Anglo American plc Production Report for the first quarter ended 31 March 2022

Mark Cutifani, Chief Executive of Anglo American until 19 April 2022, said: “Production in the normally slower first quarter was 10%(1) lower than the same period in 2021, impacted by peak Covid-related absenteeism, high rainfall affecting operations in South Africa and Brazil, and safety and other operational challenges at metallurgical coal and iron ore operations. This challenging start to the year highlights the importance of adhering to our Operating Model to stabilise performance after the necessary disruptions of the last two years as we adapted to - and now learn to live with - Covid. As a result, we are updating our platinum group metals, iron ore and metallurgical coal volume guidance for the full year, and our unit cost guidance for most product groups to also reflect up to date exchange rates and the inflationary pressure on many input prices, particularly diesel.

"More broadly, progressing our Sustainable Mining Plan priorities has never been more relevant or urgent, most notably in relation to energy security, costs and emissions as we work to ensure our business is competitively positioned for the long term. During the quarter, we agreed an MOU to partner with EDF Renewables to secure 100% renewable energy for our operations in South Africa. This ecosystem approach is a major step towards reducing our on-site energy requirements, the largest source of our operational emissions, building on the 100% renewable electricity already secured for our South America operations by 2023. We also expect to have the world's largest hydrogen haul truck in action in the next few weeks, proving up this technology at scale for real world mine conditions, and expected to displace up to 80% of our on-site diesel emissions."

Q1 2022 highlights

Rough diamond production increased by 25%, reflecting a strong operational performance and lower rainfall impact, primarily in Botswana. The Benguela Gem, diamond recovery vessel, was commissioned ahead of schedule and on budget, and is expected to add an additional 500,000 carats per year of high value diamonds to our production.
Metal in concentrate production from our Platinum Group Metals operations decreased by 6%, primarily due to high rainfall at Mogalakwena, with full year guidance revised to 3.9–4.3 million ounces (previously 4.1-4.5 million ounces).
Copper production decreased by 13% primarily due to planned lower grades. The Los Bronces and El Soldado operations and the Chagres smelter were awarded the Copper Mark in March, recognising responsible copper production practices.
Iron ore production decreased by 19% as high rainfall and plant issues affected both Kumba and Minas-Rio, with full year guidance revised to 60-64 million tonnes (previously 63-67 million tonnes).
Metallurgical coal production decreased by 32% due to the delayed longwall move at Moranbah and the end of production from Grasstree. The suspended Grosvenor operation and Aquila life-extension project both started operations in mid-February. Moranbah was suspended following a fatal underground incident in late March, with full year guidance revised to 17-19 million tonnes (previously 20-22 million tonnes), subject to regulator approval for restart at the next panel as planned.
Full year cost guidance has increased by 9%(2), reflecting a 4%(2) impact from stronger producer currencies and 3%(2) from inflationary pressures, particularly diesel, as well as the revisions to volume guidance.
Production Q1 2022 Q1 2021 % vs. Q1 2021
Diamonds (Mct)(3) 8.9 7.2 25%
Copper (kt)(4) 140 160 (13)%
Nickel (kt)(5) 9.3 10.1 (8)%
Platinum group metals (koz)(6) 956 1,021 (6)%
Iron ore (Mt)(7) 13.2 16.2 (19)%
Metallurgical coal (Mt) 2.2 3.3 (32)%
Manganese ore (kt) 804 905 (11)%
(1) Copper equivalent production is normalised to reflect the demerger of the South Africa thermal coal operations and the sale of our interest in Cerrejón.
(2) Unit cost guidance on a copper equivalent basis is calculated as the USD cost base (based on unit cost guidance) divided by the copper equivalent mid-point of production guidance.
(3) De Beers Group production is on a 100% basis, except for the Gahcho Kué joint venture which is on an attributable 51% basis.
(4) Contained metal basis. Reflects copper production from the Copper operations in Chile only (excludes copper production from the Platinum Group Metals business unit).
(5) Reflects nickel production from the Nickel operations in Brazil only (excludes nickel production from the Platinum Group Metals business unit).
(6) Produced ounces of metal in concentrate. 5E+Au (platinum, palladium, rhodium, ruthenium and iridium plus gold). Reflects own mine production and purchase of concentrate.
(7) Wet basis.

Production and unit costs guidance summary

2022 production and unit costs guidance is summarised as follows:

2022 production guidance(1) 2022 unit costs guidance(1)
Diamonds(2) 30–33 Mct c.$65/ct
Copper(3) 660–750 kt c.147c/lb
(previously c.140c/lb)
Nickel(4) 40–42 kt c.495c/lb
(previously c.450c/lb)
Platinum Group Metals(5) 3.9–4.3 Moz c.$970/PGM oz
(previously 4.1-4.5Moz) (previously c.$900/PGM oz)
Iron Ore(6) 60-64 Mt c.$40/t
(previously 63-67 Mt) (previously c.$35/t)
Metallurgical Coal(7) 17-19 Mt c.$105/t
(previously 20-22 Mt) (previously c.$85/t)
(1) Subject to the extent of further Covid-19 related disruption. Unit costs exclude royalties, depreciation and include direct support costs only. FX rates for 2022 unit costs: ~15 ZAR:USD, ~1.3 AUD:USD, ~5.0 BRL:USD, ~800 CLP:USD, ~4 PEN:USD (previously ~16 ZAR:USD, ~1.4 AUD:USD, ~5.6 BRL:USD, ~830 CLP:USD, ~4 PEN:USD).
(2) Production on a 100% basis, except for the Gahcho Kué joint venture, which is on an attributable 51% basis, subject to trading conditions. Venetia continues to transition to underground operations during 2022, with ramp-up expected from 2023. Unit cost is based on De Beers' share of production.
(3) Copper business unit only. On a contained-metal basis. Total copper production is the sum of Chile and Peru: Chile: 560–600 kt and Peru: 100–150 kt. Copper Chile subject to water availability. Unit cost total is a weighted average based on the mid-point of production guidance. Chile unit cost is revised to c.150c/lb (previously c.145c/lb). Peru unit cost is revised to c.135c/lb (previously c.125c/lb) and is based on ramp-up production volumes, it is therefore highly dependent on production start date.
(4) Nickel operations in Brazil only.
(5) 5E + gold produced metal in concentrate ounces. Includes own mined production (~65%) and purchased concentrate volumes (~35%). The split of metals differs for own mined and purchased concentrate, refer to FY2021 results presentation slide 38 for indicative split of own mined volumes. 2022 metal in concentrate production is expected to be 1.8–2.0Moz of platinum (previously 1.9-2.1Moz), 1.2–1.3Moz of palladium (previously 1.3-1.4Moz) and 0.9–1.0Moz of other PGMs and gold. 5E + gold refined production is expected to be 4.0–4.4Moz (previously 4.2-4.6Moz), subject to the potential impact of Eskom load-shedding. Unit cost is per own mined 5E + gold PGMs metal in concentrate ounce.
(6) Wet basis. Total iron ore is the sum of operations at Minas-Rio in Brazil and Kumba in South Africa. Minas-Rio: 22-24 Mt (previously 24-26 Mt) and Kumba: 38-40 Mt (previously 39-41 Mt). Kumba is subject to the third party rail and port performance, as well as weather-related disruptions. Unit cost total is a weighted average based on the mid-point of production guidance. Minas-Rio unit cost is revised to c.$32/t (previously c.$25/t) and Kumba unit cost is revised to c.$44/t (previously c.$41/t).
(7) Production excludes thermal coal by-product from Australia and is subject to the timing of the restart of Moranbah longwall mining operations. FOB unit cost comprises managed operations and excludes royalties and study costs.

REALISED PRICES

Q1 2022 Q1 2021 Q1 2022 vs Q1 2021 FY 2021
Copper (USc/lb)(1) 462 421 10 % 453
Nickel (USc/lb) 1,085 747 45 % 773
Platinum Group Metals
Platinum (US$/oz)(2) 998 1,142 (13) % 1,083
Palladium (US$/oz)(2) 2,097 2,424 (13) % 2,439
Rhodium (US$/oz)(2) 17,161 20,224 (15) % 19,613
Basket price (US$/PGM oz)(3) 2,685 2,219 21 % 2,761
Iron Ore – FOB prices(4) 168 177 (5) % 157
Kumba Export (US$/wmt)(5) 169 180 (6) % 161
Minas-Rio (US$/wmt)(6) 166 170 (2) % 150
Metallurgical Coal - HCC (US$/t)(7) 373 113 230 % 211
Metallurgical Coal - PCI (US$/t)(7) 266 94 183 % 138
(1) The realised price for Copper excludes third party sales volumes.
(2) The realised price excludes trading.
(3) Price for a basket of goods per PGM oz. The dollar basket price is the net sales revenue from all metals (PGMs, base metals and other metals), excluding trading, per 5E + gold sold ounces (own mined and purchased concentrate).
(4) Average realised total iron ore price is a weighted average of the Kumba and Minas-Rio realised prices.
(5) Average realised export basket price (FOB Saldanha) (wet basis as product is shipped with ~1.6% moisture). The realised prices differ to Kumba's standalone results due to sales to other Group companies. Average realised export basket price (FOB Saldanha) on a dry basis is $172/t (Q1 2021: $183/t) and this was higher than the dry 62% Fe benchmark price of $124/t (FOB South Africa, adjusted for freight).
(6) Average realised export basket price (FOB Açu) (wet basis as product is shipped with ~9% moisture).
(7) Weighted average coal sales price achieved at managed operations. Australian thermal coal by-product is US$230/t and Q1 2021 was US$76/t, resulting in a 203% increase. FY 2021 was US$120/t.

NOTES

This Production Report for the quarter ended 31 March 2022 is unaudited.
Production figures are sometimes more precise than the rounded numbers shown in this Production Report.
Copper equivalent production shows changes in underlying production volume. It is calculated by expressing each product’s volume as revenue, subsequently converting the revenue into copper equivalent units by dividing by the copper price (per tonne). Long-term forecast prices are used, in order that period-on-period comparisons exclude any impact for movements in price.
Please refer to page 16 for information on forward-looking statements.
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.

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