing margins in both the mining and the trading businesses. Unit costs were flat compared with the first half of 2019 due to cost-saving measures and favourable exchange rates.
Operational performance
Mining and manufacturing
Rough diamond production decreased by 27% to 11.3 million carats (30 June 2019: 15.6 million carats), primarily due to the Covid-19 lockdowns in southern Africa. Mining operations restarted following the easing of regional lockdowns, with Covid-19 measures in place to safeguard the workforce; however, production resumed at lower levels, reflecting reduced demand for rough diamonds as a consequence of the pandemic.
In Botswana, production was 36% lower at 7.5 million carats (30 June 2019: 11.7 million carats), driven by a lengthy nationwide lockdown from 2 April to 18 May. Production at Jwaneng fell by 34% to 4.3 million carats (30 June 2019: 6.6 million carats) due to the shutdown. Production at Orapa fell by 39% to 3.1 million carats (30 June 2019: 5.1 million carats) due to the lockdown impact, as well as challenges related to commissioning of new plant infrastructure. Operations restarted from mid-May, with production targeted at levels to meet the lower demand.
In Namibia, production increased by 6% to 0.9 million carats (30 June 2019: 0.8 million carats), driven by the marine operations as the Mafuta crawler vessel was under planned maintenance in the second quarter of 2019, and supported by the implementation of measures to enable continuity of the fleet while safeguarding the workforce. This increase was offset by a 30% reduction at the land operations to 0.1 million carats following the Covid-19 lockdown.
In South Africa, production increased by 37% at Venetia to 1.3 million carats (30 June 2019: 1.0 million carats), supported by a significant increase in grade as the final ore from the open pit is mined prior to the transition to underground, partially offset by the lockdown.
Canadian production decreased by 23% to 1.6 million carats (30 June 2019: 2.1 million carats), as Victor reached the end of its life in the first half of 2019. At Gahcho Kué, production decreased by 3% due to Covid-19 measures.
Brands
Jewellery retail stores were significantly affected by Covid-19, with the majority of De Beers Jewellers (DBJ) stores and ForevermarkTM outlets closed across key markets for a considerable part of the reporting period. Stores have reopened following the gradual lifting of lockdowns, but remain at risk of temporary closure in response to second-wave concerns.
Mainland China has shown signs of a strong recovery as stores have returned to normal operating hours. DBJ has delivered double digit year-on-year sales growth here in the year to date, with a similar recovery reported by ForevermarkTM at its Mainland China locations in recent months. Hong Kong remains subdued.
Operational and market outlook
The current market outlook is highly uncertain owing to the possibility of a second wave of Covid-19 infections, the ability of fiscal and monetary measures to continue to support employment and businesses in consumer countries, as well as the shape and strength of the global macro-economic recovery. Significant challenges for rough diamond demand look set to continue in the short term with the ongoing restrictions to travel in southern Africa, as well as the risk of further Covid-19 cases in the Indian cutting centres.
In the longer term, the outlook for the diamond sector remains positive, and De Beers is accelerating its business transformation - from discovery and mining, to how we sell rough diamonds to customers and how consumers purchase diamond jewellery - to ensure it retains its position as the world's leading diamond business.
Production guidance remains unchanged at 25-27 million carats, subject to continuous review based on the disruptions to operations as a result of Covid-19, as well as the timing and scale of the recovery in demand.
COPPER
Financial and operational metrics
|
|
Production |
Sales volume |
Price |
Unit cost* |
Group revenue* |
Underlying EBITDA* |
Mining EBITDA margin*(2) |
Underlying EBIT* |
Capex* |
ROCE* |
||||||||||
|
|
kt |
kt(1) |
c/lb(2) |
c/lb(3) |
$m(4) |
$m |
|
$m |
$m |
|
||||||||||
| Copper |
314 |
|
294 |
|
250 |
|
107 |
|
2,731 |
|
706 |
|
45 |
% |
378 |
|
729 |
|
13 |
% |
| Prior year |
320 |
|
307 |
|
280 |
|
135 |
|
2,676 |
|
789 |
|
44 |
% |
469 |
|
242 |
|
14 |
% |
| Los Bronces(5) |
149 |
|
136 |
|
- |
|
140 |
|
669 |
|
221 |
|
33 |
% |
44 |
|
133 |
|
- |
|
| Prior year |
183 |
|
175 |
|
- |
|
135 |
|
1,008 |
|
464 |
|
46 |
% |
291 |
|
103 |
|
- |
|
| Collahuasi(6) |
142 |
|
135 |
|
- |
|
69 |
|
752 |
|
546 |
|
73 |
% |
428 |
|
153 |
|
- |
|
| Prior year |
112 |
|
107 |
|
- |
|
121 |
|
597 |
|
370 |
|
62 |
% |
255 |
|
112 |
|
- |
|
| Quellaveco(7) |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
415 |
|
- |
|
| Prior year |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
| Other operations(8) |
22 |
|
23 |
|
- |
|
- |
|
1,310 |
|
(61) |
|
20 |
% |
(94) |
|
28 |
|
- |
|
| Prior year |
25 |
|
25 |
|
- |
|
- |
|
1,071 |
|
(45) |
|
20 |
% |
(77) |
|
27 |
|
- |
|
(1) Excludes 207 kt third-party sales (30 June 2019: 142 kt).
(2) Price represents realised price, Mining EBITDA margin excludes impact of third-party sales.
(3) C1 unit cost includes by-product credits.
(4) Group revenue is shown after deduction of treatment and refining charges (TC/RCs).
(5) Figures on a 100% basis (Group's share: 50.1%).
(6) 44% share of Collahuasi production, sales and financials.
(7) Figures on a 100% basis (Group's share: 60%), except capex which represents the Group's share after deducting direct funding from non-controlling interests. H1 2020 capex on a 100% basis was $692 million, of which the Group's 60% share is $415 million. H1 2019 capex on a 100% basis was $454 million and was fully funded by cash from the 2018 Mitsubishi syndication transaction and, hence, was not included in reported capex.
