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The $1.9 billion Barro Alto nickel project in Brazil delivered its first metal on schedule in March 2011. The project is the first of our four major strategic growth projects to be commissioned and will be a key contributor to Anglo American's 35% volume growth by 2014.

"2011 was a very good year from a project delivery perspective, with three key projects being commissioned on or ahead of time."

David Weston
Group Director of Business
Performance and Projects

In brief

  • Nine major projects completed or in commissioning during 2011.
  • Grosvenor – a 5 Mtpa hard coking coal project approved.
  • Cerrejón P500 Phase 1 – to increase export thermal coal production by 8 Mtpa (100% basis) – approved.

Barro Alto will average 41 ktpa of nickel over its first five years of full production and has a highly competitive cost position in the lower half of the cost curve. It will more than double production from our Nickel business, and increase Anglo American's total nickel volumes by 180%.

Barro Alto will have a long life from its extensive resource base, while Anglo American has the potential to increase nickel production by an additional 66 ktpa, with further upside potential from its unapproved projects at Jacaré and Morro Sem Boné, also in Brazil, leveraging the Group's considerable nickel laterite technical expertise.

The safety performance at Barro Alto has been particularly impressive and it was recognised in 2010 as being the safest mine in Brazil.

Three major new mining operations delivered on
or ahead of schedule

bar graph - CAPEX: 4 strategic growth projects bar graph - CAPEX: Other projects bar graph - CAPEX: Stay in business

Anglo American commissioned three major new mining operations during 2011 – the Kolomela iron ore mine in South Africa, the Los Bronces copper expansion in Chile and the Barro Alto nickel mine in Brazil. The Group's world class pipeline of projects spans its core commodities and is expected to deliver organic production growth of 35% by 2014 from those projects that have been commissioned during 2011 and those that are approved and currently in development.

During 2011, the Board approved a number of growth projects, including the 5 Mtpa Grosvenor metallurgical coal project in Queensland, Australia and the Collahuasi Phase 2 expansion in Chile. Beyond the near term, Anglo American is progressing towards approval decisions in relation to the development of further high quality growth projects, including the 225,000 tpa Quellaveco copper project in Peru. Submission to the Board for approval is expected for the Quellaveco project once the necessary permits are obtained. Together with a number of other medium and longer term projects, Anglo American has the potential to double production through its $98 billion pipeline of more than 85 approved and unapproved projects.

The Barro Alto nickel project in Brazil delivered its first metal in March 2011. Barro Alto is ramping up towards full production capacity, which it is expected to reach at the beginning of 2013. This project makes use of proven technology and will produce an average of 36,000 tpa of nickel in full production (41,000 tpa over the first five years), more than doubling production from our Nickel business, with a competitive cost position in the lower half of the cost curve.

The Los Bronces copper expansion project in Chile delivered its first production on schedule in October 2011. Production at Los Bronces is expected to more than double, increasing by an average of 278 ktpa over the first three years of full production and an average of 200 ktpa over the first 10 years. At peak production levels, Los Bronces is expected to be the fifth largest producing copper mine in the world, with highly attractive cash operating costs, reserves and resources that support a mine life of over 30 years, and with further expansion potential.

Kumba's Kolomela project in South Africa shipped its first lump iron ore from the port of Saldanha to China in December 2011, five months ahead of schedule. Kolomela is situated 80 km to the south of Kumba's world class Sishen mine and, when full production is achieved in 2013, will produce 9 Mtpa of high quality seaborne iron ore, with further potential for expansion.

The Minas-Rio iron ore project in Brazil is expected to produce 26.5 Mtpa of iron ore in its first phase and has made good progress during the year. Minas-Rio secured a number of major licences and permits during the year; the offshore and onshore works at the port are on schedule; more than 90% of land access has been secured along the 525 km pipeline route and more than 200 km of pipe has been installed; and the civil works at the beneficiation plant are well under way. As with other complex greenfield mining projects, a number of irregular issues, such as the discovery of caves at the beneficiation plant site which require specialised assessment, continue to cause delays to the work scheduling, in addition to outstanding land access and an evolving permitting environment. Minas-Rio is implementing various measures to manage these challenges in a high inflationary Brazilian mining environment, including acceleration activities within the previously announced 15% capital increase, to target first ore on ship in the second half of 2013.

Pre-feasibility studies for the second phase of the Minas-Rio iron ore project commenced during 2011 and, although still under way, the studies, together with the current resource statement (total resource volume (Measured, Indicated and Inferred)) of 5.8 billion tonnes, support the expansion of the project.

The greenfield Grosvenor project is situated immediately to the south of Anglo American's Moranbah North metallurgical coal mine in the Bowen Basin of Queensland, Australia. The mine is expected to produce 5 Mtpa of metallurgical coal from its underground longwall operation over a projected life of 26 years and to benefit from operating costs in the lower half of the cost curve. A pre-feasibility study for expansion by adding a second longwall at Grosvenor is under way.

The 6.6 Mtpa Zibulo mine in South Africa reached commercial operating levels in the fourth quarter of 2011, ahead of schedule.

In Colombia, Phase 1 of the Cerrejón P500 expansion project, to increase production by 8 Mtpa (100% basis), was approved by Cerrejón's three shareholders in the third quarter of 2011. First coal is targeted during the fourth quarter of 2013, with the project expected to achieve full production at the end of 2015.

The Unki project in Zimbabwe was handed over to operations in January 2011 and reached steady state production of 120,000 tonnes milled per month during the fourth quarter of 2011, a year ahead of schedule.

In Botswana, Debswana's Jwaneng mine Cut-8 extension project is progressing satisfactorily, largely on schedule and on budget.

