A BALANCED PORTFOLIO WITH THE FUTURE IN MIND

ANNUAL REPORT 2012

SUBHEAD WITH THE FUTURE IN MIND

Copy to come. At Anglo American, we will achieve our ambition to be the leading mining company if we make sound decisions that focus on delivering long term value. It is these decisions made by our talented workforce that are driving the business forward with the future in mind.

A UNIQUE TRANSACTION

Our acquisition of a further 40% interest in De Beers was a unique opportunity to consolidate control of the world's leading diamond company. The benefi ts of our scale, expertise and fi nancial resources, combined with the De Beers business and its iconic brand, will enhance De Beers' position across the diamond pipeline and capture the potential presented by a rapidly evolving diamond market.

For more information on this story go to page 82 in this report

01 Preparation plant assistant Jessica Smith and environmentalist Matt Goddard at the train load-out facility at Metallurgical Coal's Capcoal open cut mine.

02 Molten platinum being poured at Platinum's precious metals refi nery.

03 Construction work at Thermal Coal's eMalahleni water treatment plant.

04 Reclaimer operator Bobby Marthinus at the reclaimer bucket wheel at Kolomela mine's stack and reclaim yard.
- Codemin's nickel smelter in Brazil. 06 Anodes supervisor Ricardo Villalon at

05 Arc furnace at

the anodes stockpile at the Chagres copper smelter.

Cover

De Beers' sea walker drill platform, drilling the surf zone on the Atlantic coast in Namibia.

Other sources of information

You can fi nd this report and additional information about Anglo American on our corporate website.

Although we have chosen not to produce an 'integrated report', we have included a comprehensive overview of our non-fi nancial performance in this report. More detailed information on our sustainability performance is provided in our Sustainable Development Report. This can be found on our corporate website.

For more information visit www.angloamerican.com/ reportingcentre

AT A GLANCE

Anglo American's portfolio of mining businesses spans bulk commodities – iron ore and manganese, metallurgical coal and thermal coal; base metals – copper and nickel; and precious metals and minerals – in which we are a global leader in both platinum and diamonds.

SAFEGUARDING VALUE WITH THE FUTURE IN MIND

CAPITAL EXPENDITURE

5.3
4.8
5.0
5.8
5.7

2011 2012 1,374

8,615

UNDERLYING OPERATING PROFIT (2011: \$11.1 bn)

\$6.2 bn

UNDERLYING EARNINGS (2011: \$6.1 bn)

\$2.8 bn

UNDERLYING EARNINGS PER SHARE (2011: \$5.06)

\$2.26

(LOSS)/PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS (2011: \$6.2 bn)

\$(1.5)bn

Underlying operating profi t includes attributable share of associates' operating profi t (before attributable share of associates' interest, tax, and non-controlling interests) and is before special items and remeasurements, unless otherwise stated. See notes 2 and 4 to the fi nancial statements for operating profi t. For defi nition of special items and remeasurements, see note 5 to the fi nancial statements. See note 13 to the fi nancial statements for the basis of calculation of underlying earnings.

'Tonnes' are metric tons, 'Mt' denotes million tonnes, 'kt' denotes thousand tonnes and 'koz' denotes thousand ounces; '\$' and 'dollars' denote US dollars and 'cents' denotes US cents.

Net debt includes related hedges and net cash in disposal groups. See note 31 to the fi nancial statements.

Overview

10 Chief Executive's statement

Anglo American plc Annual Report 2012 01

CHAIRMAN'S STATEMENT

In a very tough year, we made signifi cant progress in overcoming the most serious challenges to our business, to the benefi t of everyone invested, directly or indirectly, in Anglo American.

Given the increased challenges involved in developing large and complex greenfi eld sites, the Board will apply a highly disciplined approach to the allocation of capital.

Sir John Parker

OUR PERFORMANCE

It was a diffi cult year for the mining industry and Anglo American encountered its share of challenges. Against a backdrop of a marked economic slowdown in China, a troubled euro zone and only a sputtering recovery in the US, the industry faced falling prices, while profi tability was further impacted as costs continued to rise well above infl ation in many countries. In our own business, in South Africa, we had to contend with lengthy illegal industrial action at our Platinum and Kumba Iron Ore operations – which ultimately had the effect of tipping Anglo American Platinum into making a loss for the year. In the fi rst half of the year, we also encountered operational setbacks in our Copper business, where output is now stabilising. At our largest capital project, the Minas-Rio iron ore project in Brazil, a diversity of problems led to a revised delivery date and capital-cost increases. This led us to review the carrying value of the asset, writing it down by \$4 billion (after tax).

DIVIDENDS AND CAPITAL ALLOCATION

In spite of all these challenges affecting cash fl ow, the Board was able to recommend a fi nal dividend of 53 cents per share, giving a rebased total dividend for the year of 85 cents, a 15% increase, refl ecting our confi dence in the underlying business. This increase completes the rebuilding of our dividend from zero in 2009, to a new base level competitive with our diversifi ed peer group.

The three major projects we commissioned in 2011 – Barro Alto nickel, Los Bronces copper expansion and Kolomela iron ore – have all been ramping up. At Minas-Rio, however, the inevitable knock-on effect of permitting and other delays have resulted in the project's capital expenditure rising to an expected \$8.8 billion, if a Group-held risk contingency of \$600 million is consumed, with the fi rst iron ore shipment due by the end of 2014. I am confi dent, however, that Minas-Rio will become one of the world's great high-quality iron ore mines, with high potential cash generation and a published resource base of well over 5 billion tonnes, a more than fourfold increase since acquisition.

Anglo American's objective is to maintain a strong investment grade rating – which demands rigorous capital discipline. We

recognise that over the next two years we will bear a heavier capital expenditure burden as we seek to complete the development of Minas-Rio and Grosvenor in Australia, after which we expect capital expenditure to be moderated.

We have a substantial potential pipeline of high-quality growth options in the most attractive commodities. However, given the increased challenges involved in developing large and complex greenfi eld sites, the Board will apply a highly disciplined approach to the allocation of capital, with smaller, lower-risk brownfi eld expansion projects more likely to fi nd favour. Prior to Board approval of large greenfi eld projects we will explore the merits of seeking suitable partners.

DELIVERING VALUE

In these volatile times, boards have a heightened responsibility to ensure that management delivers enduring value for shareholders. That is why, following almost a year of studying various options and social plans, we have announced a proposed major restructuring of our Platinum business. We aim to return it to a sustainable profi t and a more secure future for the 45,000 employees who would remain. I am glad to report we have had positive dialogue with the South African government, with a joint commitment to work together on this restructuring and the fi nalisation of our recovery plans.

It is pleasing to report that, following the dispute with the Chilean state copper producer, Codelco, we were able to retain majority control of Anglo American Sur and to establish a new relationship that positions us to build a strong future for our business in Chile. We were also able to generate \$2.3 billion of incremental proceeds for shareholders compared to the original option price.

Our acquisition from the Oppenheimer family of its 40% shareholding in De Beers now gives shareholders greater exposure to the world's No. 1 diamond company. We believe De Beers is well positioned to capitalise on the positive fundamentals in diamonds, with the supply of gem diamonds likely to fall well short of demand over the long term.

SAFETY AND SUSTAINABLE DEVELOPMENT

The number of people who lost their lives on company business fell to 13; sadly, this is 13 too many. Our lost-time injury frequency rate, which had reached a plateau in recent years, also resumed a downward trend. Overall, during Cynthia Carroll's six-year watch, on a like-for-like basis, the annual number of deaths Group-wide fell by half. This step change in performance is great testimony to Cynthia's safety leadership, as well as the commitment of her senior management team. Their tireless endeavours in leading the safety agenda have brought about real and lasting change in the way we approach our drive for zero harm. I know our incoming chief executive Mark Cutifani, during whose watch at AngloGold Ashanti, over a similar timeframe, the company's safety record improved signifi cantly, is also determined to take the lead on this most fundamental of issues.

As a company, Anglo American takes climate-change mitigation and water management particularly seriously – with targets for these included in the performance contracts

AN EVALUATION OF THE BOARD BY AN EXTERNAL FACILITATOR, WITH NO PRIOR RELATIONSHIP WITH ANGLO AMERICAN, WAS COMPLETED IN FEBRUARY 2012.

For more information turn to page 96

of our business unit CEOs. It is pleasing, therefore, that our approach to sustainable development continues to receive global recognition. At the Quellaveco copper project in Peru – historically, a challenging environment in which to conduct mining operations – we successfully concluded a community 'dialogue table'; this resulted in groundbreaking agreements that satisfy our host communities on water use, the environment and social responsibility. In 2012, Anglo American was recognised for the 10th year running for excellence in sustainability by the Dow Jones Sustainability Index, achieving the highest ranking in the mining industry. We were also awarded a platinum ranking in the 2012 Business in the Community Corporate Responsibility Index, the UK's leading voluntary benchmark of corporate responsibility – the only mining group to secure platinum status.

GOVERNANCE

Over the past few years, governance pressures on listed companies have been growing in intensity. Shareholders, institutional and individual alike, have sought to hold underperforming managements and boards to account. In the 3½ years I have been chairman of your company, therefore, I have sought to refresh and strengthen the Board by bringing in members with a range of skill-sets and experiences that can add value to our business and maintain capital discipline. It is in that light that we appointed Anne Stevens in May 2012. Anne is an engineer with extensive industrial experience, including operating in a range of South American countries in which we are present.

I also wish to take this opportunity to thank Dr Mamphela Ramphele, who stepped down in July, for the wealth of experience and insight she brought to the Board's affairs. Mamphela, who was a key fi gure in South Africa's struggle for democracy, later had a distinguished career, including serving as vice-chancellor of the University of Cape Town and as a managing director of the World Bank.

Peter Woicke will also be standing down from the Board at the forthcoming AGM. He has been a director since 2006 and chairman of the Safety and Sustainable (S&SD) Committee for the past three years. Peter has brought a wealth of experience and knowledge about development in emerging economies to our proceedings and has ensured that Anglo American remains at the forefront of the major sustainability issues facing our industry. We are indeed grateful for his leadership in this important area of our operations.

We are fortunate to have Jack Thompson's extensive mining experience and knowledge of safety to take over as chairman of the S&SD Committee and to build on Peter Woicke's excellent work.

The Board is also proposing the appointment of Dr Byron Grote as a non-executive director at the forthcoming AGM. Byron has more than three decades' experience in the natural resources sector, including nine years as chief fi nancial offi cer of BP. He will be retiring from BP and stepping down from the BP board in April. It is intended that Byron will, after a period of induction, take over the chairmanship of the Audit Committee from David Challen, who has rendered outstanding service in this role. I am glad that David, whose independence is not in doubt, has agreed, given the extensive changes to Board

REPRESENTATION OF WOMEN ON THE BOARD

membership since late 2009, to serve for at least another year as the senior independent non-executive director.

In terms of the Board's composition, the biggest change, of course, was Cynthia Carroll's decision in October to step down as chief executive and from the Board, in April, with the agreement of the Board. Cynthia's leadership has had a transformational impact on Anglo American. She developed a clear strategy and created a strong and unifi ed culture and a streamlined organisation.

Cynthia lived out Anglo American's values to the full and her legacy includes, among many other things, a step-change improvement in safety, sustainability and the quality of our dialogue with governments, communities and other stakeholders around the world. As a Board, we not only thank her but wish her all success and good wishes in the years ahead.

I led the Board's global search to identify the best possible candidate for the role of chief executive. Mark Cutifani was the Board's unanimous choice to succeed Cynthia, and he will take up his post on 3 April 2013. Mark comes to us from AngloGold Ashanti, where he led the successful restructuring and development of its business. He is an experienced listed-company chief executive who has a focus on creating value, and a seasoned miner, with broad experience of mining operations and projects across a wide range of commodities and geographies, including South Africa and the Americas, as well as his native Australia. He is a highly respected leader in the global mining industry, with values strongly aligned to those of Anglo American.

In terms of enhancing the Board's contribution to Anglo American's affairs, during the year the Board joined the company's most senior executives in an internal strategy forum, and will do so again in June 2013. In addition, the results of an external effectiveness review of the Board, which I commissioned in 2011, were presented to the Board in 2012. The results of the review, together with details of all of our governance arrangements, can be found in the Corporate Governance section (pages 90–134) of this report.