(8) Other operations includes El Soldado and Chagres (figures on a 100% basis, Group's share: 50.1%), third-party sales and purchases, projects and corporate costs.
Financial and operational overview
Underlying EBITDA decreased by 11% to $706 million (30 June 2019: $789 million), largely driven by an 11% decline in the average LME copper price, partly offset by a 21% reduction in unit costs.
Production decreased by 2% to 313,900 tonnes (30 June 2019: 320,200 tonnes) owing to expected lower water availability at Los Bronces, partly offset by water-management initiatives and record production from Collahuasi. Covid-19 protocols implemented to help ensure the safety of our workforce did not have a meaningful negative impact on production in the period. Unit costs decreased by 21% to 107 c/lb (30 June 2019: 135 c/lb), reflecting year-on-year sustainable cost savings and favourable movements in the Chilean peso.
Sales volumes in the six months to 30 June 2020 were affected by temporary port closures in Chile due to heavy tidal swells limiting vessel loading availability in June. At 30 June, 124,800 tonnes of copper were provisionally priced at an average price of 273c/lb.
Markets
|
|
30 June 2020 |
30 June 2019 |
| Average market price (c/lb) |
249 |
280 |
| Average realised price (c/lb) |
250 |
280 |
The differences between the market price and realised price are largely a function of the timing of sales across the period and provisional pricing adjustments.
The average LME cash copper price in the first half of 2020 was 11% lower than for the same period in 2019. The Covid-19 pandemic has had the greatest impact on global demand, hitting consumption as lockdowns hampered economic activity. A sharp recovery is now becoming evident in China while, elsewhere, measures to restart activity have taken effect and there are signs of pending recovery. Despite uncertainties, copper prices increased later in the period as investors focused on copper's positive fundamentals, potential for disruptions to supply and a decline in reported inventories.
Operational performance
Total production decreased by 2% to 313,900 tonnes (30 June 2019: 320,200 tonnes).
At Los Bronces, production decreased by 18% to 149,400 tonnes (30 June 2019: 182,900 tonnes) due to expected lower water availability impacting plant throughput (17 Mt vs 24 Mt), particularly during the first quarter, partially offset by planned higher grades (0.90% vs 0.81%). Although precipitation has increased recently, Chile´s central zone, where the operation is located, continues to face severe climatic conditions following the decade-long mega-drought. The impact on production has been mitigated by the successful implementation of initiatives to optimise plant efficiency, reduce water consumption and increase water recycling, as well as to secure additional external sources of industrial or 'grey' water. C1 unit costs increased by 4% to 140 c/lb (30 June 2019: 135 c/lb), mainly due to lower production and lower capitalised waste, compensated by the weaker Chilean peso and cost-saving initiatives.
At Collahuasi, Anglo American's attributable share of copper production increased by 27% to 142,200 tonnes (30 June 2019: 112,000 tonnes), a record for the operation, driven by higher throughput (28 Mt vs 25 Mt) and record copper recovery (90.5% vs 86.5%), reflecting plant improvement projects implemented during 2019. C1 unit costs decreased by 43% to 69 c/lb (30 June 2019: 121 c/lb), reflecting the solid production performance and the weaker Chilean currency.
Production at El Soldado decreased by 12% to 22,300 tonnes (30 June 2019: 25,300 tonnes) as a result of water availability issues. C1 unit costs decreased by 7% to 202 c/lb (30 June 2019: 218 c/lb), owing to the favourable exchange rate and cost reductions.
Operational outlook
Production guidance for the year is unchanged at 620,000-670,000 tonnes, subject to water availability and the impact of the Covid-19 pandemic.
Quellaveco update
Prior to the Covid-19 pandemic, project execution was ahead of schedule, with all applicable milestones achieved. At the Vizcachas dam, part of the water-source infrastructure located approximately 90 kilometres from the plant, water impoundment had started as scheduled and construction works across the mine, plant and tailings areas were also progressing to plan. However, the project has been affected by the implementation of Peru's national quarantine since 15 March.
As previously announced, on 17 March, Quellaveco withdrew the majority of the project's 10,000-strong workforce from site after the Peruvian government's announcement of an initial 15-day national quarantine. Construction work was significantly slowed, maintaining only limited critical works. Following subsequent further extensions of the quarantine, on 23 April, Anglo American announced the suspension of non-critical works for an expected period of up to three months in support of the government's continuing efforts to control the spread of Covid-19, allowing for a safe and responsible restart to be planned. During the suspension, the focus has been on the safety of our workforce and the local community, as well as on the development of a restart and updated construction plan. These plans incorporate leading health protocols which have been approved by the Peruvian authorities, enabling a gradual and safe restart of site activities.
From the beginning of July, activities have recommenced on site and are expected to ramp up during the second half of 2020, subject to further Covid-19 related impacts. Key project activities in the second six months will be the construction of a c.95-kilometre water pipeline from the water-source area to the Quellaveco site, the start of pre-stripping activities to remove surface waste material, and assembly of the mills.
Despite the Covid-19 related slowdown, first production is still expected in 2022, in part due to the excellent progress achieved prior to the national quarantine, and based on optimised development and mine plans designed to enhance value. Capital expenditure is expected to increase, reflecting additional costs associated with the demobilisation and subsequent remobilisation of the construction workforce. As a result, based on current expectations for remobilisation and ramp-up of activity, total project capital expenditure guidance (100% basis) has increased to $5.3-$5.5 billion (previously the upper end of $5.0-$5.3 billion), of which the Group's share is $2.7-$2.8 billion. Capital expenditure guidance (100% basis) for 2020 is unchanged at $1.2-$1.5 billion, of which the Group's share is $0.7-$0.9 billion. Capital expenditure for Quellaveco is attributable 60% to Anglo American and 40% to Mitsubishi.
