CEO's Statement

Determination to
lead by example

Impressive financial and operational performance

RECORD OPERATING
PROFIT

(2010:$9.8bn)

$11.1bn

HIGH VALUE METALLURGICAL COAL FROM OUR NEWLY APPROVED GROSVENOR PROJECT

5Mtpa

Anglo American delivered an impressive financial and operational performance in 2011, as we continued to capture the benefits of operational improvements and disciplined cost management to capitalise on the attractive commodity demand and pricing environment that prevailed for much of the year. We reported a record operating profit of $11.1 billion, a 14% increase, EBITDA of $13.3 billion, while underlying earnings increased by 23% to $6.1 billion, also a record.

Three major new mining operations delivered

Our successful delivery of three major mining projects on or ahead of schedule during the year is a great achievement, and will contribute significant new volumes of iron ore, copper and nickel as the new operations continue to ramp up during 2012.

Our decision to sustain capital investment in the development of these and other growth projects through the cycle, with highly competitive operating costs and capital intensity ratios, sets us apart as a near term volume growth leader.

The first shipment of lump iron ore from the 9 Mtpa Kolomela mine in South Africa in December 2011, five months ahead of schedule, was an important step towards our goal of increasing production to 70 million tonnes from our South African iron ore assets this decade. In copper, the expansion at Los Bronces in Chile, completed in October 2011, will more than double the mine's production of 221,000 tpa, on average, over the first three years of full production, with reserves and resources that support a mine life of over 30 years. And in Brazil, we delivered first production at our new Barro Alto nickel operation in March 2011. Barro Alto will average 41,000 tpa of nickel over its first five years of full production and increase Anglo American's nickel volumes by 180%.

two further new mines on track

We also made good progress during the year at the Minas-Rio iron ore project in Brazil, the fourth of our strategic growth projects. We are continuing to manage a number of challenges in a high inflationary Brazilian mining environment. To mitigate these challenges, we are implementing various measures including acceleration activities within the previously announced 15% capital expenditure increase, to target first ore on ship in the second half of 2013.

We are maintaining momentum into our next phase of growth, with the Board approval of six growth projects across six commodities, including our 5 Mtpa Grosvenor metallurgical coal project in Australia. We expect to approve further new projects during 2012, including the Quellaveco copper project in Peru.

Building the next phase of growth

Looking further out, we are focused on prioritising the most attractive of our $84 billion pipeline of unapproved projects towards development and we continue to replenish and increase our world class resource base through numerous exploration successes. Our discovery of copper, nickel and platinum group elements at Sakatti in northern Finland is a great example of Anglo American's deep-rooted greenfield exploration expertise delivering value as well as the use of our innovative drilling technology to reduce our environmental impact as we work towards defining the resource.

Seizing opportunities to deliver further value

Beyond our organic growth programme, we continue to deliver shareholder value commercially. We took the unique opportunity in November to finalise the agreement to acquire the Oppenheimer family's shareholding in De Beers, taking Anglo American's interest in the world's leading diamond company to up to 85%. We will continue to pursue growth where we see the most compelling, long term opportunities and to deliver value from our high quality asset base.

Our sale of a non-controlling interest in our Anglo American Sur assets to Mitsubishi for $5.4 billion, valuing those assets at $22 billion, is a demonstration of that commitment and of the quality our assets.

Our Platinum business today is a far cry from what it was a few years ago in terms of production, productivity and safety. We have seen substantial improvement in operating performance and the returns are in line with the industry. However, these returns have declined in recent years and are not acceptable to us for the medium and longer term. The platinum industry faces significant challenges, from cost inflation and safety issues to ongoing concerns over European demand. As a result, we are embarking on a review to assess the optimal configuration of our Platinum portfolio with a focus on improving performance. We will do this with the single purpose in mind of maximising shareholder value and returns through the cycle.

Safety

Safety remains my absolute priority and I have not wavered on this commitment since my appointment as chief executive five years ago. I am deeply saddened that in 2011, 17 employees died while working for Anglo American. We have a long way to go to achieve our objective of zero harm, despite marked improvements in our safety record since 2007, with a significant reduction in the number of our people who have lost their lives at work and lost time injury rates. While we continue to see many examples of safety excellence across Anglo American, we are committed to reviewing, refocusing and reprioritising our safety related programmes to address ongoing challenges.

Taking the lead in sustainable mining

Managing the social, economic and environmental impacts of our operations is essential to our success. Our approach to sustainability is a key differentiator for Anglo American, is fundamental to the way we do business and is embedded in everything we do.

Together with safety, our primary sustainability challenges are around climate change, and securing access to water and energy. During 2011, we implemented new technical standards and management tools - the Water Efficiency Target Tool and our energy and carbon management programme, ECO2MAN - to help operations understand their water and energy requirements, and identify and implement savings projects.

We have continued our support for community health systems during 2011, particularly in emerging economies, at a local and global level. In June 2011, we pledged $3 million over three years to the UK Government-led matching initiative for the Global Alliance for Vaccines and Immunisations, a public/private partnership that is increasing access to immunisation in the world's poorest countries.

In January 2012, I joined other world business leaders to launch the Business Leadership Council for a Generation Born HIV Free, a private sector-led initiative that aims to end the transmission of HIV from mothers to children by the end of 2015.

Strong outlook for our commodities

Despite short term uncertainty persisting in the global economy, particularly in Europe, the outlook for Anglo American's diversified mix of commodities remains strong. We expect sustained growth in the emerging economies, notably in China and India, which will underpin robust demand for commodities, supplemented by early recovery signs in the US. Continuing industrialisation and urbanisation cycles and the considerable scope for the convergence of living standards, combined with long term supply constraints, present an attractive proposition across our unique portfolio of early, mid- and late development cycle commodities.

Cynthia Carroll

Chief Executive