OUTLOOK

During 2012 there were signifi cant macroeconomic policy changes, which should support a stronger recovery in 2013 and beyond. There are now clear signs of an upturn in US housing, which should reinforce a broader economic recovery helped by ultra-loose monetary policy. In China, the authorities have also eased policy to stimulate faster growth. But the country's newly installed leadership is mindful of the need to rebalance the economy, which will restrain growth over the next few years. In Europe and Japan, activity has been weak, but there are signs of improvement and changes in policy should boost growth in 2013. In the medium term, we see continuing robust demand for industrial commodities as emerging economies continue to industrialise and advanced economies invest in upgrading their infrastructure.

Sir John Parker Chairman

The number of people who lost their lives on company business fell to 13, while our lost-time injury frequency rate, which had reached a plateau in recent years, also resumed a downward trend.

For more information turn to page 27

A BRIGHTER OUTLOOK FOR OUR KEY COMMODITIES

THE ECONOMY

ECONOMIC SLOWDOWN

The world economy slowed in 2012. According to the IMF, global real GDP increased by 3¼ %, following 4% in 2011 and 5% in 2010. There was broad-based weakness, with both advanced and developing economies experiencing lower growth. In aggregate, real GDP in the advanced economies rose by 1¼ % in 2012, after 1½ % in 2011 and 3% in 2010. Emerging and developing economies recorded aggregate real GDP growth of 5% in 2012, down from 6¼ % in 2011 and 7½ % in 2010. The growth in world trade slowed more sharply, to 2¾ % in 2012, after 6% in 2011 and 12½ % in 2010.

In spite of the fragile global environment, the US economy grew slightly more strongly in 2012. The housing market

improved signifi cantly through the year and rising sales and prices encouraged a recovery in new housing starts. The labour market also improved, though more fi tfully. During the year, the corporate sector scaled back its investment spending owing to increasing uncertainty about the path of fi scal policy in 2013. This restrained the economy's growth rate to 2¼ % in 2012. The Federal Reserve responded to the economy's modest growth rate with the implementation of openended quantitative easing ('QE3') in the autumn.

The European economy weakened signifi cantly in 2012. In the euro zone, real GDP contracted by ½ % following growth of 1½ % in 2011. Economic activity was particularly weak in the heavily indebted countries that are receiving fi nancial help from the EU and the IMF. But there were also signs of more broad-based weakness as Germany and France slowed through 2012. Three factors have undermined growth. First, the debt crisis has signifi cantly increased risk premiums on European fi nancial assets. Second, the banking system remains impaired in many economies. Third, many governments are implementing multi-year fi scal consolidation plans.

The Chinese economy slowed abruptly in 2012. Real GDP grew by 7¾ %, following 9¼ % in 2011 and 10½% in 2010. The slowdown extended to the third quarter, refl ecting two main factors. First, there was signifi cant weakness in China's exports to the US and Europe. Unsurprisingly, in the light of Europe's problems, China's exports to the EU fell during 2012. Second, the downturn in the property market undermined domestic demand. The authorities responded to the downturn with modest policy stimulus. Policymakers brought forward some spending on infrastructure and the People's Bank of China eased monetary conditions with several cuts in its required reserve ratio for large banks. The renminbi depreciated a little, supporting exports. By the end of the year, GDP growth had recovered.

Other large emerging economies experienced notably weaker growth in 2012. Concerns about stubborn infl ation and government economic reforms weighed on India's growth.

We expect a gradual strengthening of economic activity in 2013, with the emerging economies expected to lead the improvement.

World trade and industrial production

% change, latest three months on previous three months

Brazil's economy was disappointingly weak in spite of looser macroeconomic policies and currency depreciation. Industrial unrest added to the weakness of South Africa's economy late in 2012.

PROSPECTS

We expect a gradual strengthening of economic activity in 2013. Global GDP growth should be around 3½ %, slightly below the longer term trend rate, with the emerging economies expected to lead the improvement. China's growth rate is likely to recover to 8% in 2013, as export markets stabilise and domestic demand strengthens. India, Brazil and South Africa should pick up in response to improving external conditions, lower infl ation and looser domestic policy.

The recovery will be patchier in the advanced economies. The European Central Bank has headed off the threat of a euro breakdown, removing one of the biggest downside risks. But monetary and fi scal policy settings will not stimulate economic growth. The recovery in Europe looks as though it will be painfully slow in 2013.

Indexed 2012 commodity prices(1)

The US economy also faces a more challenging domestic policy environment. The recent debate about the 'fi scal cliff' has exposed the absence of a credible medium term plan to reduce the US' federal budget defi cit and arrest the rise in debt. In coming years, US policymakers will have to balance the need for signifi cant fi scal retrenchment against providing support for economic activity in the short term. This implies a prolonged period of monetary accommodation from the Federal Reserve and sustained dollar weakness.

In the medium term, we expect the US to return to its underlying trend growth of around 2½ –3% a year. Europe's growth rate will remain more anaemic. But economic growth should remain more robust in the main emerging economies. There is considerable scope for further catch-up growth, especially in China and India. But China's increasing scale implies the new leadership must implement reforms to rebalance growth gradually away from investment towards consumption. The next stage of the country's urbanisation will take place in the western inland provinces, while growth in coastal provinces should slow modestly in the medium term.

COMMODITY MARKETS

In an increasingly uncertain macroeconomic climate, 2012 was a year of commodity price weakness and heightened volatility. Average annual prices were down for all of Anglo American's key commodities, with falls ranging from 10% for copper to 35% for hard coking coal.

Price weakness in 2012 was a continuation of a trend that emerged in the second half of 2011. Although annual average prices were down across the Group's portfolio, a number of commodities spent much of the year at prices equal to or above those seen in December 2011. In this respect there was a marked contrast in performance between the precious and base metals and the bulk commodities, with platinum and copper trading above December 2011 price levels for much of 2012, while bulk commodity prices weakened materially.

Source: Anglo American Commodity Research

In an increasingly uncertain macroeconomic climate, 2012 was a year of commodity price weakness and heightened volatility.

The platinum price increased by 8% during 2012, with higher prices refl ecting not only the support provided by South African supply disruptions, but also the relatively poor platinum pricing environment seen in late 2011. The price moved sharply upwards in both the fi rst and third quarters of 2012, in response to industrial action in South Africa, with the resulting losses in output helping to offset the impact of a generally fragile demand environment, most notably in the European auto sector.

The copper price also rose by 8%, underpinned by stockpiling of cathodes in Chinese bonded warehouses, which 'sterilised' a considerable amount of metal. Estimated global stocks of copper are still well below those of other base metals and also somewhat below 'normal' working levels, while visible terminal market stocks are also reasonably low. Investors and speculators have therefore been reluctant to 'short' the copper market in the light of the relatively low levels of readily available stocks, the continued mine disruptions and supply under performance.

In 2012, the fall in the prices of bulk commodities, notably those used for steel making, was signifi cant. Annual average steel prices were down by 16% (HRC FOB Eur). However, 2012 iron ore and hard coking coal prices were 24% and 35% lower respectively, while molybdenum, which is also used in steels, was down by 17%. The slowdown in Chinese demand, which has been magnifi ed by destocking activity, has been a principal factor in these markets and, with the run-down

of inventories having run its course and even reversed, prices of both began to improve from October, and, by December, iron ore prices were back to December 2011 levels.

Thermal coal prices also declined markedly for most of 2012, but began to improve during Q4 following the closure of some US supply and an increase in gas prices. European prices continued to be dampened by coal displaced by gas, while Asian offtake has been muted. Globally, supply cutbacks have been limited and the near term outlook is for continued supply additions from Indonesia, exerting a drag effect on any price recovery.

In 2013, the easing of macroeconomic policy globally, renewed infrastructure spending in China and stronger manufacturing output should help support commodity demand growth. Coupled with price-induced project deferral (constrained capex) and supply curtailments, this should tighten markets, thereby providing some price support where there have been recent lows. This expectation is supported by the analysts' consensus, which forecasts 2013 average prices above current levels for most of Anglo American's key commodities.

WELL PLACED FOR ALL STAGES OF THE ECONOMIC CYCLE

Anglo American's current portfolio is uniquely diversifi ed, with material exposure to commodities that are key to the continued early-stage industrialisation of emerging economies, such as metallurgical coal and iron ore, as well as having exposure to midand late-cycle commodities, such as copper, nickel, platinum and diamonds.

Over the past decade, China and other emerging economies have experienced an unprecedented phase of industrialisation and urbanisation. In spite of the current challenging global economic environment, this growth is set to continue.

As the populations of the cities in these emerging economies grow, so too do their incomes and desire to spend.

EARLY STAGE

Creating the building blocks of the urban environment As economies start to develop and grow there is a need to expand infrastructure, construct residential and commercial buildings and build port capacity for the inevitable rise in import and export activity.

Sources: NBS, UN, McKinsey Global Institute, FAO, NDRC, ICA, De Beers

MID STAGE

* Compound Annual Growth Rate

The rise of the consuming class

As developing economies mature, populations move to cities and start to enjoy a higher disposable income and a more comfortable standard of living. Households purchase 'white goods' and mobile phone communication becomes widespread. Diets shift from being grain based to being high in protein.

LATE STAGE

Aspiring to an affl uent lifestyle

As purchasing power increases, so too does the appetite for 'luxury' goods and services, including cars, jewellery, advanced technological goods and travelling for leisure.

OUR STRATEGY AND BUSINESS MODEL

company – the investment, the partner and the employer of choice – through the operational excellence of world class assets in the most attractive commodities, and through a resolute commitment to the highest standards of safe and sustainable mining.

As our business model illustrates, mining is only part of the story. Our sector-leading exploration teams strive to fi nd the resources we will mine in the future and we engage with a broad range of stakeholders – from governments to local communities and NGOs – to secure our right to mine those resources. Many of the commodities we mine are processed and refi ned further before we apply our market knowledge to deliver a quality product our customers value.

We believe we can achieve our aim of becoming the leading global mining company through our four strategic elements:

Investing in world class assets in those commodities that we believe deliver the best returns through the economic cycle and over the long term – namely, iron ore, metallurgical coal, thermal coal, copper, nickel, platinum and diamonds.
Organising effi ciently and effectively to outperform our competition throughout our value chain.

Operating safely, sustainably and responsibly, in the belief not only that this is fundamental to our licence to operate, but also that this is an increasingly important source of competitive advantage. The safety of our people is our key core value and we are relentless in striving to achieve our goal of zero harm.

Employing the best people. We recognise that attracting, developing and retaining the best talent is essential to achieving our ambition.

Our strategic elements are put into action across our business model.

The LT-SQUID has been employed by our fi eld teams to help search for so-called blind deposits that have no visible expression on the ground surface. It has revolutionised how we look at and model the picture beneath the ground surface, particularly at depth. Go to page 41 for more information on this story

During the year, outstanding injunctions were lifted at our Minas-Rio iron ore project in Brazil. Following a detailed review, capital expenditure has increased to \$8.8 billion and fi rst ore on ship is expected at the end of 2014.

Go to page 58 for more information on this story

OPERATING

Securing our licence to build and operate a mine depends on winning the trust of many stakeholders. We participated in an extensive, structured 'dialogue table' with local and national stakeholders in our Quellaveco copper project in Peru, which helped us to reach agreement with the local community and regional government to develop the project.

Go to page 22 for more information on this story

We apply more than 95 years of opencast and deep-level mining experience along with unique in-house technological expertise to extract mineral resources in the safest, most effi cient way.

INVESTING

Our Kolomela mine, commissioned fi ve months ahead of schedule in 2011, produced 8.5 Mt of iron ore in 2012, above expectations of 4–5 Mt.

Go to page 14 for more information on this story

Our Nickel business is addressing the shortage of qualifi ed people at its operations in Brazil by tailoring a trainee graduate programme to develop the businesses engineers and leaders of the future. On successful completion of the programme, the trainees will be ready to start their career at Anglo American. Go to page 73 for more information on this story

We generate extra value by processing and refi ning many

of our commodities.

The technical team at our Phosphates business proposed an innovative solution to re-use phosphate waste in the fertiliser production process. The technique was put into fullscale production during 2012, with 40% of phosphate waste being re-used in the year, resulting in lower production costs and a signifi cant environmental benefi t. Go to page 87 for more information on this story

OPERATING

Following completion of the Los Bronces expansion in Chile, our Copper business implemented a water recirculation system to help reduce the water requirement in an already stretched catchment area. Go to page 69 for more information on this story

cargo deliveries, we offer effi cient and effective transport of our commodities.