Selected major projects

Completed/In commissioning in 2011

Sector Project Country Commissioning
date
Capex $m(1) Production volume(2)
Iron Ore
and Manganese
Kolomela South Africa Q4 2011 1,062 9.0 Mtpa iron ore
Thermal Coal Zibulo South Africa Q4 2011 517 6.6 Mtpa thermal
Copper Los Bronces expansion
Collahuasi Phase 1
Chile
Chile
Q4 2011
Q4 2011
2,800
148
200 ktpa copper(3)
19 ktpa copper
Nickel Barro Alto Brazil Q1 2011 1,900 36 ktpa nickel (4)
Platinum Unki
Mogalakwena North
Base metals refinery expansion
Dishaba East Upper UG2
Zimbabwe
South Africa
South Africa
South Africa
Q4 2011
H2 2011
Q3 2011
H2 2011
459
822
360
219
70 kozpa refined platinum
350–400 kozpa refined platinum
11 ktpa nickel
100 kozpa refined platinum

Approved

Sector Project Country First
production date
Full
production date
Capex $m(1) Production volume(2)
Iron Ore
and Manganese
Minas-Rio Phase 1
Groote Eylandt Expansion Project
(GEEP 2)(6)
Brazil
Australia
2013
2013
2014
2013
5,034
280
26.5 Mtpa iron ore pellet feed (wet basis)(5)
0.6 Mtpa manganese ore
Metallurgical Coal Grosvenor Phase 1 Australia 2013 2016 1,700 5.0 Mtpa metallurgical
Thermal Coal Cerrejón P500 Phase 1 Colombia 2013 2015 1,311 8.0 Mtpa thermal
Copper Collahuasi expansion Phase 2 Chile 2013 2014 212 20 ktpa copper(7)
Platinum Twickenham
Khuseleka Ore Replacement
Bathopele Phase 4
Bathopele Phase 5
South Africa
South Africa
South Africa
South Africa
2015
2007
2009
2013
2019
2015
2012
2018
1,248
187
67
230
180 kozpa refined platinum
Replace 101 kozpa refined platinum
65 kozpa refined platinum
139 kozpa
Diamonds Jwaneng – Cut 8 Botswana 2017 2021(8) 3,000(9) 100 million carats
Other Mining and Industrial Boa Vista Fresh Rock Brazil 2013 2014 173 (10) 2.7 ktpa additional niobium in product

Future unapproved

Sector Project Country First
production date
Full
production date
Production volume(2)
Iron Ore
and Manganese
Sishen Expansion Project phase 1B
Sishen B Grade
Sishen Concentrates
Kolomela Expansion
Minas-Rio expansion
South Africa
South Africa
South Africa
South Africa
Brazil
2013
2016
2017
2017
TBD
2014
2017
2019
2019
TBD
0.75 Mtpa iron ore
6.0 Mtpa iron ore
1.1 Mtpa iron ore
6.0 Mtpa iron ore
TBD
Metallurgical Coal Grosvenor Phase 2
Drayton South
Moranbah South
Australia
Australia
Australia
2015
2015
2016
2017
2015
2019
6.0 Mtpa metallurgical
4.0 Mtpa thermal
12.0 Mtpa metallurgical
Thermal Coal Elders Multi-product Project
New Largo
Cerrejón P500 P2

South Africa
South Africa
Colombia
2017
2015
TBD
2019
2017
TBD
3.0 Mtpa thermal
13.0 Mtpa thermal
10–20 Mtpa thermal
Copper Quellaveco
Michiquillay
Collahuasi expansion Phase 3
Pebble
Peru
Peru
Chile
US
2016
2019
TBD
TBD
2017
2020
TBD
TBD
225 ktpa copper
187 ktpa copper(11)
469 ktpa
175 ktpa(12)
Nickel Jacaré
Brazil TBD TBD TBD
Platinum Tumela Conglomerate South Africa 2020 2026 271 kozpa refined platinum
Diamonds Gahcho Kué
Venetia UG(13)
Canada
South Africa
TBD
TBD
TBD
TBD
TBD
TBD
  • (1) Capital expenditure shown on 100% basis in nominal terms.
  • (2) Represents 100% of average incremental or replacement production, at full production, unless otherwise stated.
  • (3) Production represents average over the first 10 years of the project. Production over the first three years of the project will average 278 ktpa.
  • (4) Average production of 36 ktpa over the full production years; a new mine plan will extend the life of Barro Alto with lower production in the additional years.
  • (5) Capital expenditure, post-acquisition of Anglo American's shareholding in Minas-Rio, includes 100% of the mine and pipeline, and an attributable share of the port, as modified by the agreement with LLX SA and LLX Minas-Rio. Capital expenditure is under review to contain the capital increase to approximately 15% of the guidance.
  • (6) Subject to conditions precedent being fulfilled.
  • (7) Further phased expansions have the potential to increase production to 1 Mtpa.
  • (8) Waste stripping at Cut-8, an extension to Jwaneng mine, began in 2010. Carat recovery will commence in 2017, with Cut-8 reaching full production when Cut-7 ore is exhausted in 2021.
  • (9) Debswana is investing $500 million in capital expenditure. Project investment, including capital expenditure, is likely to total $3 billion over the next 15 years. Total carats exposed are over the life of the extension.
  • (10) Capital estimate subject to review.
  • (11) Expansion potential to 300 ktpa.
  • (12) Pebble will produce molybdenum and gold by-products and other projects will produce molybdenum and silver by-products.
  • (13) A feasibility study is scheduled for consideration by De Beers Consolidated Mines (DBCM) board in 2012.