PLATINUM GROUP METALS
Financial and operational metrics
|
|
Production |
Production volume palladium |
Sales volume platinum |
Basket price |
Unit cost* |
Group revenue* |
Underlying EBITDA* |
Mining EBITDA margin*(5) |
Underlying EBIT* |
Capex* |
ROCE* |
|||||||||||
|
|
koz(1) |
koz(1) |
koz(2) |
$/Pt oz(3) |
$/Pt oz(4) |
$m |
$m |
|
$m |
$m |
|
|||||||||||
| PGMs |
748 |
|
532 |
|
436 |
|
5,520 |
|
1,675 |
|
3,331 |
|
610 |
|
27 |
% |
476 |
|
200 |
|
24 |
% |
| Prior year |
992 |
|
674 |
|
1,009 |
|
2,685 |
|
1,551 |
|
3,007 |
|
824 |
|
38 |
% |
659 |
|
217 |
|
29 |
% |
| Mogalakwena |
239 |
|
258 |
|
122 |
|
5,681 |
|
1,281 |
|
683 |
|
386 |
|
57 |
% |
330 |
|
90 |
|
- |
|
| Prior year |
258 |
|
281 |
|
231 |
|
3,354 |
|
1,353 |
|
779 |
|
442 |
|
57 |
% |
373 |
|
119 |
|
- |
|
| Amandelbult |
111 |
|
51 |
|
88 |
|
5,476 |
|
2,430 |
|
475 |
|
137 |
|
29 |
% |
116 |
|
14 |
|
- |
|
| Prior year |
215 |
|
99 |
|
194 |
|
2,485 |
|
1,720 |
|
485 |
|
126 |
|
26 |
% |
100 |
|
26 |
|
- |
|
| Other operations(6) |
138 |
|
98 |
|
85 |
|
5,858 |
|
1,835 |
|
556 |
|
(69) |
|
(6) |
% |
(115) |
|
96 |
|
- |
|
| Prior year |
191 |
|
132 |
|
186 |
|
2,741 |
|
1,629 |
|
499 |
|
94 |
|
26 |
% |
38 |
|
72 |
|
- |
|
| Processing and trading(7) |
260 |
|
125 |
|
141 |
|
- |
|
- |
|
1,617 |
|
156 |
|
10 |
% |
145 |
|
- |
|
- |
|
| Prior year |
328 |
|
162 |
|
398 |
|
- |
|
- |
|
1,244 |
|
162 |
|
13 |
% |
148 |
|
- |
|
- |
|
(1) Production reflects own-mined production and purchase of metal in concentrate.
(2) Sales volumes exclude the sale of refined metal purchased from third parties and toll material.
(3) Average US$ realised basket price. Excludes the impact of the sale of refined metal purchased from third parties.
(4) Total cash operating costs - includes on-mine, smelting and refining costs only.
(5) The total PGMs mining EBITDA margin excludes the impact of the sale of refined metal purchased from third parties, purchase of concentrate and tolling. Other operations margin includes unallocated market development, care and maintenance, and corporate costs, but excludes Group recharges.
(6) Includes Unki, Mototolo and PGMs' share of joint operations.
(7) Purchase of concentrate from joint operations, associates and third parties for processing into refined metals, tolling and trading activities.
Financial and operational overview
Underlying EBITDA decreased by 26% to $610 million (30 June 2019: $824 million), driven by the shutdown of the Anglo Converter Plant (ACP) for repairs and the impact of Covid-19 related lockdowns.
Markets
|
|
30 June 2020 |
30 June 2019 |
||
| Average platinum market price ($/oz) |
848 |
|
832 |
|
| Average palladium market price ($/oz) |
2,136 |
|
1,410 |
|
| Average rhodium market price ($/oz) |
9,254 |
2,846 |
|
|
| US$ realised basket price ($/Pt oz) |
5,520 |
|
2,685 |
|
| Rand realised basket price (R/Pt oz) |
90,776 |
|
38,305 |
|
The realised basket price increased by 106% in dollar terms, compared with the same period in 2019. The average market platinum price increased by 2%, but palladium and rhodium prices were significantly stronger, with both metals hitting all-time price highs during the period, increasing by 51% and 225%, respectively. The initial gains were driven by strong automotive demand and, while both metals moved substantially lower when Covid-19 spread globally, they still ended the period significantly higher year on year.
Operational performance
Total platinum production (metal in concentrate) decreased by 25% to 748,300 ounces, with total palladium output decreasing by 21% to 531,600 ounces. This was largely attributable to the South African government implementing a national lockdown from 26 March 2020, in response to the Covid-19 pandemic.
Own-mined production
Own-mined platinum production decreased by 27% to 488,100 ounces, with palladium production decreasing by 21% to 406,300 ounces, primarily due to the impact of lockdowns to contain Covid-19.
Mogalakwena's platinum production decreased by 7% to 239,200 ounces and palladium production by 8% to 257,600 ounces, owing to the effects of the lockdowns. In addition, production was affected by maintenance at the North concentrator and lower built-up head grade owing to drawdown of ore stockpiles, though this was partially offset by improved concentrator recovery.
At Amandelbult, platinum and palladium production decreased by 48% to 110,800 ounces and 50,800 ounces, respectively, largely due to the impact of the lockdown, as well as the closure of some sections in Tumela Upper in December 2019 as they came to the end of their mine life.
Production of platinum and palladium from other operations decreased by 28% to 138,100 ounces and 26% to 97,900 ounces, respectively, in the wake of Covid-19. Unki in Zimbabwe, however, recorded a strong performance; despite being impacted by Covid-19 lockdowns, the operation was able to ramp up to normal production levels quickly.
Joint operations, also subject to lockdowns, saw platinum production decrease by 35% to 129,200 ounces and palladium production by 32% to 86,400 ounces (split equally between own-mined and purchase of concentrate).
