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Q1 2023 Production Report

25 April, 2023

Anglo American plc Production Report for the first quarter ended 31 March 2023.

Duncan Wanblad, Chief Executive of Anglo American, said: “Our production in the first quarter increased by 9% compared to the same period in 2022, driven by the ramp-up of copper production from our new Quellaveco mine in Peru(1). Performance also benefited from the ongoing improvement at our Steelmaking Coal longwall operations, as well as at Kumba and Minas-Rio, our iron ore businesses. These were offset by planned lower copper grades in Chile, lower PGMs production and the transition of De Beers' Venetia mine from open pit to the new underground section, which results in temporary lower production until the underground operation fully ramps up.  

"This improved performance reflects our focus on safe and stable operational momentum through the seasonally slower first quarter of the year which also coincides with the wet season in much of the southern hemisphere. 

"We continue to make progress towards our suite of sustainability ambitions and organic growth options in future-enabling products and we welcome the recent approval of the environmental permit application for our Los Bronces Integrated Project, which sets up the next phase of development for one of the world's largest copper mines." 

Q1 2023 highlights 

  • Copper production increased by 28%, reflecting the ramp-up of production from our new Quellaveco copper mine in Peru, while production from our operations in Chile decreased by 15%, primarily due to planned lower grades at both Los Bronces and Collahuasi. 
  • Steelmaking coal production increased by 59%, primarily due to all three underground longwall operations running during the quarter. 
  • Iron ore production increased by 15%, driven by improved operational performance at both Kumba and Minas-Rio, as well as improved rain readiness plans. 
  • Nickel production increased by 4%, reflecting improved operational performance. 
  • Rough diamond production was flat, as planned higher grade ore and strong operational performance across most of the assets was offset by the planned completion of Venetia's open pit in December 2022, as it transitions to underground operations during 2023. 
  • Metal in concentrate production from our Platinum Group Metals (PGMs) operations decreased by 6% due to the impact of unplanned plant maintenance and lower grades at Mogalakwena, as well as planned infrastructure closures at Amandelbult in Q4 2022. 
  • Partnering with H2 Green Steel, the Swedish hydrogen and steel producer, to study and trial the use of premium quality iron ore products from Kumba and Minas-Rio as feedstock for H2 Green Steel’s direct reduced iron production process. 
  • 2023 production and unit cost guidance is unchanged across all business units. 
Production Q1 2023 Q1 2022 % vs. Q1 2022
Diamonds (Mct)(2) 8.9 8.9 0%
Copper (kt)(3) 178 140 28%
Nickel (kt)(4) 9.7 9.3 4%
Platinum group metals (koz)(5) 901 956 (6)%
Iron ore (Mt)(6) 15.1 13.2 15%
Steelmaking coal (Mt) 3.5 2.2 59%
Manganese ore (kt) 841 804 5%

(1) Total production across Anglo American’s products is calculated on a copper equivalent basis, including the equity share of De Beers’ production and using long-term consensus parameters.
(2) De Beers Group production is on a 100% basis, except for the Gahcho Kué joint operation which is on an attributable 51% basis.
(3) Contained metal basis. Reflects copper production from the Copper operations in Chile and Peru only (excludes copper production from the Platinum Group Metals business unit).
(4) Reflects nickel production from the Nickel operations in Brazil only (excludes 3.3 kt of Q1 2023 nickel production from the Platinum Group Metals business unit).
(5) Produced ounces of metal in concentrate. 5E+Au (platinum, palladium, rhodium, ruthenium and iridium plus gold). Reflects own mine production and purchase of concentrate.
(6) Wet basis.

Production and unit cost guidance summary

  2023 production guidance 2023 unit cost guidance(1)
Diamonds(2) 30–33 Mct c.$80/ct
Copper(3) 840-930 kt c.156c/lb
Nickel(4) 38-40 kt c.515c/lb
Platinum Group Metals(5) 3.6–4.0 Moz c.$1,025/oz
Iron Ore(6) 57-61 Mt c.$39/t
Steelmaking Coal(7) 16-19 Mt c.$105/t

(1) Unit costs exclude royalties, depreciation and include direct support costs only. FX rates used for 2023 costs: ~17 ZAR:USD, ~1.5 AUD:USD, ~5.3 BRL:USD, ~900 CLP:USD, ~3.8 PEN:USD.
(2) Production on a 100% basis, except for the Gahcho Kué joint operation, which is on an attributable 51% basis, subject to trading conditions. Venetia continues to transition to underground operations - first production is expected in 2023. Unit cost is based on De Beers' share of production and is impacted by the Venetia transition to underground during 2023.
(3) Copper business unit only. On a contained-metal basis. Total copper production is the sum of Chile and Peru: Chile: 530–580 kt and Peru: 310–350 kt. Production in Chile is subject to water availability, and in Peru is subject to completion of ramp-up, expected around mid-2023. Unit cost total is a weighted average based on the mid-point of production guidance. Chile: c.190 c/lb and Peru: c.100 c/lb.
(4)Nickel operations in Brazil only. The Group also produces approximately 20 kt of nickel on an annual basis as a co-product from the PGM operations.
(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 FY2022 results presentation slide 42 for indicative split of own mined volumes. 2023 metal in concentrate production is expected to be 1.6–1.8 Moz of platinum, 1.2–1.3 Moz of palladium and 0.8–0.9 Moz of other PGMs and gold. 5E + gold refined production is expected to be 3.6–4.0 Moz, subject to the impact of Eskom load-curtailment. 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 Kumba in South Africa and Minas-Rio in Brazil. Kumba: 35–37 Mt and Minas-Rio: 22–24 Mt. Kumba production is subject to the third party rail and port performance. Unit cost total is a weighted average based on the mid-point of production guidance. Kumba: c.$44/t and Minas-Rio: c.$32/t .
(7) Production excludes thermal coal by-product from Australia. FOB unit cost comprises managed operations and excludes royalties and study costs.