Whether providing innovative haulage solutions within a mine, or coordinating global

In September 2012, our recently installed fl exible conveyor train produced 116,708 tonnes of thermal coal at Greenside mine, achieving the highest monthly coal output ever recorded outside the US. Go to page 36 for more

information on this story

OPERATING

Working with the aerospace industry, Sishen developed a unique collision avoidance system for mining vehicles, dramatically reducing the number of vehicle-related accidents at the mine. Go to page 55 for more information on this story

We collaborate with our customers around the world to tailor products to their specifi c needs.

new sales and marketing hub in Singapore, enabling us to be closer to our customers in the Asia-Pacifi c market and be more agile and responsive to their needs.

Go to page 18 for more information on this story

CHIEF EXECUTIVE'S STATEMENT

UNDERLYING OPERATING PROFIT (2011: \$11.1 bn) \$6.2 bn

FINAL DIVIDEND PER SHARE turn to page 42

For more information

(2011: 46 cents) 53 cents As a result of markedly weaker commodity prices, ongoing cost pressures and an operating loss in our Platinum business, Anglo American reported an underlying operating profi t of \$6.2 billion, a 44% decrease. Underlying EBITDA decreased by 35% to \$8.7 billion and underlying earnings decreased by 54% to \$2.8 billion.

Our safety performance has always been my fi rst priority and our efforts continue to build on the progress we have made since 2006, both in terms of lives lost and lost time injuries sustained. I am deeply saddened that 13 of our colleagues lost their lives in 2012 – a constant reminder that we must persevere to achieve zero harm.

Anglo American continued its drive for strong operational performance throughout 2012 in an environment of tough macroeconomic headwinds and a number of industry-wide and company-specifi c challenges. Record volumes of metallurgical coal, achieving benchmark equipment performance levels, and of iron ore and increased volumes of export thermal coal and copper helped offset the impact of illegal industrial action, declining grades and higher waste stripping.

The new mining operations and expansions delivered and commissioned during 2011 contributed to production growth and generated \$1.2 billion of underlying operating profi t. The Los Bronces expansion contributed 196,100 tonnes of copper in 2012 and has achieved full ramp up since August 2012, while Kumba's Kolomela mine exceeded expectations by producing 8.5 million tonnes for the year – both considerable achievements – while we have been slowly ramping up Barro Alto.

Beyond organic growth, we have completed our acquisition of the Oppenheimer family's 40% interest in De Beers, taking our holding to 85%. In Chile, our joint ownership of Anglo American Sur (AA Sur) with Codelco, Mitsubishi and Mitsui, while we retain control of the business, fi rmly aligns our interests in one of the most exciting producing and prospective copper orebodies in the world – the Los Bronces district. During the year, we also increased our shareholding in

Kumba Iron Ore, lifting our ownership by 4.5% to 69.7%, refl ecting our view on the quality of the business and its highly attractive performance and growth profi le.

Our divestment programme has generated proceeds as announced of \$4 billion on a debt and cash free basis, which excludes \$7.4 billion cash generated from the sale of 49.9% of AA Sur. In line with our divestment programme of non-core businesses as set out in October 2009, I am delighted that Tarmac's UK joint venture with Lafarge was completed in January 2013, creating a leading UK construction materials company with signifi cant synergies expected.

We are focused on delivering shareholder value and returns through the cycle by maintaining a prudent and disciplined approach to managing our businesses and capital allocation. Despite the macroeconomic headwinds and likely sustained higher capital and operating cost environment for the industry, we are committed to returning cash to shareholders and have recommended an increase to our fi nal dividend of 15% to 53 cents per share, bringing total dividends for the year to 85 cents per share, a 15%

The new mining operations and expansions delivered and commissioned during 2011 contributed to production growth and generated \$1.2 billion of underlying operating profi t.

01 At Thermal coal's Highveld hospital in Mpumalanga province in South Africa, Sister Evah Molefe takes a sputum sample to test for TB from Kleinkopje colliery plant operator Sipho Mhlabane.

02 Cleaning copper anodes in the tank house at Los Bronces in Chile.

03 As part of the Board's visit to Minas-Rio in October, the directors visited the CRCA (Cultural and Environment Centre), which houses specialist information in the fi elds of archaeology, biodiversity and water.

04 Specialist asset strategy engineer Sylvester Hennessy monitoring data at Metallurgical Coal's offi ces in Brisbane, Australia.

increase. This refl ects our confi dence in the underlying business and completes the reinstatement journey to rebase our dividends to be competitive with our diversifi ed peers. 02

We recorded impairments totalling \$4.6 billion (post-tax) in relation to Minas-Rio and a number of platinum projects that are uneconomical, which is disappointing. In Platinum, we completed our review in January 2013 and have put forward proposals to create a sustainable, competitive and profi table business. We, of course, regret the potential impact on jobs and communities and have designed an extensive social plan to more than offset any such impact. In Brazil, Minas-Rio is a world class iron ore project of rare magnitude and quality, representing one of the world's largest undeveloped resources. The published resource has increased more than fourfold since acquisition, of which we have subsequently converted 1.45 billion tonnes to Ore Reserves; we anticipate increases in the resource confi dence and further conversion of resources to reserves through our ongoing infi ll drilling programme. Despite the diffi culties we have faced that have caused a signifi cant increase in capital

expenditure, we continue to be confi dent of the medium and long term attractiveness and strategic positioning of Minas-Rio and we remain committed to the project. The fi rst phase of the project will begin its ramp up at the end of 2014, with operating costs expected to be highly competitive in the fi rst quartile of the FOB cash cost curve, generating signifi cant free cash fl ow for many decades to come.

We continue to sequence investment by prioritising capital to commodities with the most attractive market dynamics and projects with the lowest execution risks. The 5 Mtpa Grosvenor metallurgical coal project in Australia is under way and on schedule while, in Peru, successful completion of our community dialogue process at the Quellaveco copper project will allow us to target submission to the Board for approval in 2013.

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.

In Platinum, we completed our review and have put forward proposals to create a sustainable, competitive and profi table business.

Together with the safety and well-being of employees, our primary sustainability issues are adapting to climate change, securing access to water and energy, and managing relationships with stakeholders, particularly communities. During 2012, we made good progress implementing our long term water and energy strategies. To date, more than 70% of our operational water requirements are met by recycling/re-using water.

In support of our commitments to protect and enhance the health of our people, contractors and communities, we are extending our industry-leading health and wellness programmes, which include HIV/AIDS and TB treatment and care, to long term contract employees in South Africa. 03

Looking ahead, recent months have brought a degree of renewed optimism to the economic prospects. While European and Japanese economic activity remains weak, recent policy changes ought to stimulate growth in 2013. Alongside a continuing recovery in the US, we expect robust growth in the major emerging economies – especially China and India – as they benefi t from continuing urbanisation. Rising living standards and an expanding middle class should support demand for our products across our diversifi ed mix.

I step down from my role as chief executive after six years knowing that Anglo American is a safer place to work, with a clear strategy and a much changed culture of performance. There is no doubt in my mind that Anglo American's people and asset base are unmatched in the industry and I wish my successor, Mark Cutifani, every success in leading this great company. I sincerely thank the Board of directors, my executive management team and all our employees for their support and relentless effort since 2007.

Cynthia Carroll Chief Executive

MEASUREMENT AND TARGETS

Strategic elements KPI targets

INVESTING

In world class assets in the most attractive commodities Turn to page 14

ORGANISING

Effi ciently and effectively Turn to page 18

OPERATING(1) Safely, sustainably and responsibly Turn to page 22

Total shareholder return (TSR)

Share price growth plus dividends reinvested over the performance period. A performance period of three years is used and TSR is calculated annually

Return on capital employed (ROCE)

Total underlying operating profi t before impairments for the year divided by the average total capital less other investments and adjusted for impairments

In two vital areas of our business – asset optimisation (AO) and supply chain – we have beaten our own expectations. By the end of 2011, we had exceeded our targets for both AO and supply chain, each of which delivered more than \$1 billion from core businesses since 2009. As a result, we no longer report against Group-wide AO and supply chain targets

Work-related fatal injury frequency rate (FIFR)

FIFR is calculated as the number of fatal injuries to employees or contractors per 200,000 hours worked

Lost-time injury frequency rate (LTIFR)

The number of lost-time injuries (LTIs) per 200,000 hours worked. An LTI is an occupational injury which renders the person unable to perform his/her regular duties for one full shift or more the day after the injury was incurred, whether a scheduled workday or not

Energy consumption

Measured in gigajoules (GJ)

Greenhouse gas (GHG) emissions

Measured in tonnes of CO2 equivalent emissions

Capital projects and investment

Optimise the pipeline of projects and ensure that new capital is only committed to projects that deliver the best value to the Group on a risk adjusted net present value basis

Underlying earnings per share

Underlying earnings are net profi t attributable to equity shareholders, before special items and remeasurements

We do, however, continue to deliver on both programmes and examples of how our operations are achieving and surpassing 'industry benchmark' performance are detailed throughout this report. Further details on the AO and supply chain functions can be found on pages 18–21

Total water use

Total water use includes only water used for primary activities, measured in million m3

Corporate social investment

Social investment as defi ned by the London Benchmarking Group includes donations, gifts in kind and staff time for administering community programmes and volunteering in company time and is shown as a percentage of profi t before tax

Enterprise development

Number of companies supported and number of jobs sustained by companies supported by Anglo American enterprise development initiatives

Voluntary HIV counselling and testing (VCT)(2)

Percentage of employees in southern Africa undertaking voluntary annual HIV tests with compulsory counselling and support

Voluntary labour turnover

Number of permanent employee resignations as a percentage of total permanent employees

Gender diversity

Percentage of women, and female managers, employed by the Group

(1) With the exception of corporate social investment, which includes the results of De Beers from the date of acquisition, the results and targets for the Operating and Employing strategic elements include wholly owned subsidiaries and joint ventures over which Anglo American has management control, and does not include De Beers or other major non-managed operations such as Collahuasi, Cerrejón and Samancor. In addition, results for the Employing strategic element exclude OMI – non-core operations.

(2) 2012 HIV/AIDS statistics exclude Scaw Metals South Africa.

(3) CSI expenditure for 2011 was restated from \$122 million to \$129 million due to increased expenditure reported by Kumba following publication of the 2011 Anglo American Annual Report.

STRATEGIC ELEMENT: Investing in world class assets and the most attractive commodities

We have a clear strategy of deploying capital in those commodities with strong fundamentals and the most attractive risk-return profi les that deliver long term, through-the-cycle returns for our shareholders.

EXCEEDING EXPECTATIONS

Kumba's Kolomela mine, which was brought into production fi ve months ahead of schedule in December 2011, is a key element of our South African iron ore growth strategy. Although, initially the operation was expected to ramp up through 2012 to produce between 4 and 5 Mt of saleable product, it surpassed expectations to achieve design capacity by the third quarter, shipping 8.5 Mt of iron ore to customers in the year. Safety performance at Kolomela has been outstanding; the project and operations achieved a combined 29 million man hours, without a fatal incident or lost-time injury between March 2010 and October 2012, setting a new benchmark for the Group and for projects of this nature in South Africa.

"It is such occasions as today, the opening of a new mine, the creation of new economic activity and jobs which makes one proud and emphasises the importance of mining in our country."

Susan Shabangu South Africa's Minister of Mineral Resources

c. 85%

OF PERMANENT EMPLOYEES ARE FROM THE NORTHERN CAPE PROVINCE, VERSUS A TARGET OF 75%.

718

HOMES ARE BEING BUILT TO ACCOMMODATE KOLOMELA'S EMPLOYEES. BY THE END OF 2012, 615 HAD BEEN COMPLETED, WITH THE REMAINDER DUE BY Q2 2013.

IRON ORE PRODUCTION FOR KUMBA (MT) 70 Mtpa

	of 70 Mtpa from South Africa.	Kumba plans to grow organically to achieve production		70.0
41.9	43.4	41.3	43.1
2009	2010	2011	2012	Target

"Kumba is studying opportunities to expand Kolomela's production through a benefi ciation process, which could add a

further 6 Mtpa of production." Norman Mbazima

CEO, Kumba Iron Ore

63.7% Fe

AVERAGE GRADE OF UNBENEFICIATED ORE – KOLOMELA. Main Fitter Martha Zenda at Kolomela iron ore plant's load-out station feed conveyor. The conveyor transfers iron ore from the stacker reclaimer yard to bins which feed the Sishen-Saldanha export rail system.