Purchase of concentrate
Purchase of concentrate, excluding tolling, decreased by 21% to 260,200 ounces in the case of platinum and by 23% to 125,300 ounces for palladium, reflecting the lower production from joint operations.
Refined production and sales volumes
Refined platinum production (excluding toll-treated metal and purchased concentrate from Sibanye refined in the prior year) decreased by 57% to 400,900 ounces, while refined palladium output on the same basis was 49% lower at 344,500 ounces. Refined production was adversely affected by the temporary shutdown of the ACP in March following a force majeure event. Phase B returned to operation on 12 May and, following a further two-week shut down at the beginning of June, has ramped up and is operating at full capacity. Repairs to Phase A are ahead of schedule, with completion estimated by the end of the year. During the period the ACP was down, there was a build-up in work-in-progress inventory, which is expected to be refined to normalised levels through the second half of 2020 and into 2021.
Platinum sales volumes (excluding prior year sales of concentrate purchased from Sibanye) decreased by 52% to 435,600 ounces, while palladium sales declined by 46% to 383,300 ounces on the same basis, largely due to the ACP shutdown. Refined inventory was drawn down to supplement sales.
Operational outlook
Production guidance (metal in concentrate) is unchanged at 1.5-1.7 million ounces of platinum and 1.0-1.2 million ounces of palladium, subject to the extent of any further Covid-19 related disruptions.
IRON ORE
Financial and operational metrics
|
|
Production |
Sales volume |
Price |
Unit |
Group revenue* |
Underlying EBITDA* |
Mining EBITDA margin* |
Underlying EBIT* |
Capex* |
ROCE* |
||||||||||
|
|
Mt(1) |
Mt(1) |
$/t(2) |
$/t(3) |
$m |
$m(4) |
|
$m(4) |
$m |
|
||||||||||
| Iron Ore |
30.5 |
|
31.5 |
|
91 |
|
25 |
|
3,291 |
|
1,827 |
|
56 |
% |
1,606 |
|
235 |
|
34 |
% |
| Prior year |
30.9 |
|
32.0 |
|
103 |
|
30 |
|
3,584 |
|
2,036 |
|
57 |
% |
1,819 |
|
278 |
|
42 |
% |
| Kumba Iron Ore(5) |
17.9 |
|
18.8 |
|
93 |
|
29 |
|
1,914 |
|
1,028 |
|
54 |
% |
881 |
|
174 |
|
69 |
% |
| Prior year |
20.1 |
|
21.4 |
|
108 |
|
34 |
|
2,427 |
|
1,366 |
|
57 |
% |
1,214 |
|
186 |
|
92 |
% |
| Iron Ore Brazil (Minas-Rio) |
12.6 |
|
12.7 |
|
88 |
|
19 |
|
1,377 |
|
799 |
|
59 |
% |
725 |
|
61 |
|
25 |
% |
| Prior year |
10.8 |
|
10.6 |
|
92 |
|
21 |
|
1,157 |
|
670 |
|
60 |
% |
605 |
|
92 |
|
27 |
% |
(1) Minas-Rio production and sales volumes are reported as wet metric tonnes. Product is shipped with c.9% moisture. Total iron ore is the sum of Kumba (dry basis) and Minas-Rio (wet basis).
(2) Prices for Kumba Iron Ore are the average realised export basket price (FOB Saldanha). Prices for Minas-Rio are the average realised export basket price (FOB Açu) (wet basis). Prices for total iron ore are a blended average.
(3) Unit costs for Kumba Iron Ore are on an FOB (dry) basis. Unit costs for Minas-Rio are on an FOB (wet) basis. Unit costs for total iron ore are a blended average.
(4) Kumba Iron Ore segment includes $28 million projects and corporate costs (30 June 2019: $27 million). Iron Ore Brazil segment includes $26 million projects and corporate costs (30 June 2019: $23 million).
(5) Sales volumes, stock and realised price for H1 2020 differ to Kumba's stand-alone reported results due to sales to other Group companies.
Financial and operational overview
Kumba
Underlying EBITDA decreased by 25% to $1,028 million (30 June 2019: $1,366 million), driven by a 14% decrease in the average realised iron ore price to $93/tonne (30 June 2019: $108/tonne) and lower sales volumes, partly offset by the favourable impact of the weaker South African rand. FOB unit costs decreased to $29/tonne (30 June 2019: $34/tonne), primarily due to the effect of the weaker rand, lower maintenance costs and the benefit from cost optimisation initiatives, partly offset by lower production volumes and mining cost inflation.
Total sales volumes decreased by 12% to 18.8 Mt (30 June 2019: 21.4 Mt) owing to Covid-19 related logistical constraints, severe weather conditions at Saldanha Port in June, and lower domestic sales of 0.4 Mt (30 June 2019: 1.5 Mt). Export sales decreased to 18.4 Mt (30 June 2019: 19.9 Mt) and total finished stock increased to 6.2 Mt(5) (30 June 2019: 4.5 Mt).
Minas-Rio
Underlying EBITDA increased by 19% to $799 million (30 June 2019: $670 million), reflecting the higher volumes and lower unit costs, partly offset by lower average realised prices. Unit costs decreased by 10% to $19/tonne (30 June 2019: $21/tonne), due to the weaker Brazilian real, higher production due to the ongoing implementation of P101 productivity initiatives and cost savings.
Markets
|
|
30 June 2020 |
30 June 2019 |
| Average market price (IODEX 62% Fe CFR China - $/tonne) |
91 |
91 |
| Average market price (MB 66% Fe Concentrate CFR - $/tonne) |
104 |
106 |
| Average realised price (Kumba export - $/tonne) (FOB Saldanha) |
93 |
108 |
| Average realised price (Minas-Rio - $/tonne) (FOB wet basis) |
88 |
92 |
Kumba's outperformance over the IODEX (Platts) 62% Fe CFR China index was primarily due to the higher iron content at 64.4% and the relatively high proportion (approximately 65%) of lump in its product portfolio.
