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Delivering value through operational excellence

Anglo American is now a more focused and performance oriented international mining company. We have a clear strategy in place and are driving harder than ever in pursuit of our ambition of being the investment, partner and employer of choice in the mining industry.

In 2009, we made significant progress on several fronts, delivering on and exceeding our targets - achieving a step change in safety performance, restructuring the Group and laying the foundation for significant cultural change, while continuing our highly successful cost and efficiency initiatives, taking Anglo American into a new, more dynamic era of value delivery.

In October, we announced a major corporate reorganisation to ensure delivery of a clear corporate strategy, to create a more streamlined and efficient management structure and further focus the Group on its core mining businesses. Through our redesign of the Group's structure, we have created seven focused commodity businesses, with their management teams located in the area of core geographic focus for each commodity, responsible for operational performance and project delivery. The rationalised corporate centre will be responsible for providing strategic support to the businesses and will be focused on delivering synergies, technology and business performance. We have worked quickly to implement these new structures and we expect full implementation by the end of the first quarter of 2010, with associated annualised cost savings of approximately $120 million. Taken together with our overall Group restructuring and efficiency initiatives, this has resulted in a reduction of our total headcount of 23,400* during 2009.

Two areas of synergy where we are continuing to deliver clear and substantial value are in our asset optimisation and global procurement programmes. We are now well advanced towards delivering our stated combined target of $2 billion of uplift in 2011, generating more than $1.6 billion in 2009, ahead of expectations. Based on our excellent progress to date, we now expect to achieve our $2 billion asset optimisation and procurement targets from our core businesses alone on the same timeline.

Cost control continues to be a major focus for Anglo American. Anglo Platinum has a clear strategy to move the cost position of its operations to the first and second quartile while, in 2009, it achieved flat cash operating unit costs and significant further productivity improvements. Furthermore, following a full restructuring of the operations at Rustenburg and Amandelbult to enable greater operational control and flexibility, the company has removed 140 koz (annualised) of high cost production by placing three shafts on care and maintenance. We have delivered cost reductions across the Group, most notably at our Diamonds and Metallurgical Coal businesses.

Anglo American has provided strong support to the recapitalisations of both Anglo Platinum and De Beers, positioning them to take full advantage of economic recovery and the delivery of their long term growth prospects as respective industry leaders.

We also made excellent progress during 2009 disposing of other interests. As we reported at the half year, Anglo American disposed of its residual shareholding in AngloGold Ashanti in the first quarter and in Hulamin and Tongaat Hulett in July and August respectively, generating total proceeds of $2.4 billion.

During the first quarter of 2010, Anglo American agreed the sale of Tarmac's aggregates businesses in France, Germany, Poland and the Czech Republic and its Polish concrete products business, with expected total proceeds of approximately $400 million.

Delivering Value Chart

*
Headcount reduction includes contractors and 100% of De Beers.

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Annual Report 2009