01 The Kumba/ Kolomela rail loading facility is designed to transfer iron ore rapidly to rail wagons on the export rail system.

02 Maintenance operator Mattieus Dikwidi at the Kolomela plant.

PROJECT DELIVERY TO CONTINUE TO DRIVE HIGH QUALITY PRODUCTION GROWTH

IN BRIEF

•Cerrejón P40 8 Mtpa export thermal coal expansion in Colombia – fi rst coal in 2013.
•Minas-Rio 26.5 Mtpa iron ore project in Brazil – injunctions lifted and fi rst ore on ship (FOOS) end of 2014.
•Grosvenor 5 Mtpa metallurgical coal project in Australia – longwall production in 2016.

CAPEX: Other projects \$ bn
2012 1.3
2011 1.0
2010 1.0

The Group's extensive portfolio of undeveloped world class resources and pipeline of growth options span its chosen core commodities. It offers the Group fl exibility to sequence investment in line with the Group's view of market dynamics and the geopolitical environment. Capital is prioritised to maximise value accretion while minimising risk exposure, taking into consideration the Group's resulting funding capacity.

We have a number of projects in the execution phase and are progressing with the development of other growth projects, including the 225,000 tonnes per annum (tpa) Quellaveco greenfi eld copper project in Peru.

The Minas-Rio iron ore project in Brazil is expected to capture a signifi cant part of the pellet feed market with its premium product featuring high iron content and low contaminants. Phase 1 of the Minas-Rio project is expected to produce 26.5 million tonnes per annum (Mtpa), with potential optimisation to 29.8 Mtpa.

During the year Anglo American completed a detailed cost and schedule review of the project. The review included third party input and examined the outstanding capital expenditure requirements in light of current development progress and the disruptive challenges faced by the project. The review included a detailed re-evaluation of all aspects of the outstanding schedule, with a focus on maximising value and mitigating risk.

Following completion of the review, estimated capital expenditure for the Minas-Rio project increased to \$8.8 billion, if a centrally held risk contingency of \$600 million is utilised in full. On the basis of the revised capital expenditure requirements and assessment of the full potential of Phase 1 of the project (excluding at this stage the potential for future expansions up to 90 Mtpa), Anglo American will record an impairment charge of \$4 billion at

31 December 2012, on a post-tax basis. The fi rst phase of the project will begin its ramp up at the end of 2014.

The published resource has increased more than fourfold since acquisition to 5.77 billion tonnes in 2011, of which we have recently converted 1.45 billion tonnes to Ore Reserves. We anticipate increases in the resource confi dence and further conversion of resources to reserves through our ongoing infi ll drilling programme.

In Colombia, the brownfi eld expansion project, P40, aims to increase value by increasing export thermal coal production capacity by 8 Mtpa to 40 Mtpa (100% basis), through additional mining equipment and the debottlenecking of key logistics infrastructure along the coal chain. The project was approved by Cerrejón's shareholders in the third quarter of 2011. The project is progressing well and is expected to be delivered on schedule, with fi rst coal expected in 2013.

The greenfi eld Grosvenor metallurgical coal 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 high quality metallurgical coal from its underground longwall operation over a projected life of 26 years and to benefi t from operating costs in the lower half of the cost curve.

Grosvenor forms a major part of the Group's strategy of tripling hard coking coal production from its Australian assets, using a standard longwall and coal handling and preparation plant (CHPP) design. In its fi rst phase of development, Grosvenor will consist of a single new underground longwall mine, targeting the same well understood Goonyella Middle coal seam as Moranbah North, and will process its coal through the existing Moranbah North CHPP and train loading facilities. The Grosvenor project is currently in execution, with engineering work progressing to plan, construction under way and longwall

The Group's extensive portfolio of undeveloped world class resources and pipeline of growth opportunities spans our chosen core commodities. production targeted to begin in 2016. A pre-feasibility study for expansion by adding a second longwall at Grosvenor is under way.

Quellaveco is a greenfi eld copper project in the Moquegua region of southern Peru that has the potential to produce 225,000 tpa of copper from an open pit over a mine life of approximately 28 years. The project is expected to operate in the lower half of the cash operating cost curve, benefi ting from attractive ore grades, low waste stripping and molybdenum by-product production. Anglo American completed the feasibility study for the project in late 2010, and took the decision to suspend progress in order to engage more actively with the local communities through a formal dialogue table process, following requests from local stakeholders. The dialogue process reached agreement in early July

2012 in relation to water usage, environmental responsibility and Anglo American's social contribution over the life of the mine, and has been held as a model for stakeholder engagement in Peru. The project received three critical permits during the fourth quarter of 2012 and Anglo American is targeting submission to the Board for approval in 2013.

SELECTED MAJOR PROJECTS

Approved
Sector	Project	Country	Greenfi eld (G)/ Brownfi eld (B)	First production date	Full production date		Capex \$ bn(1) Production volume(2)
Iron Ore and Manganese	Minas-Rio Phase 1	Brazil	G	2014	2016	8.8(3)	26.5 Mtpa iron ore
	Groote Eylandt Expansion Project	Australia	B	2013	2013	<1	0.6 Mtpa manganese ore
Metallurgical Coal	Grosvenor Phase 1	Australia	G	2014	2016	<2	5.0 Mtpa metallurgical
Thermal Coal	Cerrejón P40	Colombia	B	2013	2015	<2	8.0 Mtpa thermal
Copper	Collahuasi expansion Phase 2	Chile	B	2013	2014	<1	20 ktpa copper
	Mantoverde desalination plant	Chile	B	2013	2013	<1	To sustain current copper production plans
Platinum	Twickenham	South Africa	G	2016	2021	<2	180 kozpa refi ned platinum
	Bathopele Phase 4	South Africa	B	2013	2013	<1	65 kozpa refi ned platinum
	Bathopele Phase 5	South Africa	B	2013	2017	<1	139 kozpa refi ned platinum
Diamonds	Jwaneng – Cut-8	Botswana	B	2016	2018(4)	3(5)	approx. 10 million carats pa
	Venetia U/G	South Africa	B	2021	2024	<3	approx. 4 million carats pa
Other Mining and Industrial – Core Boa Vista Fresh Rock		Brazil	B	2014	2015	<1(6)	6.5 ktpa total niobium production

Unapproved

Sector	Project	Country	Greenfi eld (G)/ Brownfi eld (B)	Indicative production volume(2)
Iron Ore and Manganese	Kolomela Expansion	South Africa	B	6.0 Mtpa iron ore
	Sishen Lower Grade	South Africa	B	6.0 Mtpa iron ore
	Sishen Concentrates (Phase 1)	South Africa	B	1.1 Mtpa iron ore
	Minas-Rio Phase 1 AO	Brazil	B	3.3 Mtpa iron ore
	Minas-Rio Expansion	Brazil	B	TBD
Metallurgical Coal	Moranbah South	Australia	G	12.0 Mtpa metallurgical
	Grosvenor Phase 2	Australia	B	6.0 Mtpa metallurgical
	Drayton South	Australia	B	4.0 Mtpa export thermal
Thermal Coal	New Largo	South Africa	G	11.0 Mtpa thermal
	Elders Multi-product	South Africa	G	3.1 Mtpa thermal
	Mafube	South Africa	B	4.3 Mtpa thermal
Copper	Quellaveco	Peru	G	225 ktpa copper
	Michiquillay	Peru	G	222 ktpa copper(7)
	Collahuasi Expansion Phase 3	Chile	B	469 ktpa copper
	Pebble	USA	G	187 ktpa copper(8)
	Los Bronces District/Los Sulfatos	Chile	B/G	TBD(9)
Nickel	Jacaré	Brazil	G	TBD
	Morro Sem Boné	Brazil	G	TBD
Platinum	Tumela Central Shaft	South Africa	B	128 kozpa refi ned platinum
	Mogalakwena NC Debottlenecking	South Africa	B	70 kozpa refi ned platinum
	Mogalakwena Expansion Phase 2	South Africa	B	TBD
Diamonds	Gahcho Kué(10)	Canada	G	4.5 million carats pa
Other Mining and Industrial – Core	Goiás II	Brazil	B	1.4 Mtpa phosphates concentrate

(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) 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.

(4) Waste stripping at Cut-8, an extension to Jwaneng mine, began in 2010. Carat recovery will commence in 2016, with Cut-8 becoming the main ore source for Jwaneng from 2018.

(5) Infrastructure expenditure of approximately \$450 million has already been spent. Project expenditure, including infrastructure expenditure, is likely to total approximately \$3 billion

and is anticipated to create access to 95 million carats over the life of the mine.

(6) An extension to mine life by mining the unweathered ore after oxides have been depleted. New processing plant (from crushing to leaching) required.

(7) Expansion potential to 300 ktpa.

(8) Pebble will produce molybdenum and gold by-products. Other copper projects will produce molybdenum and silver by-products.

(9) Projected underground mine.

(10) Gahcho Kué has received De Beers board approval subject to completion of the permitting process and receipt of certain regulatory clearances.

STRATEGIC ELEMENT: Organising effi ciently and effectively

LIFTING PERFORMANCE WITH THE FUTURE IN MIND

We organise our business effi ciently and effectively to outperform our competition throughout our value chain.

DRIVING VALUE THROUGH COMMERCIAL EXCELLENCE

During 2012, we introduced a more globally coordinated and strategic approach to the way we manage our commercial activities, aimed at delivering substantial additional value for the Group.

A key element of the new approach is the location of business units' export sales and marketing activities in Singapore and London, to enable us to be closer to our customers in the Asia-Pacifi c and European markets, and be more agile and responsive to their needs.

The new Singapore hub opened in July 2012, with Metallurgical Coal, Thermal Coal and Platinum establishing a base there during the year and others, including Iron Ore and Copper, following in 2013.

New global competence centres will also support value creation by driving excellence and innovation in areas such as logistics, shipping and market intelligence.

For instance, all our global shipping activities have now been consolidated into a single freight book, with an increasing proportion of cargo deliveries arranged by us rather than the buyer. Consolidating our freight book improves our purchasing power and enables us to be more effi cient in managing shipments through our loading facilities. Sharing vessels and coordinating deliveries will also make better use of global shipping routes, reducing freight costs and turnaround times.

50 Mt GROUP'S FREIGHT PORTFOLIO TARGET BY 2015.

2012 REVENUE GENERATED BY CUSTOMERS IN CHINA(1)

c.57 Mt YEAR-ON-YEAR INCREASE IN IRON ORE IMPORTS TO CHINA IN 2012.

"This new approach brings us closer to our customers, enabling us to be more responsive to their needs. We can also create signifi cant additional commercial value by coordinating our approach globally, improving our product mix, enhancing our logistics, and using more sophisticated marketing tools and techniques."

Dr Alexander Schmitt Group Head,Commercial Coordination

574 vessels

IRON ORE VESSELS INTO QINGDAO PORT, CHINA IN 2012.

01 Iron ore from Kumba's Sishen mine, 861 kilometres away, is transferred from rail wagons at the dedicated export port of Saldanha on South Africa's Atlantic coast.

Operating and fi nancial review

STRATEGIC ELEMENT: Organising effi ciently and effectively

EMBEDDING OPERATIONAL EXCELLENCE GROUPWIDE

ASSET OPTIMISATION

We continue to deliver on our asset optimisation (AO) programme that has been in place since 2009. Having surpassed our \$1 billion target set in terms of the sustainable AO benefi ts from core businesses by the end of 2011, we continue to focus on embedding the methodologies, and infl uencing mindsets and behaviours necessary for delivering AO benefi ts across our operations.

One of the key features of the AO programme remains the Operation Review (OR) process initiated in 2010. This structured eight-step review process enables our business units to drive towards operational excellence through the identifi cation and prioritisation of business improvement opportunities, in accordance with our technical standards and our commitment to safety and sustainable development.

The ORs are a collaborative effort that combine our central technical capability with our operational expertise across the Group, thereby creating teams that are able to identify value improvement opportunities and share leading practices across the Group's entire mining value chain, which includes the resource, mine, plant and product.

During 2012, ORs were conducted at Collahuasi (Copper joint venture); Mantos Blancos (Copper); Bathopele/Waterval UG2 Concentrator and Precious Metal Refi nery (Platinum); Bokoni (Platinum joint venture); Orapa, Letlhakane and Damtshaa mines (De Beers); and our Phosphates business.