Minas-Rio's pellet feed product is also higher grade (higher iron content of 67% and lower gangue) than the reference product used for the IODEX 62% Fe CFR China index. The Metal Bulletin (MB) 66 index, therefore, is used when referring to Minas-Rio product.
Operational performance
Kumba
Total production decreased by 11% to 17.9 Mt (30 June 2019: 20.1 Mt), reflecting lower workforce levels in response to the Covid-19 lockdown, the subsequent reopening of operations with reduced workforce levels of c.50% and the ramp up of production to normal run rates in June. Sishen's production decreased by 10% to 12.4 Mt (30 June 2019: 13.8 Mt) and Kolomela's reduced by 12% to 5.6 Mt (30 June 2019: 6.3 Mt).
In line with this, Sishen's waste stripping decreased by 17% to 68 Mt (30 June 2019: 83 Mt), while Kolomela's waste stripping reduced by 15% to 26 Mt (30 June 2019: 31 Mt). The scheduled maintenance programme is on track and progress continues to be made towards P101 benchmark efficiency.
Minas-Rio
Production increased by 17% to 12.6 Mt (30 June 2019: 10.8 Mt), reflecting further improvements to operational performance from the ongoing implementation of P101 initiatives, as well as sustained operational stability. Covid-19 measures in place to help safeguard the workforce and communities are not currently expected to significantly affect 2020 production.
Operational outlook
Kumba
Kumba's production guidance for 2020 is unchanged at 37-39 Mt, subject to the extent of further Covid-19 related disruption.
Minas-Rio
Minas-Rio production guidance is unchanged at 22-24 Mt, subject to the extent of further Covid-19-related disruption. The planned one-month production stoppage to carry out routine internal scanning of the pipeline, originally scheduled for the second quarter of 2020, has been postponed to the second half of the year owing to prevailing Covid-19 related constraints.
COAL
Financial and operational metrics
|
|
Production |
Sales volume |
Price |
Unit cost* |
Group revenue* |
Underlying EBITDA* |
Mining EBITDA margin*(6) |
Underlying EBIT* |
Capex* |
ROCE* |
||||||||||
|
|
Mt(1) |
Mt(2) |
$/t(3) |
$/t(4) |
$m |
$m(5) |
|
$m(5) |
$m |
|
||||||||||
| Coal |
- |
|
- |
|
- |
|
- |
|
1,969 |
|
23 |
|
0 |
% |
(271) |
|
375 |
|
(15) |
% |
| Prior year |
- |
|
- |
|
- |
|
- |
|
3,204 |
|
996 |
|
35 |
% |
607 |
|
336 |
|
28 |
% |
| Metallurgical Coal |
7.8 |
|
7.8 |
|
120 |
|
97 |
|
962 |
|
(10) |
|
(1) |
% |
(230) |
|
287 |
|
(16) |
% |
| Prior year |
10.0 |
|
9.9 |
|
187 |
|
68 |
|
1,880 |
|
906 |
|
50 |
% |
610 |
|
253 |
|
45 |
% |
| Thermal Coal - South Africa |
7.8 |
|
7.2 |
|
61 |
|
39 |
|
862 |
|
20 |
|
1 |
% |
(8) |
|
88 |
|
(5) |
% |
| Prior year |
9.0 |
|
9.2 |
|
64 |
|
46 |
|
1,049 |
|
14 |
|
4 |
% |
(32) |
|
83 |
|
(11) |
% |
| Thermal Coal - Colombia(7) |
2.7 |
|
3.2 |
|
46 |
|
35 |
|
145 |
|
13 |
|
9 |
% |
(33) |
|
- |
|
(16) |
% |
| Prior year |
4.2 |
|
4.4 |
|
62 |
|
36 |
|
275 |
|
76 |
|
28 |
% |
29 |
|
- |
|
7 |
% |
(1) Production volumes are saleable tonnes. South African production volumes include export primary production, secondary production sold into export markets, production sold domestically at export parity pricing and pre-commercial production volumes from Navigation section of Khwezela and excludes other domestic production of 6.4 Mt (30 June 2019: 4.9 Mt). Metallurgical Coal production volumes exclude thermal coal production of 0.9 Mt (30 June 2019: 0.6 Mt).
(2) South African sales volumes include export primary production, secondary production sold into export markets and production sold domestically at export parity pricing and pre-commercial production volumes from Navigation section of Khwezela and exclude domestic sales of 6.0 Mt (30 June 2019: 4.4 Mt) and non-equity traded sales of 5.6 Mt (30 June 2019: 5.5 Mt). Metallurgical Coal sales volumes exclude thermal coal sales of 1.1 Mt (30 June 2019: 0.7 Mt).
(3) Metallurgical Coal realised price is the weighted average hard coking coal and PCI sales price achieved at managed operations. Thermal Coal - South Africa realised price is the weighted average export thermal coal price achieved. Excludes third-party sales from locations other than Richards Bay.
(4) FOB cost per saleable tonne, excluding royalties. Metallurgical Coal excludes study costs. Thermal Coal - South Africa unit cost is for the trade operations.
(5) Metallurgical Coal segment includes $30 million projects and corporate costs (30 June 2019: $28 million). Thermal Coal - South Africa segment includes $24 million projects and corporate costs (30 June 2019: $26 million).
(6) Excludes impact of third-party sales.
(7) Represents the Group's attributable share from its 33.3% interest in Cerrejón.
Financial and operational overview
Metallurgical Coal
Metallurgical Coal recorded an underlying EBITDA loss of $10 million (30 June 2019: $ 906 million gain), with a 36% reduction in the realised price for metallurgical coal, a 22% decrease in sales volumes and a 43% increase in US dollar unit costs to $97/tonne (30 June 2019: $68/tonne). The volume and cost performances were principally impacted by two underground operational incidents at Moranbah and Grosvenor, as well as longwall moves at Grosvenor and Grasstree.