Realised prices

  Q1 2023 Q1 2022 Q1 2023 vs. Q1 2022 FY 2022
Copper (USc/lb)(1) 447 462 (3) % 385
Copper Chile (USc/lb)(2) 455 462 (2) %  386
Copper Peru (USc/lb) 433 n/a n/a  379
Nickel (US$/lb) 10.16 10.85 (6)  %  10.26
Platinum Group Metals        
Platinum (US$/oz)(3) 984 998 (1) % 962
Palladium (US$/oz)(3) 1,690 2,097 (19) % 2,076
Rhodium (US$/oz)(3) 11,671 17,161 (32) % 15,600
Basket price (US$/PGM oz)(4) 2,131 2,685 (21) % 2,551
Iron Ore – FOB prices(5) 122 168 (27) % 111
Kumba Export (US$/wmt)(6) 121 169 (28) % 113
Minas-Rio (US$/wmt)(7) 125 166 (25) % 108
Steelmaking Coal – HCC (US$/t)(8) 301 373 (19)  % 310
Steelmaking Coal – PCI (US$/t)(8) 278 266 5  % 271

(1) Average realised total copper price is a weighted average of the Copper Chile and Copper Peru realised prices.
(2) Realised price for Copper Chile excludes third party sales volumes.
(3) Realised price excludes trading.
(4) 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).
(5) Average realised total iron ore price is a weighted average of the Kumba and Minas-Rio realised prices.
(6) 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 $123/t (Q1 2022: $172/t), higher than the dry 62% Fe benchmark price of $112/t (FOB South Africa, adjusted for freight).
(7) Average realised export basket price (FOB Açu) (wet basis as product is shipped with ~9% moisture).
(8) Weighted average coal sales price achieved at managed operations. Australian thermal coal by-product in Q1 2023, a 16% decrease to US$194/t (Q1 2022:: US$230/t). FY 2022 was $310/t.

NOTES

  • This Production Report for the first quarter ended 31 March 2023 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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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, with a broad range of future development options, provides many of the future-enabling metals and minerals for a cleaner, greener, more sustainable world and that meet the fast growing every day demands of billions of consumers. With our people at the heart of our business, we use innovative practices and the latest technologies to discover new resources and to mine, process, move and market our products to our customers – safely and sustainably.

As a responsible producer of diamonds (through De Beers), copper, platinum group metals, premium quality iron ore and steelmaking coal, and nickel – with crop nutrients in development – we are committed to being carbon neutral across our operations by 2040. More broadly, our Sustainable Mining Plan commits us to a series of stretching goals to ensure we work towards a healthy environment, creating thriving communities and building trust as a corporate leader. We work together with our business partners and diverse stakeholders to unlock enduring 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.

www.angloamerican.com

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, prospects and projects (including development plans and objectives relating to Anglo American’s products, production forecasts and Ore Reserve and Mineral Resource positions) and sustainability performance related (including environmental, social and governance) goals, ambitions, targets, visions, milestones and aspirations, 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, unanticipated downturns in business relationships with customers or their purchase from Anglo American, mineral resource exploration and project development capabilities and delivery, recovery rates and other operational capabilities, safety, health or environmental incidents, the effects of global pandemics and outbreaks of infectious diseases, the impact of attacks from third parties on our information systems, natural catastrophes or adverse geological conditions, climate change and extreme weather events, the outcome of litigation or regulatory proceedings, the availability of mining and processing equipment, the ability to obtain key inputs in a timely manner, the ability to produce and transport products profitably, the availability of necessary infrastructure (including transportation) services, the development, efficacy and adoption of new technology or competing, challenges in realising resource estimates or discovering new economic mineralisation, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, liquidity and counterparty risks, the effects of inflation, terrorism, war, conflict, political or civil unrest, uncertainty, tensions and disputes and economic and financial conditions around the world, evolving societal and stakeholder requirements and expectations, shortages of skilled employees, unexpected difficulties relating to acquisitions or divestitures, competitive pressures and the actions of competitors, activities by courts, regulators and governmental authorities such as in relation to permitting or forcing closure of mines and ceasing of operations or maintenance of Anglo American’s assets 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 UK Listing Rules, the Disclosure 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, but 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 information.