A prominent element of the AO programme is to embed business improvement knowledge and skills within the business. This is being achieved through our AO change management programme, which encompasses skills development and sharing of key learnings, practices, and case studies through dedicated internal communication channels.

We continue to develop our employees' business improvement skills and have trained approximately 1,300 people through the Group's central AO Academy.

As we continue to equip our people with the necessary skills and tools to advance business improvement, we are also creating unifying systems and frameworks that will result in improved operational performance. We are currently developing an Operational Excellence Framework (OEF), the purpose of which is to provide a clear and consistent reference for how we operate and maximise the value proposition for Anglo American. The OEF focuses on those priority areas that are fundamental to driving operational performance, bringing together, and ensuring consistent application of all the relevant standards and processes to support the operations.

We continue to develop our employees' business improvement skills and have trained approximately 1,300 people through our central AO Academy.

Supporting operational excellence are the Resource to Market (R2M) optimisation and Group Benchmarking programmes. The objective of the R2M programme is to integrate planning and execution across the mining value chain. This ensures that an operation is managed with an understanding of how decisions made are likely to impact other parts of the value chain. During 2012, R2M was launched at Copper's Los Bronces mine in Chile and Platinum's Mogalakwena mine in South Africa and has delivered improved performance and enhanced mining fl exibility. As an example of specifi c improvements, blasted rock stock and average tonnage per blast have increased substantially at Los Bronces, leading to reduced congestion at the mine.

In 2012, we launched the fi rst phase of our Group Benchmarking Tool. The tool aims to deliver a platform that provides a single and validated source for benchmarking information in Anglo American. The fi rst phase of the project delivered KPIs for equipment effi ciency in opencast mines. The next phase, planned for completion by end of 2013, will include additional KPIs for opencast benchmarking as well as the launch of underground and metallurgical benchmarking information.

SUPPLY CHAIN

Supplier partnerships

Our relationships with suppliers have been strengthened considerably in recent years. These relationships have resulted in minimised lead times for major equipment delivery and have mitigated infl ationary pressure and supply risk to our operations. Supply Chain is working with key suppliers in each region as part of our 'Top 40' initiative to identify additional savings, waste elimination opportunities and to minimise cost infl ation through 2013. Proactive reviews of equipment and services on our operations have led to the identifi cation of savings opportunities and are delivering total cost of ownership (TCO) benefi ts across the business units.

Framework agreements are now in place with 33 key suppliers, representing a formal alignment in our commercial relationships. These agreements are critical in the current market as they provide the platform for value creation and greater transparency of cost, demand and capacity.

Regional gross expenditure 2012

Sustainable and responsible supply chain

Local procurement Anglo American's procurement spend on goods and services represents a signifi cant development opportunity. Expenditure on suppliers based in the host communities close to our operations was \$1.5 billion.

We proactively design local procurement initiatives to optimise opportunities to integrate local businesses into our global supply chain. In doing so, we believe we can make a signifi cant socioeconomic contribution to our host communities, as well as effi ciencies in our supply chain by lowering logistics costs and securing access to critical goods and services.

Anglo American's Group-wide local procurement policy, launched in 2010, is now embedded in all our operations.

During the year, all operations made progress in developing their local procurement strategies and are now measuring and reporting local spend.

In making sourcing decisions, however, we also need to ensure that we remain competitive. Sourcing from countries where we do not operate is sometimes essential if the products are not available locally. China is a key customer and strategic business partner and we have a sourcing strategy to build long term, valuable relationships with Chinese suppliers. This includes identifying Chinese suppliers from whom local businesses can source and provide maintenance and support services locally.

Local procurement is a particular priority in our South African operations, forming an important part of our contribution to the country's drive to promote black economic empowerment. In 2012, managed businesses spent ZAR 25.8 billion (\$3.1 billion), 54% of South African discretionary expenditure, with historically disadvantaged South African businesses (not including goods and services procured from parastatal companies and municipalities).

TOTAL COST OF OWNERSHIP IMPROVEMENTS AT PLATINUM

The Anglo Converting Process (ACP) uses a rubber hose in its matte feed transfer into the furnace via a submerged steel lance. The value of the product transported through the matte transfer system and hose is \$12.5 million per day. Any unplanned downtime, therefore, incurs signifi cant cost to the plant through reduced production, maintenance and overtime costs.

The ACP previously made use of standard specialised rubber hoses. These hoses, however, had a lifespan to transport approximately 1,500 tonnes, meaning they had to be replaced 11 times a month on average. Aside from the replacement costs, this had a signifi cant impact on production.

A focus team from ACP critically evaluated the hoses, developed alternatives, then approached Dunlop Industrial Products for the supply of the alternative hoses. The ACP focus team, together with Dunlop, were able to develop a fi t-for-purpose ceramic tiled rubber hose.

The new hoses are able to transport on average 25,000 tonnes and only need to be replaced once a month, resulting in realised value that has, to date, exceeded expectations.

Image

Platinum's ACP plant in Rustenburg, South Africa.

For more information, visit www.angloamerican.com STRATEGIC ELEMENT: Operating safely, sustainably and responsibly

BUILDING RELATIONSHIPS WITH THE FUTURE IN MIND

We believe that operating safely, sustainably and responsibly is not only fundamental to our licence to operate, but is also an increasingly important source of competitive advantage.

OPEN DIALOGUE IN PERU

In late 2010, our Quellaveco copper project located near Moquegua in southern Peru faced considerable local opposition from communities concerned at what they saw as its potential negative impact, in particular on water availability in a severely water-stressed area.

In response, Anglo American agreed to pause the project and to participate in an extensive, structured 'dialogue table' with local and national stakeholders, led by the regional president Martín Vizcarra, with a view to addressing community concerns.

During 18 months of detailed negotiations, the project team was able to understand the root cause of local worries, address the lack of information about both the environmental safeguards of the project and its multiple potential social and economic benefi ts, and adapt aspects of the project design to increase those benefi ts.

The result? Agreement at the dialogue table, broad social and political support for Quellaveco, and Anglo American's approach held up as best practice for socially responsible mining in Peru.

"This was a victory for openness, transparency and engagement and all participants in the process are to be

congratulated. Together we showed that our project can bring huge benefi ts to Peru and Moquegua. We now need to ensure we deliver on our commitments and continue the work to maintain our licence to operate."

Eduardo Serpa Anglo American's chief negotiator

KEY FACTS

Reserves and Resources

•916.4 Mt Proved and Probable Reserves (at 0.65% TCu)
•1,092.0 Mt Measured and Indicated Resources (at 0.39% TCu)
•Contained copper = 5.9 Mt

Dialogue table

•Began March 2011
•Ended July 2012
•22 plenary meetings
•45 sub-committee meetings
•31 organisations participating
•A fi nal agreement comprising 26 wide-ranging programmes addressing water, environment and regional development issues

OUR QUELLAVECO COPPER PROJECT IS LOCATED IN SOUTHERN PERU

Main At our Quellaveco project in Peru, process manager Gonzalo Manrique uses a model of the proposed mine and processing facilities to 'dialogue table' representatives from the local Moquegua community.
01 Participants representing local and national stakeholders and Anglo American attend the fi nal meeting of the dialogue table in Moquegua.
02 Selma Fernandes, from our Supply Chain team in Copper, with local procurement analyst Milagros Myrick, at the Quellaveco project's Moquegua offi ce.

STRATEGIC ELEMENT: Operating safely, sustainably and responsibly

SUSTAINABLE DEVELOPMENT IN EVERYTHING WE DO

MAKING A DIFFERENCE

Our aim is always to operate safely, sustainably and responsibly. Making a tangible difference is fundamental to our licence to operate and an important source of competitive advantage. We strive to realise exceptional operational value by embedding sustainable development in everything we do – from our systems, risk processes and procedures, to the way in which we consult and work with our stakeholders. Mining can be a high-risk business – but we do not accept that anyone should be injured while working for us. Safety, therefore, remains our number one priority. As a company that exploits a fi nite resource, we aspire to operating our mines in a way that is environmentally responsible, benefi ts host communities and leaves a positive social legacy.

Our strong governance structures relating to sustainable development support this aspiration, providing clear lines of responsibility from the operational level through to the Board. A dedicated global Safety and Sustainable Development Risk and Assurance team provides expert opinion, in conjunction with our internal Anglo American Business Assurance Services, on the adequacy of risk-control measures to ensure that current and emerging risks are effectively controlled. This secondparty perspective, together with subject matter expertise (internal and external), enables us to identify critical safety, health, social and environmental improvement opportunities. Sustainable Development is fully integrated within the project management and asset optimisation processes, ensuring that broader sustainability and licence-tooperate issues are duly taken into account in operational and decision making processes.

In this section we provide an overview of our management approach and performance relating to social and community activities, safety and health, and environmental performance. Our website www.angloamerican.com provides additional information on our sustainability performance, including a stand-alone sustainability report as well as separate reports from certain of our individual companies and operations.

As a company that exploits a fi nite resource, we aspire to operating our mines in a way that is environmentally responsible, benefi ts host communities and leaves a positive social legacy.

SOCIAL AND COMMUNITY

Most of our operations are located in emerging economies, many of which have low levels of socioeconomic development. To ensure a lasting positive social and environmental legacy, we supplement the value generated through our core activities – paying taxes, salaries, and payments to suppliers – with initiatives designed to develop host communities over the long term, many of which are undertaken in partnership with NGOs, communities, and local governments.

If we fail to account for our actions and do not engage appropriately with our communities, we risk undermining our reputation and jeopardising our licence to develop and operate projects. The relative importance of labour relations and local economic development activities has grown, as witnessed by the industrial action in South Africa's mining industry in the second half of 2012.

Our strategy and management approach

Anglo American's social strategy focuses on observance of human rights, proactive engagement with our stakeholders and leveraging our core business to support long term social development. Community development activities prioritise local procurement and supplier development, building local capacity, including providing infrastructure for health care, housing and sanitation, and investing in enterprise and skills development.

The Anglo American Social Way contains a mandatory set of standards that prescribe rigorous minimum requirements for social performance across the Group.

The requirements of the Social Way are integrated into the stage-gate reviews of our new capital projects and our due diligence procedures for mergers and acquisitions.

Social investment output indicators
Total number of community development projects delivering benefi ts to communities in 2012	1,602
Total number of businesses supported	17,598
Jobs created/maintained through enterprise development initiatives	64,927
Benefi ciaries of education projects	256,980
Benefi ciaries of sports, arts, culture and heritage projects	645,211
Benefi ciaries of community development projects	1,065,821
Benefi ciaries of disaster and emergency relief projects	43,684
Benefi ciaries with improved livelihood	448,395

Our commitment to respecting human rights forms the foundation of our approach to community engagement and development. Human rights best practice requirements are integrated into the Social Way and all other relevant policies, systems and tools throughout the business.

In 2012, we rolled out a Groupwide community development peer review process, which draws on internal expertise, as well as external partners such as CARE International to ensure that our investments in community development are as effective as possible.

Our industry leading Socio-Economic Assessment Toolbox (SEAT) is the primary means by which we enhance the development outcomes and capacities of host communities. We use SEAT to improve operations' understanding of their socioeconomic impacts (both positive and negative), enhance stakeholder dialogue and the management of social issues, build our ability to support local socioeconomic development, and foster greater transparency and accountability. The third version of SEAT was published during the year and has been made available publicly, as a leading practice resource for other companies to use.

Promoting sustainability in our supply chain and local procurement

We expect and encourage our suppliers to act in a safe, sustainable and responsible manner. This expectation is given effect through our policy on sustainable development in the Anglo American supply chain and our Supplier Sustainable Development Code.

We are also committed to promoting local procurement throughout our mining life cycle. In doing so, we believe we can make a signifi cant socioeconomic contribution to our host communities as well as improve effi ciencies in our supply chain by lowering logistics costs, and securing access to critical goods and services.

BUILDING STRONG TOWNS IN MINING REGIONS

A lack of municipal capacity in our host communities can have a negative effect on residents and on Anglo American's ability to plan. Our new partnership approach to capacity building in South Africa and Brazil aims to offer an effective and sustainable solution.

In South Africa, we have teamed up with the Development Bank of South Africa to improve capacity in host mining areas and create the country's fi rst example of a public-private partnership in this fi eld, with the aim of enabling municipalities to supply basic services like water and electricity effectively, rather than Anglo American supplying them directly.