Thermal Coal - South Africa
Underlying EBITDA increased by 43% to $20 million (30 June 2019: $14 million), as higher domestic sales volumes and lower unit costs more than offset lower export volumes resulting from Covid-19 related restrictions and a 5% decrease in the realised export thermal coal price. Unit costs decreased by 15% to $39/tonne (30 June 2019: $46/tonne) as domestic productivity improvements and the favourable impact of the weaker rand offset the effects of inflation and lower export production volumes. Since June, all mines have been operating at c.80% as a result of Covid-19 measures implemented to help safeguard the workforce.
Thermal Coal - Colombia
Underlying EBITDA decreased by 83% to $13 million (30 June 2019: $76 million), reflecting a 26% decrease in the realised price and a 29% reduction in sales volumes as a result of the impact of Covid-19 on production and weaker demand. Despite the 35% reduction in saleable production, Cerrejón reduced unit costs by 3% to $35/tonne (30 June 2019: $36/tonne) through optimisation of the mine plan to exclude higher cost volumes that are not economic at current prices and an enterprise-wide cost reduction programme.
Revenue for thermal coal includes amounts earned from the sale of volumes purchased from third parties (non-equity traded sales) that were not mined by the Group. Excluding these volumes, revenue from the mining of thermal coal (including Thermal coal business volumes from South Africa, Colombia and the Metallurgical Coal business) for the period was $676 million, or 5% of Group's revenue (30 June 2019: $1,018 million, 6%). Thermal coal underlying EBITDA for the period, excluding non-equity traded sales, was $13 million (30 June 2019: $84 million).
Markets
Metallurgical coal
|
|
30 June 2020 |
30 June 2019 |
|
| Average benchmark price hard coking coal ($/tonne)(1) |
137 |
|
205 |
| Average benchmark price PCI ($/tonne)(1) |
83 |
|
125 |
| Average realised price for premium low-volatile hard coking coal ($/tonne) |
123 |
|
195 |
| Average realised price for PCI ($/tonne) |
98 |
|
123 |
(1) Represents average spot prices.
Average realised prices differ from the average market price owing to differences in material grade and timing of contracts.
Market prices decreased in line with demand through the first half of the year. Demand was affected by the slowdown in the global economy due to the Covid-19 pandemic and increasingly stringent coal import policies at ports in China.
Thermal coal
|
|
30 June 2020 |
30 June 2019 |
|
| Average market price ($/tonne, FOB South Africa) |
67 |
|
74 |
| Average market price ($/tonne, FOB Colombia) |
46 |
|
60 |
| Average realised price - Export South Africa ($/tonne, FOB) |
61 |
|
64 |
| Average realised price - Colombia ($/tonne, FOB) |
46 |
|
62 |
The average realised price for export thermal coal differs from the average market price due to timing differences and quality discounts relative to the industry benchmark.
Thermal coal prices declined over the period as demand was impacted to a greater extent than supply by the effects of Covid-19. India, a key market for South African coal, experienced an estimated 23% decrease in imports in the first half of 2020. Towards the end of the half, the US and Indonesia had started to respond by reducing their seaborne supply.
Operational performance
Metallurgical Coal
Production decreased by 22% to 7.8 Mt (30 June 2019: 10.0 Mt), principally due to two incidents underground as well as longwall moves at Grosvenor and Grasstree. In January, a fall of ground at Moranbah delayed the completion of a longwall move with the operation restarting ahead of schedule in mid-May. At Grosvenor, operations have been suspended since the beginning of May following a gas ignition incident underground. The investigation into the incident at Grosvenor is ongoing. The affected longwall panel is being sealed off for safety reasons to facilitate works to prepare the mine for restart, resulting in a $75 million write-down relating to the lost equipment in that area. Mining operations will restart in a new location only when it is safe to do so, with the benefit of learnings from the investigation and the Board of Inquiry, and with any additional safety measures in place. Grosvenor is therefore currently expected to return to operation in the second half of 2021. Disruption to operations from Covid-19 has been limited, with measures in place to help safeguard the workforce and local communities. Open cut operations have been scaled back at Dawson and Capcoal in response to reduced demand for lower quality metallurgical coal.
Thermal Coal - South Africa
Export production decreased by 13% to 7.8 Mt (30 June 2019: 9.0 Mt), mainly due to sections at Goedehoop reaching the end of their life and the impact of Covid-19-related lockdowns.
Thermal Coal - Colombia
Anglo American's attributable production from its 33.3% ownership of Cerrejón decreased by 35% to 2.7 Mt (30 June 2019: 4.2 Mt) as a result of the impact of lockdown restrictions due to Covid-19 and planned lower production in response to lower demand.
Operational outlook
Metallurgical coal
Following the temporary suspension of operations at Grosvenor since the start of May, production guidance for metallurgical coal is revised to 16-18 million tonnes (previously 19-21 million tonnes), subject to the extent of further Covid-19 related disruption.
Export thermal coal
Production guidance for export thermal coal is revised to c.21 million tonnes (previously c.22 million tonnes) due to the impact of Covid-19 related restrictions and lower production at Cerrejón in response to reduced demand, and remains subject to the extent of further Covid-19 related disruption.