At our Barro Alto nickel operation in Brazil, Anglo American has been collaborating with Agenda Pública since 2008, in an effort to prepare both the local government and citizens to live in a society that would grow as mining revenues started to fl ow into the town.

In both Brazil and South Africa, the projects follow two broad strands: empowerment of communities to enable them to understand their rights and hold the government to account; and training and skills development for public offi cials to enable them to fulfi l their roles and respond to public demand.

Although Anglo American provides funding in both cases, our knowledge of the local area, our input into project planning and evaluation, and our local relationships have all proved important elements of the work.

Image

Liomar Vidal, an Anglo American community relations offi cer, at the Professora Maria Siqueira Pinto school, which Anglo American helped to build in Barro Alto.

STRATEGIC ELEMENT: Operating safely, sustainably and responsibly

2012 Global social investment expenditure by region

Employee matched giving 1% Other 10%

Our local procurement policy is now embedded across the Group and all operations have made encouraging progress in developing local procurement strategies. In 2012, expenditure on suppliers based in the communities close to our operations was \$1.5 billion (2011: \$1.1 billion). In 2012, we hosted a conference for our leading on-site suppliers in South Africa and agreed a number of initiatives to improve the welfare of our contractor employees and their families. A number of commitments were made by both parties during the conference, including a requirement that all employees on our operations in South Africa would have access to basic medical care (facilitated by Anglo American where necessary), as well as making Anglo American's highly regarded tools, initiatives and resources in the areas of community engagement and community development available to contractors.

Enterprise development

Enterprise development is one of the most effective means of ensuring that the benefi ts for host communities as a result of our mining activities will be sustainable. Since the 1980s, we have been pioneering approaches to building small businesses in South Africa, and have now extended our reach fi rmly into Chile and Brazil. In 2012, we took a more strategic approach to enterprise development that has involved specifi cally designing schemes for countries such as Peru, Brazil and Botswana, as well as for particular focus areas such as housing and low-carbon technologies.

Enterprise development is one of the most effective means of ensuring that the benefi ts for host communities as a result of our mining activities will be sustainable.

Infrastructure and local capacity development

Our mines are often situated in areas that are underdeveloped and remote, where the associated infrastructure – such as roads, health facilities and water – can be used to the advantage of local communities. A particular focus is addressing South Africa's acute shortage of affordable housing. Notably, we have entered into a partnership agreement with the Development Bank of Southern Africa (DBSA) to build the capacity of 10 of our host municipalities. This initiative will enable local governments to deliver on their basic public service obligations; for example, in the fi elds of water and electricity supply, management of local infrastructure projects and revenue collection. We have also briefed the South African Chamber of Mines so that other companies may replicate this model.

Our capacity development activities focus on strengthening the skills, competencies and abilities of employees and community members to promote robust, self-suffi cient local economies long after our mines have closed.

Corporate social investment

In 2012, Anglo American's corporate social investment (CSI) spend in local communities totalled \$154 million (3% of profi t before tax), up from \$129 million in 2011. We have a standardised reporting process for all our social investments, with robust metrics to monitor the level of social performance. This facilitates consistent reporting of outputs, and helps to identify the most effective projects, delivery methods and partners, in order to try and maximise the value that Anglo American and its host communities get from these investments. A fuller analysis of the Group's social investment activities can be found in the Sustainable Development Report 2012.

SAFETY

Offering a safe and healthy workplace is a core component of our 'employer of choice' agenda. We aim to achieve 'zero harm' by creating and instilling a company and industry culture that protects people from harm and improves their health and well-being.

Performance

Although the number of people who lost their lives while working for us declined to 13 for the year (2011: 17), any loss of life is unacceptable and no one should have to risk their life while working for us. Seven of these deaths occurred at our Platinum business, where the majority of fatal incidents still occur, despite a signifi cant improvement of 61% over the past fi ve years.

Our lost-time injury frequency rate (LTIFR) improved from 0.64 in 2011 to 0.60 in 2012. Furthermore, our total recordable case frequency rate, which includes any injury that requires more than fi rst aid treatment, has started to improve.

Our strategy and management approach

Anglo American's safety strategy is founded on three key principles: a mindset of zero harm; the elimination of repeat incidents; and the consistent application of simple, non-negotiable standards.

We use the Anglo American safety 'journey model' – which recognises the importance of the roles of both people and systems in a mining business – to measure our progress in delivering against our safety strategy. We believe we are currently at the 'compliant' stage, with a growing number of operations moving to 'proactive' and a decreasing number being characterised as 'reactive'.

Our current suite of Group safety programmes focuses on issues that will improve our level of maturity on the journey model. These programmes involve: operational risk management; learning from incidents; risk and change management; leadership; developing people; leading indicators; corporate safety work streams; supply chain safety initiatives; integrating safety throughout the business; and our 2012 safety leadership summit.

Total number of fatal injuries and fatal injury frequency rate 2008–2012

All operations have safety improvement plans that prioritise these elements based on operational risk. The operational risk management and 'learning from incidents' programmes are a particular focus for all business units.

HEALTH

Effective management of occupational health protects our people, enhances productivity, and helps maintain our licence to operate and our global reputation. Promoting a healthy community and a safe and healthy workforce is benefi cial for everyone.

Our strategy and management approach

We strive to proactively identify and manage the source of potential health risks in the workplace, and to eliminate exposure to hazards that can cause disease to develop. Building on these initiatives is our employee health and wellness programme, which includes a strong emphasis on combating HIV/AIDS and tuberculosis (TB) within our workforce and their families, particularly in southern Africa. Beyond our immediate workforce, we strive to help strengthen healthcare systems in under-serviced rural areas and build partnerships to improve access to quality health care.

Total number of lost-time injuries and lost-time injury frequency rate 2008–2012

Occupational health

Our approach is governed by the Anglo American Occupational Health Way, which sets out a series of standards, guidelines and assurance processes aimed at preventing harm to our employees. In 2012, we continued to roll out new mandatory technical standards that address our principal health risks relating to noise, dust (inhaled hazards or airborne pollutants), fatigue, alcohol and substance abuse. We also refreshed the risk management approach within the Occupational Health Way to align with our Group-wide integrated risk management approach.

The ability to capture and manage health information is critical if we are to keep our workforce and their families healthy. Building this capability within our business was a central activity in 2012 and will continue in the coming year.

The number of occupational disease cases reported in 2012 was 170, compared with 197 in 2011. This translates to an incidence rate of 0.189, an 8% reduction.

STRATEGIC ELEMENT: Operating safely, sustainably and responsibly

Tackling TB and HIV

We are recognised leaders for our HIV/AIDS programmes in the workplace. The continued high prevalence of HIV in southern Africa is linked to a rising incidence of TB, which has become a most disturbing and pressing issue for us and our employees. We have an active programme aimed at addressing the escalating TB epidemic. This is evidenced in our TB incidence rate, which continues to decline and is, at 958 per 100,000 employees, lower than both the national and industry averages. Despite these efforts, it is with deep regret that 59 employees died from TB in 2012. We do not accept that anyone should die from this preventable and treatable disease.

People enrolled in our HIV Wellness Programme are also offered TB prevention therapy. Testing (through our wellness programme) is the entry point to our comprehensive programme of prevention, care, support and treatment for HIV and AIDS and all employees who test positive are invited to enrol. In 2012, we tested and counselled 95,244 employees and contractors (2011: 110,010), while more than 90% of our employees in southern Africa check their HIV status every year, on average. In 2012, we saw a signifi cant increase in the number of employees who are estimated to be HIV-positive enrolling on the programme – 70% against 61% in 2011.

By year end, we had 5,332 employees on anti-retroviral therapy (ART) (2011: 4,730). A major challenge is ensuring people's adherence to treatment, and extra emphasis is placed on providing support and counselling and ensuring diligent care at a primary care level.

We remain one of the key private-sector supporters of the Global Fund to Fight AIDS, Tuberculosis and Malaria and of the Global Alliance for Vaccines and Immunisations.

Promoting healthcare in the broader community

Our activities to promote healthcare in the broader community include planned investments in health systems strengthening in our neighbouring communities, as well as activities aimed at supporting health care in developing countries more broadly.

We remain one of the key privatesector supporters of the Global Fund to Fight AIDS, Tuberculosis and Malaria and the Global Alliance for Vaccines and Immunisations, a public-private partnership that is increasing access to immunisation in the world's poorest countries.

We use the knowledge and experience gained from our workplace health programmes to support community outreach programmes and strengthen community health systems; that is, the people, the processes and the technology that make local health services work. In South Africa, we are working with the provincial health departments in the Eastern Cape, Mpumalanga, Northern Cape and North West provinces, which are all associated with our operations or are labour-sending areas, to improve health services.

In Brazil, we continue to work with the highly regarded Brazilian NGO, Reprolatina, to improve access to quality health services, particularly with regard to reproductive health for women and girls with a current focus on the communities surrounding the Barro Alto nickel operation.

ENVIRONMENT

While the extraction and processing of minerals and metals is fundamental to the global economy, its associated activities result in the unavoidable disturbance of land, the consumption of resources, and the generation of waste and pollutants. Growing regulatory and social pressure, increasing demands for limited natural resources, and the escalating costs of energy and water all highlight the business imperative of responsible environmental management. Within this context, the principal environmental risks facing our business relate to water, climate change and energy.

Please refer to our stand-alone Sustainable Development Report for a review of our management approach and performance relating to land management, biodiversity, waste and air quality.

Our strategy and management approach

We seek to effectively manage our environmental risks by minimising our impacts and by taking advantage of opportunities that deliver long term benefi ts to our stakeholders. The potential gains to our business include access to secure, affordable and sustainable supplies of water and energy for our operations, reduced costs, improved productivity, shorter permitting times and an enhanced reputation. Implementation of our strategy is through the following three areas of activity: driving operational excellence; investing in technology; and engaging and partnering with our stakeholders.

The Anglo American Environment Way and its mandatory performance standards on social and environmental impact assessments, water, air quality, mineral and non-mineral waste, hazardous substances, biodiversity, rehabilitation and mine closure, all guide our approach to responsible environmental management.

WATER

Security of water supply is a core business risk and a critical element of our social and legal licence to operate. Our operations need large volumes of the right quality of water for both production and processing. Yet more than 70% of our mines are in water-stressed areas where access to water is already a signifi cant socioeconomic concern. At the same time, our operations present a potential environmental risk in terms of water quality. We are committed, therefore, to providing water security for our operations and the communities where we operate.

Our strategy and management approach

We have an ambitious 10-year strategy that is split into three distinct steps. The fi rst step, 'Be disciplined', is about getting the basics right. The second step, 'Be proactive', encourages operations to go beyond compliance, while the third, 'Build resilience', takes us to being part of broader, catchmentlevel water solutions. Our intention is to achieve 'water neutrality' at our new mines by 2030.

Two years into the strategy, we have largely consolidated the fi rst stage of our journey and are now targeting the more advanced 'proactive' and 'resilient' stages.

Operational excellence

Operational excellence in relation to water management is mainly about being smarter in the way we use and manage water. Our Group technical standard includes detailed requirements on water-reduction target setting, water monitoring and reporting, and site-level water action plans (WAPs), which have driven a positive shift in our approach to managing water at operations.

In 2011, we implemented our water effi ciency target tool (WETT), which forecasts the projected business-asusual water demand of individual operations and establishes a register of water-saving projects. The rolling out of WETT across the Group during 2012 has led to tangible water savings, more effective water management, better tracking and reporting, and increased awareness of water conservation.

In 2012, we also completed a water-quality audit protocol and undertook a series of audits across the Group, which will inform our understanding of how to better manage water quality risk.

Technology

To achieve our long term goal of becoming water neutral, we estimate we will have to halve the current consumption of 'new' water at operations and ensure that more than 80% of that water is recycled. We will need to identify and invest in new technology solutions to achieve this.

To better understand and defi ne our water technology pathway, we have researched what 'water neutrality' would mean for a mine, as well as how to achieve a 'carbon neutral' mine, recognising the potential trade-offs between water and energy savings.

Another focus has been working with the UK Met Offi ce, Imperial College London and others, on modelling the potential regional impacts of changes in precipitation resulting from climate change.

Engagement and partnerships

Wherever we operate, we engage with host governments, local authorities, communities, NGOs, businesses and other stakeholders on a range of water-related issues, and participate in global policy debates on water.

Our performance

Despite acquisitions, expansions and production increases, and taking into account disposals, the Group has maintained a reasonably stable level of water demand since 2007.

Anglo American's consumption of water used for primary activities has increased by 6%, from 115 million m3 in 2011 to 122 million m3 in 2012. The primary driver was Los Bronces copper mine in Chile, which increased our Copper business' water consumption by 7 million m3 . This fi gure would have been signifi cantly higher if it were not for the large increase in water recycled from the operation's tailings dam (this more than doubled to 82 million m3 of water in 2012). The increase was further mitigated by 26 water savings projects around the Group that saved 7 million m3 of water.

More than 70% of our operational water requirements were met by recycling/re-using water over the past two years. Within the Group there have been several high performers in terms of recycling, with some reaching levels as high as 90–97%. Our operations are also seeking to reduce their dependency on high-quality water by switching to the use of lower waterquality grades where this is deemed fi t for the intended use. Currently, potable water accounts for just 18% of our total.

STRATEGIC ELEMENT: Operating safely, sustainably and responsibly

CLIMATE CHANGE AND ENERGY

Climate change presents a signifi cant business challenge. The key risks we face are: increasing energy and compliance costs associated with new policy measures, including potentially signifi cant costs from carbon pricing; changing demand for our products; and increased risks associated with the physical impacts of climate change on our operations and neighbouring communities. We aim to enable our operations and local communities to address and adapt to the causes and effects of climate change.

Our strategy and management approach

Climate change is integrated into multi-disciplinary, Group-wide risk management processes. We are in the second year of our 10-year climate change strategy.

Operational excellence

Our leading energy and carbon management programme, ECO2 MAN, has enabled us to understand how energy management can be used to create additional business value. It provides a structured approach to achieve our objectives and it helps our people understand their responsibilities and accountabilities. Each mine has a programme in place to continually improve how it manages energy usage, with targets to reduce consumption in relation to a businessas-usual projection.

During 2012, we established a Group carbon steering committee to coordinate activities that lower our exposure to carbon compliance costs, including building our capacity to buy and sell carbon allowances.

Total energy consumed 2008–2012 Million GJ

Total GHG emissions 2008–2012

Technology

Achieving our long term milestones in energy management hinges on identifying and implementing innovative, 'step-change' technologies. We are researching many opportunities with key stakeholders, and have invested nearly \$200 million to date in low carbon technology, such as the Capcoal and Moranbah North methane-fi red power stations in Australia.

Our technology vision is to run cost effi cient, low-carbon (if not carbon neutral) mines by 2030. Our approach focuses on three areas: reducing how much energy we use; recovering and re-using some of that energy; and using alternative energy sources. In parallel, we continually investigate opportunities for carbon offsetting.

Our longer term research areas include using liquefi ed petroleum gas (LPG) and methane capture to power trucks, introducing clean coal technology, and piloting platinumbased fuel cells as an alternative power system for underground locomotives.

In recent years we have focused on assessing the potential physical impacts of climate change in a number of potentially high-risk operational regions and sites. Building on this climate change impact assessment work, in 2012 we worked with the UK Met Offi ce to prioritise all our projects across the Group in terms of when climate change 'time of emergence' signals will arise. We are also piloting a study to capture issues around climate and weather model data into project design.

Engagement and partnerships

We continue to work with governments, our business peers, and other stakeholders to help shape equitable and effective climate change policies. In South Africa, we are especially active in discussions around a carbon pricing policy and have welcomed the opportunity to participate in the debate and in the development of a solid fact base to infl uence an effective carbon policy aligned with the country's development objectives.

Our performance

Anglo American's energy consumption has increased by 6 million gigajoules (GJ) year-on-year to 108 million GJ in 2012. The rise is primarily as a result of electricity consumption increases at Los Bronces copper mine and Nickel's Barro Alto operation. A further increase of 1 million GJ at Metallurgical Coal as a result of production increases at the open cut mines was mitigated by a relatively small reduction at Platinum arising from industrial action. These increases were further mitigated by 215 energy-saving projects, accounting for reductions of nearly 5% (equal to saving 4 million GJ of energy and \$75 million), that were completed in 2012.

Anglo American's greenhouse gas emissions (GHG) have dropped slightly year-on-year from 19 Mt of CO 2 equivalent (CO 2 e) emissions to 18 Mt of CO 2 e in 2012. An expected rise in GHG emissions associated with increased energy consumption was mitigated by methane management activities at Metallurgical Coal and our decision to discontinue public reporting on methane emissions associated with spontaneous combustion(1).

(1) The reason for this is two-fold: our peers do not report on emissions from spontaneous combustion and there is currently no consistent methodology for doing so. We will, however, continue to monitor and manage these emissions internally.

MANAGING METHANE

Methane emissions represent a signifi cant challenge to our underground coal mining operations in Australia and South Africa. As methane is 21 times more damaging to the environment than carbon dioxide (CO 2), we have made it a priority to identify and implement technologies that will mitigate the impact of this greenhouse gas (GHG) and transform an environmental liability into an asset.

Methane is found, in differing concentrations, in the majority of coal seams. For safety reasons, it needs to be continually ventilated for underground mines but its impact on the environment also has to be considered. Since 2008, we have been piping methane-rich gas from our underground Moranbah North and Capcoal mines to two dedicated gas fi red power stations. When burned, methane is one of the cleanest fossil fuels, producing less CO 2 for each unit of heat produced than other hydrocarbon fuels. By capturing methane, the two power stations together prevent 2.5 Mt of CO 2 equivalent emissions from entering the atmosphere each year – the equivalent of taking 500,000 cars off the road, or planting 3.6 million trees – and generate 77 MW of electricity for the Australian national grid, which is enough to power 48,000 homes per year.

In South Africa, our New Denmark mine has helped to design and develop a 'world fi rst' mobile fl aring system that will reduce its annual methane emissions from ventilation boreholes by an expected 15%. Flaring burns off methane, rendering it 18.5 times less harmful to the environment than venting. Under the Kyoto Protocol, methane fl aring is an eligible Clean Development Mechanism activity. The project could therefore generate more than \$8 million in revenue in its fi rst decade through the sale of Certifi ed Emission Reduction (CER) credits, depending on prevailing CER prices.

Another facet to this challenge is the ventilation systems, which run continuously and require signifi cant energy. At Goedehoop mine we have reduced our GHGs related to ventilated air methane by improving how we manage these systems. By isolating the areas underground that require ventilation and identifying and addressing any leaks, we have reduced the amount of methane fl ushed out of the machinery as well as the electricity required to run the ventilation system. Ventilation systems at other underground mines in Thermal Coal are also set to be optimised, contributing greatly towards our 2015 ECO 2MAN targets.

Image

Senior project manager Ellis Lawrie (foreground) and Energy Developments Limited project manager Michael Ball inspect a gas engine at the Capcoal underground waste coal mine gas power station.

STRATEGIC ELEMENT: Employing the best people

WORKING WITH COMMUNITIES WITH THE FUTURE IN MIND

We offer a range of housing options to our South African mineworkers as part of our broader strategy to improve the living conditions of our employees.

IMPROVING HOUSING IN SOUTH AFRICA

We want all our employees to enjoy quality housing and living conditions. In South Africa, where there is a shortage of affordable housing and long waiting lists for units being built, this is a particular challenge. In partnership with local and provincial government, we help to alleviate this problem.

We invest in improving the housing and living conditions of employees and making it possible for them to buy their own homes in sustainable areas near our mining operations. Our vision is that all of our employees in mining communities who would like family accommodation have that option.

Our Platinum, Iron Ore, Thermal Coal businesses and De Beers proactively engage in developing properly serviced land to facilitate housing development in areas where services are inadequate or do not exist. The business units collaborate with reputable developers to encourage and promote affordable home ownership among employees at all levels. Where possible, land is donated to the municipality to facilitate the rehousing of communities residing in informal settlements. We engage with the Chamber of Mines and with organised labour to address issues and options for home ownership.

While 11,648 employees currently reside in mine accommodation, our objective is to lessen employee dependency on the company to provide accommodation.

Thermal Coal

•Currently 33% of employees live in mine-provided accommodation.
•203 houses have been built for sale to date.
•A new project to provide an additional 272 units in the eMalahleni area has commenced.

De Beers

•De Beers has no hostels at its three South African operations.
•Currently engaging with South Africa's National Union of Mineworkers (NUM) regarding the facilitation of home ownership.
•Approximately 550 houses planned to be built across three operations and investigations on rent-to-buy options are under way.

11,648

EMPLOYEES AT OUR SOUTH AFRICAN OPERATIONS STAYING IN MINE ACCOMMODATION.

Platinum

•6,743 employees reside in company and privately leased houses.
•All hostels have been converted into single accommodation villages.
•There are four ongoing housing projects in its portfolio.

Iron Ore

•From March 2012, employees no longer stay in hostels.
•Sishen has built 1,662 houses to accommodate their employees.
•Sishen plans to build an additional 1,720 houses in Kathu for current and future housing needs.

"As an industry, we need to work with our stakeholders to discuss openly how the migrant labour system can be changed to create more sustainable lives and communities."

Cynthia Carroll Chief Executive

Main Platinum Union south mine time and attendance operator Gift Mpho takes possession of one of the 400 new houses being built at the Northam Extension 6 Housing Project.

01 These houses for Thermal Coal employees and their families are being built with bricks made partly from gypsum – which was formerly discarded as a waste product – from the eMalahleni water-treatment plant.

STRATEGIC ELEMENT: Employing the best people

THE RIGHT PEOPLE IN THE RIGHT PLACES

OUR PEOPLE

Our people are as vital to our success as our mining assets. They determine how effectively we operate, represent our values and are critical to building and maintaining our reputation with stakeholders. Ultimately, it is our people who will realise our ambition and deliver on our strategy of being the leading global mining company.

OUR STRATEGY AND MANAGEMENT APPROACH

Our human resources (HR) strategy is anchored in Anglo American's objective 'to be the leading global mining company' and in supporting the objective of being 'the employer of choice'. We see the quality of our people as a key source of competitive advantage.

To attract and retain the best people we need to:

•Demonstrate that we have a clear and compelling strategy for success
•Offer safe, worthwhile and stimulating work
•Be organised for effectiveness and effi ciency
•Maintain the right leadership culture
•Support people to develop and progress
•Pay people competitively.

The Group HR function operates as part of a lean corporate centre and focuses on: essential governance; capturing synergies across the Group; and sharing knowledge and expertise. Policies and standards are set through a collaborative process involving the businesses. Once set, compliance with these is mandatory. Along with these standards, our HR management systems and processes provide the foundation that allows us to deliver on our HR agenda.

We are implementing a wide-ranging three year plan of work to further improve these foundations.

Resourcing with the future in mind

Having the right people in place is vital to achieving our business objectives. Within the context of a very competitive job market, ensuring we understand our current and future skills needs, and actively drive plans to meet these, is a key strategic priority for HR. Throughout 2011 we put in place foundations to enable more effective workforce planning. This included a Group-wide monthly headcount reporting process and system and a common framework for categorising roles across the organisation. During 2012, we built on these foundations, implementing a new annual strategic workforce planning process and system that ran successfully to support the 2012 planning cycle.

Our improved workforce planning capability will play a pivotal role in targeting our talent sourcing activities and guiding the work we do to build global talent pools. Talented graduates, bursars, interns, apprentices and other trainees form an important part of our sourcing strategy. During 2012, we saw nearly 3,000 graduates, bursars, apprentices and other trainees supported by the company.

At certain of our operations we are legally required to recruit a percentage of mining related roles from within the immediate and local communities in which we operate. The recent implementation of text-based job applications has enabled us to more effectively access community members in remote locations particularly across South Africa.

Supporting our people to develop and progress

Managing our people's performance plays a key role in guiding their behaviour and development. During 2012 we continued to roll out our Group-wide performance management process and system, which aligns individual objectives with the company's strategy while reinforcing our values. Our management and professional employees have regular performance and career development reviews with their managers. For the remaining employees, performance management is largely team-based.

Number of permanent employees and contractors by region(1) 2012

(1) Excludes associates and OMI non-core operations.

Alongside our performance management process, we continued to embed the People Development Way, our global capability framework detailing the behaviours, knowledge, skills and experience required of our employees to achieve our strategic objectives. 2012 also saw the introduction of career path tools aimed at guiding employees' career development decisions.