NICKEL AND MANGANESE
Financial and operational metrics
|
|
Production volume(1) |
Sales volume(1) |
Price |
Unit cost* |
Group revenue* |
Underlying EBITDA* |
Mining EBITDA margin* |
Underlying EBIT* |
Capex* |
ROCE* |
||||||||||
|
|
|
|
c/lb(2) |
c/lb(3) |
$m |
$m(4) |
|
$m(4) |
$m |
|
||||||||||
| Nickel and Manganese |
- |
|
- |
|
- |
|
- |
|
564 |
|
218 |
|
39 |
% |
132 |
|
12 |
|
12 |
% |
| Prior year |
- |
|
- |
|
- |
|
- |
|
756 |
|
326 |
|
43 |
% |
249 |
|
20 |
|
20 |
% |
| Nickel |
21,700 |
|
20,400 |
|
502 |
|
336 |
|
229 |
|
64 |
|
28 |
% |
9 |
|
12 |
|
1 |
% |
| Prior year |
19,600 |
|
18,600 |
|
563 |
|
410 |
|
232 |
|
52 |
|
22 |
% |
1 |
|
20 |
|
0 |
% |
| Manganese(5) |
1.7 |
|
1.7 |
|
- |
|
- |
|
335 |
|
154 |
|
46 |
% |
123 |
|
- |
|
79 |
% |
| Prior year |
1.8 |
|
1.9 |
|
- |
|
- |
|
524 |
|
274 |
|
52 |
% |
248 |
|
- |
|
142 |
% |
(1) Nickel production and sales are tonnes (t). Manganese production and sales are million tonnes (Mt).
(2) Realised price.
(3) C1 unit cost.
(4) Nickel segment includes $5 million projects and corporate costs (30 June 2019: $5 million).
(5) Production, sales and financials include ore and alloy.
Financial and operational overview
Nickel
Underlying EBITDA increased by 23% to $64 million (30 June 2019: $52 million), benefiting from improved operational stability and favourable foreign exchange movements, partly offset by the lower realised nickel price. In addition, the first half of 2019 was also adversely affected by a 40-day planned stoppage at Barro Alto.
Manganese (Samancor)
Underlying EBITDA decreased by 44% to $154 million (30 June 2019: $274 million), mainly owing to the lower manganese ore price and a 25% decrease in alloy sales, driven by lower production.
Markets
Nickel
|
|
30 June 2020 |
30 June 2019 |
| Average market price (c/lb) |
566 |
559 |
| Average realised price (c/lb) |
502 |
563 |
Ferronickel is traded based on discounts or premiums to the LME nickel price, depending on market conditions, supplier products and consumer preferences. Differences between market prices and realised prices are largely due to variances between the LME and the ferronickel price.
The average LME nickel price remained largely unchanged at 566 c/Ib (30 June 2019: 559 c/lb), despite the negative impacts of Covid-19 on demand and market sentiment. Nickel demand for stainless steel production had a strong recovery in China in the second quarter, while the global supply of nickel decreased owing to the impact of Covid-19 containment measures. Nickel demand for electric vehicle batteries also benefited from the strong year-on-year growth in sales of zero-emission vehicles in Europe.
Manganese
The average benchmark price for manganese ore (Metal Bulletin 44% manganese ore CIF China) was $5.07/dmtu, a decrease of 20% (30 June 2019: $6.33/dmtu). The adverse effects of Covid-19 shutdowns led to lower demand and prices.
Operational performance
Nickel
Nickel output increased by 11% to 21,700 tonnes (30 June 2019: 19,600 tonnes), reflecting improved operational stability and the effect of a planned stoppage at Barro Alto in the first half of 2019. Current Covid-19 measures in place to safeguard the workplace and communities are not expected to significantly affect 2020 production.
Manganese
Attributable manganese ore production decreased by 4% to 1.6 Mt (30 June 2019: 1.7 Mt) as the impact from the Covid-19 lockdowns in South Africa was largely offset by improved production in Australia due to improved concentrator and PC-02 performance.
Operational outlook
Nickel
Production guidance for 2020 is unchanged at 42,000-44,000 tonnes, subject to the extent of further Covid-19 related disruptions.
CROP NUTRIENTS
Financial and operational metrics
|
|
Production |
Sales volume(1) |
Price |
Unit |
Group |
Underlying EBITDA* |
Mining EBITDA margin* |
Underlying EBIT* |
Capex* |
ROCE* |
||||||||
|
|
|
|
c/lb |
c/lb |
$m |
$m |
|
$m |
$m |
|
||||||||
| Crop Nutrients |
- |
|
- |
|
- |
|
- |
|
22 |
|
4 |
|
n/a |
4 |
|
91 |
|
n/a |
| Prior year |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
n/a |
- |
|
- |
|
n/a |
| Woodsmith project |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
n/a |
- |
|
91 |
|
n/a |
| Prior year |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
n/a |
- |
|
- |
|
n/a |
| Other(1) |
- |
|
- |
|
- |
|
- |
|
22 |
|
4 |
|
n/a |
4 |
|
- |
|
n/a |
| Prior year |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
n/a |
- |
|
- |
|
n/a |
(1) Other comprises a 30% interest in The Cibra Group, a fertiliser distributor based in Brazil.
Crop Nutrients
Anglo American is developing the Woodsmith project in the north east of England to access the world's largest known deposit of polyhalite, a natural mineral fertiliser product containing potassium, sulphur, magnesium and calcium - four of the six nutrients that every plant needs to grow. The mine is being constructed approximately three kilometres south of Whitby where polyhalite ore will be extracted via two 1.6 kilometre deep mine shafts and transported to the port at Teesside on a conveyor belt system in a 37 kilometre underground tunnel, thereby minimising impact on the surface above. It will then be granulated at a materials handling facility to produce a fertiliser product - known as POLY4 - that will be exported to a network of customers in overseas markets.
Woodsmith project
Following the completion of the acquisition of Sirius Minerals Plc on 17 March 2020, integration activities have progressed well and the development of the project has continued in line with Anglo American's expected $300 million capital expenditure for 2020. The impact of Covid-19 on the project's development has been limited due to the successful implementation of appropriate health measures.
By the end of June, the first drive of the project's 37 kilometre tunnel to accommodate the underground mineral transport system had reached 7.3 kilometres and continues to progress well. At the mine head, the first shaft-boring machine is being assembled within the service shaft (where the early shaft-sinking work has taken place), with works at the production shaft also progressing well.
During the second half of the year, a review of the project's overall development plan will continue, making any appropriate adjustments to further optimise the project and align it with Anglo American's technical and other standards.
Market development - POLY4
Supply agreements with a global customer base are in place, including with a number of well-established counterparties such as Archer Daniels Midland Company, BayWa AG, Cibra, IFFCO, Wilmar Group and Muntajat. Many of these agreements have specific price levels recognising the value from key nutrients and have been set up on a take-or-pay basis. In total, these offtake arrangements accommodate production in excess of 10 Mtpa.
The ongoing focus of the market development activities is now around developing and implementing detailed sales and marketing strategies for each region and supporting customers with their own market development activities in order to further promote POLY4 to the end-users of the product.
CORPORATE AND OTHER
Financial metrics
|
|
Group revenue* |
Underlying EBITDA* |
Underlying EBIT* |
Capex* |
||||
|
|
$m |
$m |
$m |
$m |
||||
| Segment |
91 |
|
(40) |
|
(62) |
|
7 |
|
| Prior year |
- |
|
(38) |
|
(112) |
|
15 |
|
| Exploration |
- |
|
(43) |
|
(44) |
|
- |
|
| Prior year |
- |
|
(53) |
|
(54) |
|
- |
|
| Corporate activities and unallocated costs |
91 |
|
3 |
|
(18) |
|
7 |
|
| Prior year |
- |
|
15 |
|
(58) |
|
15 |
|
Financial overview
Corporate and other reported an underlying EBITDA loss of $40 million (30 June 2019: $38 million loss). Revenue increased to $91 million (30 June 2019: nil), predominantly due to a ramp up of third-party shipping activity.
Exploration
Exploration's underlying EBITDA loss decreased to $43 million (30 June 2019: $53 million loss), reflecting decreased exploration activities across most product groups, in particular at De Beers.
Corporate activities and unallocated costs
Underlying EBITDA decreased to a $3 million gain (30 June 2019: $15 million gain), driven primarily by transaction costs related to the acquisition of Sirius Minerals Plc.
For further information, please contact:
| Media |
Investors |
| UK James Wyatt-Tilby Tel: +44 (0)20 7968 8759 |
UK Paul Galloway Tel: +44 (0)20 7968 8718 |
| Marcelo Esquivel Tel: +44 (0)20 7968 8891 |
Robert Greenberg Tel: +44 (0)20 7968 2124 |
| Katie Ryall Tel: +44 (0)20 7968 8935 |
Emma Waterworth Tel: +44 (0)20 7968 8574 |
| South Africa Pranill Ramchander Tel: +27 (0)11 638 2592 Sibusiso Tshabalala Tel: +27 (0)11 638 2175 |
|
Notes to editors:
Anglo American is a leading global mining company and our products are the essential ingredients in almost every aspect of modern life. Our portfolio of world-class competitive operations, development projects and undeveloped resources, provides many of the metals and minerals that enable a cleaner, greener, more sustainable world and that meet the fast growing consumer-driven demands of developed and maturing economies. With our people at the heart of our business, we use innovative practices and the latest technologies to mine, process, move and market our products to our customers - and to discover new resources - safely and sustainably.
As a responsible producer of diamonds (through De Beers), copper, platinum group metals, the steelmaking ingredients of iron ore and metallurgical coal, and nickel - with crop nutrients in development and thermal coal operations planned for divestment - we are committed to being carbon neutral across our operations by 2040. We work together with our business partners and diverse stakeholders to unlock sustainable value from precious natural resources for the benefit of the communities and countries in which we operate, for society as a whole, and for our shareholders. Anglo American is re-imagining mining to improve people's lives.
Webcast of presentation:
A live webcast of the results presentation, starting at 9.00am UK time on 30 July 2020, 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. Tonnes are metric tons, 'Mt' denotes million tonnes and 'kt' denotes thousand tonnes, unless otherwise stated.
Group terminology
In this document, references to "Anglo American", the "Anglo American Group", the "Group", "we", "us", and "our" are to refer to either Anglo American plc and its subsidiaries and/or those who work for them generally, or where it is not necessary to refer to a particular entity, entities or persons. The use of those generic terms herein is for convenience only, and is in no way indicative of how the Anglo American Group or any entity within it is structured, managed or controlled. Anglo American subsidiaries, and their management, are responsible for their own day-to-day operations, including but not limited to securing and maintaining all relevant licences and permits, operational adaptation and implementation of Group policies, management, training and any applicable local grievance mechanisms. Anglo American produces Group-wide policies and procedures to ensure best uniform practices and standardisation across the Anglo American Group but is not responsible for the day to day implementation of such policies. Such policies and procedures constitute prescribed minimum standards only. Group operating subsidiaries are responsible for adapting those policies and procedures to reflect local conditions where appropriate, and for implementation, oversight and monitoring within their specific businesses
Forward-looking statements and third-party information:
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, acquisition and divestment strategy, dividend policy, plans and objectives of management for future operations (including development plans and objectives relating to Anglo American's products, production forecasts and Ore Reserves and Mineral Resource estimates), are forward-looking statements. By their nature, 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 effects of global pandemics and outbreaks of infectious diseases, sustainability aspirations, the availability of mining and processing equipment, the ability to produce and transport products profitably, the availability of transportation infrastructure, 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 permitting and 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 Guidance and Transparency Rules of the Financial Conduct Authority, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SIX 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 has not been independently verified and presents the views of those third parties, though these may not necessarily correspond to the views held by Anglo American and Anglo American expressly disclaims any responsibility for, or liability in respect of, such third-party information.
Anglo American plc
20 Carlton House Terrace London SW1Y 5AN United Kingdom
Registered office as above. Incorporated in England and Wales under the Companies Act 1985.
Registered Number: 3564138 Legal Entity Identifier: 549300S9XF92D1X8ME43
Anglo American interim results 202007:00:0730 Jul 2020Results5345U