Formal learning is delivered at both business unit and Group level with external training expenditure across Anglo American amounting to \$98 million, 3% of total employee costs in 2012 (2011: \$79 million, 2.2% of total employee costs). The continued development of fi rst-line managers to improve operational and people management capabilities has been the focus of 2012. The fi rst-line managers development programme builds on current best practice across the Group and will be rolled out during 2013.

The Adult Basic Education and Training programme, which is run by our businesses and corporate centre offi ce in South Africa provides general education to adults who have not had access to formal schooling. In 2012, 1,239 employees, contractors and community members enrolled in the programme. In addition, 2,638 employees and community members were provided with portable skills

training. This puts emphasis on training people in skills not traditionally needed within the company, so that they are employable after mine closure.

Building leadership capability

We see strong leadership and managerial capabilities as central to achieving our business objectives and sustained success in the mining sector. Beyond capability, we see maintaining the right leadership culture as critical to encouraging people to want to work with Anglo American. For this reason we focus on and continuously review high quality leadership development and have a range of over 200 external and internal development programmes currently in use across the Group.

Recognising and rewarding performance

It is important to our success that the structure and level of our remuneration and rewards are consistent across the Group and competitive in each of the markets within which we operate. We benchmark our remuneration schemes against our peers and implement comprehensive performance-based reward systems with the aim of attracting and retaining the best people.

Creating a diverse organisation

By year end, 23% of managers were women, representing an increase from 22% in 2011. 15% of our overall workforce is female. Across our businesses, targets have been set to increase further female representation, both within the management population and the workforce as a whole.

In our South African operations we continued to promote transformation in the workforce. By year end, 62% of our management were 'historically disadvantaged South Africans' (HDSAs), representing a signifi cant increase on the 51% recorded at the end of 2011. HDSA employees, including white women, represent 80% of our workforce as a whole in South Africa.

Across our businesses, targets have been set to increase further female representation, both within the management population and the workforce as a whole.

Fostering sound industrial relations

During 2012, two strikes exceeding one week's duration were recorded. Platinum experienced eight weeks of illegal industrial action and unrest at fi ve of its mines where operations were halted. Kumba Iron Ore experienced 12 days' unprotected occupation of the company's Sishen Mine.

Approximately 84% of our permanent workforce is represented by work councils, trade unions or other similar bodies and covered by collective bargaining agreements. The nature of these agreements varies by country of operation. However, protecting the rights of employees and ensuring fair and compliant employment practices are principles that apply to everyone who is employed by Anglo American, regardless of any recognised, formal representation employees may form part of for collective bargaining purposes.

Building and maintaining sound relationships with our employees and trade unions is fostered through:

A culture of inclusivity and, consistent with our company value of care and respect, a genuine concern for the well-being of our employees, partners and communities.
•Ongoing, open and meaningful dialogue, ensuring that relevant changes to the organisation or its practices are tabled with trade unions for discussion prior to their implementation and that, in turn, any employee concerns are brought for discussion with the organisation before they become the subject of disputes.
•Our appreciation of the fact that many of the issues affecting our employees are issues that affect the rest of the mining sector and, in some cases, society as a whole. In these instances, as a responsible corporate citizen, we have a broader role to play in tabling and positively infl uencing discussion and issue resolution.

A signifi cant part of our operational workforce consists of contractors; therefore, the effectiveness of the relationships between us and our contracting companies, and between those companies and their employees, will remain important.

Protecting labour rights

As signatories to the United Nations Global Compact, we are committed to the labour rights principles provided in the International Labour Organisation core conventions, including the right to freedom of association and collective bargaining, the eradication of child and forced labour and non-discrimination. We do not tolerate any form of unfair discrimination, inhumane treatment, forced labour, child labour, harassment or intimidation in the Anglo American workplace. Full observance of these issues is also required of our suppliers in tenders and compliance is audited. At our operations, we have clear policies and processes in place in order to ensure that we do not employ any underage or forced labour. No incidents of employing under-age or forced labour were reported in 2012.

INNOVATING SOLUTIONS WITH THE FUTURE IN MIND

Thermal Coal's fl exible conveyor train is set to be a game-changer in the safe and effi cient production of coal from underground mines.

FLEXIBLE CONVEYOR TRAIN SETS NEW RECORD

In producing 116,708 tonnes in September 2012, the 110-metres-long fl exible conveyor train (FCT) based underground at Greenside achieved the highest monthly coal output ever recorded outside the US.

Developed in conjunction with Joy Mining Machinery, the FCT is a continuous haulage system that eliminates bottlenecks, thus allowing continuous miners to operate at maximum capacity.

The key to the FCT's effectiveness is its fl exible conveyor and traction system that permits it to be operated, by remote control, as a single unit. The ability to continuously convey material along its entire length, while simultaneously moving to follow the continuous miner's every move, offers a distinct advantage over all other types of haulage.

The FCT also offers safety benefi ts through eliminating the need for shuttle cars, thereby reducing vehicle and pedestrian interaction.

25 %

PRODUCTIVITY IMPROVEMENT IN CONTINUOUS MINER OUTPUT TARGETED BY 2014.

HIGHEST MONTHLY PRODUCTION IN 2012 +116,708 tonnes

To achieve the targeted productivity increase, Greenside must average 116 kt per month.

117 kt	116 kt
	100 kt		102 kt




Sept 2012	Oct 2012	Nov 2012	Dec 2012

"The Greenside FCT project team are among the most competent people in the business."

Avery Bailey FCT specialist

"The FCT's successful introduction demonstrates the value being delivered from Thermal Coal's

technology partnerships; this system has the potential to transform our underground coal mining operations in South Africa."

Godfrey Gomwe CEO, Thermal Coal Main, 01 and 02 Members of the Greenside team who assisted in the successful implementation of the mine's 110 metre long fl exible conveyor train – the fi rst of its kind in South Africa.

INNOVATION TO DELIVER VALUE

OUR RESOURCES

The resources Anglo American considers critical to achieving its strategic aims include:

•Knowledge and expertise.

•Proved and Probable Reserves (a summary is contained on pages 192–193).

Full details of the Group's Ore Reserves and Mineral Resources estimates are found on pages 191–230.

TECHNOLOGY

Our strong in-house technology capability provides world class solutions to Anglo American and its global operations. Mining and Technology, which comprises seven highly specialised technical groups that concentrate their expertise in specifi c valueadding areas, made a signifi cant contribution to the Group on several fronts.

In collaboration with the business units, the heads of the Mining, Metallurgy, Geosciences and Engineering disciplines have fi nalised a global set of Group Technical Standards and associated guidelines aimed at enhancing project delivery, sharing best practice, optimising value added to operations and mitigating technical risks. Gap analyses are conducted by business units and operations to determine compliance with the standards, and plans are being put in place to address any gaps that have been identifi ed. The discipline heads with their team of experts continue to provide technical assurance to projects and support the identifi cation of signifi cant asset optimisation opportunities at the operations. The effective development and management of technical talent within the Group has also been a focal point.

Our Technical Solutions division supports business units, operations and project teams as well as the various Group functions across the entire mining value chain, from exploration to mine closure. The division provides fundamental research as well as development and piloting services. Multi-disciplinary teams are made up of in-house experts from all the traditional engineering disciplines, as well as mining, metallurgy, geometallurgy, process and chemistry, industrial engineering, materials handling, safety, occupational health, sustainable development, geophysics, hydrogeology, and quality and compliance. In addition, project engineering and change management specialists provide consulting services to our operations. The teams also develop and implement or assist operations with the implementation of techno-economic solutions. The Field Services section provides hands-on machine health monitoring expertise to operations.

Technical Solutions recently developed and is now implementing an integrated drill and blast solution for surface operations comprising mine planning, drill and hole monitoring, on-bench explosive quality testing as well as on-bench blast monitoring and analysis. The solution provides operations with the capability to reconcile actual performance with designed performance, in real time, which increases the visibility of actual bottlenecks and allows enhanced decision making at the mine site. The Equipment Monitoring System (EMS), aimed at identifying equipment condition remotely, has successfully been rolled out to sites in Australia, South America and South Africa and has been expanded from haul truck monitoring to monitoring other critical equipment. An integrated water management solution has been developed to meet the growing needs of the Group's operations in this area. On the fundamental research side, Technical Solutions has successfully combined molecular modelling with fast track chemical effectiveness evaluation to quickly identify non-toxic and more effective reagents without having to rely on traditional trial and error experimentation.

Our Technology Development unit manages, coordinates and integrates technology development across the Group. Progress continues on realising Anglo American's long term technology vision and is concentrated on laying the platform for a radical change in technology over the coming years. The work focuses on long term, high value projects in underground mining, metal recovery and energy effi ciency, as well as the shorter term demonstration of automation technologies to improve safety and add value.

A concerted systems approach has now been adopted in order to facilitate mining's transition to a more modern, automated and technologically mature era.

Mine life per commodity(1)

(1) Mine life is the extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only. For diamonds, life of mine (years) is reported and is based on scheduled Probable Reserves including Indicated and some Inferred Resources considered for life of mine planning. Note: the 30 years for platinum is due to 30 years being the maximum number of years for which a mining right is granted in South Africa.

The development of proprietary exploration tools remains a priority, with some already in use and improved models undergoing testing prior to the piloting of prototypes. These provide a signifi cant competitive advantage for Anglo American in the search for new Tier One orebodies.

The shorter term projects will see various automated vehicles being demonstrated at certain opencast mines during 2013 and multiple novel underground mining machines being tested on platinum mines. Success in these projects would make a signifi cant impact on the safety and competitiveness of Group operations.

A concerted systems approach has now been adopted in order to facilitate mining's transition to a more modern, automated and technologically mature era. Effort is being concentrated on creating the necessary building blocks to support both open pit and underground methods in steadily moving up the steps towards automation maturity. In particular, attention is currently being placed, inter alia, on automation-specifi c technologies such as underground mapping, positioning and obstacle detection. Emphasis, too, is being placed on integrated operations centres as the hub of the automation approach needed to command integrated data in a risk-managed environment in order to deliver improved performance, as well as to coordinate and drive sustainable performance improvement.

Our Thermal Coal business has identifi ed 15 technologies in order to form a prioritised pipeline for technology development. During 2012, Thermal Coal achieved a number of technology milestones and is the fi rst coal mining company in South Africa to commission Flexible Conveyor Train technology (FCT) underground at Greenside and Goedehoop. The implementation of the technology resulted in a marked reduction in underground coal transport vehicles, thereby signifi cantly improving safety while also increasing productivity. Thermal Coal has started the journey of automation of some of the opencast fl eets, including articulated dump trucks, overburden drills and bulldozers. Furthermore, automation provides opportunity for improvements in utilisation, productivity and quality, as well as safety and health.

At our Metallurgical Coal business, we are making progress in several areas on the technological front. The 'Smart Cap' fatigue-management system has moved to the commercialisation phase. Signifi cant work has been undertaken to reduce carbon emissions from the underground mines through improved monitoring, capture and utilisation of potential fugitive emissions. Remote monitoring of equipment health and performance has been embedded through the Brisbane-based Benchmark Performance Centre, where the health and performance of both open cut and underground equipment is being monitored and actions taken to improve performance. In coal processing, laboratory scale trials have been completed on enhanced processing for coals with high inherent ash and clay; if successful, our reserves base of high quality metallurgical coal could potentially increase.

EXPLORATION

Global exploration activity for 2012 focused on greenfi eld projects across a number of mature and frontier locations, as well as on adding value, through increasing resources and reserves, to our operations and advanced projects. Our exploration expenditure in 2012 amounted to \$206 million and covered 18 countries.

Iron Ore exploration expenditure of \$23 million was concentrated around operations and projects in Africa, Australia and Brazil. In South Africa, exploration was undertaken to support Kumba's Sishen and Kolomela operations; reconnaissance drilling on high priority targets confi rmed mineralisation and drilling capacity has been increased to further investigate their potential. In Brazil, activity related to preliminary drilling and geological activities around the Minas-Rio project.

Metallurgical Coal exploration expenditure of \$18 million focused on drilling, seismic surveys, and coal quality analysis near existing operations in Australia and Canada with the aim of improving the defi nition of additional coking coal resources. In Australia, drilling and seismic activities were performed, including at the Foxleigh and Rolfe Creek projects. In Canada, the exploration team was strengthened at the Peace River Coal Trend mine and surrounding exploration leases, with the aim of defi ning additional coking coal resources.

Thermal Coal exploration expenditure totalled \$14 million, being spent primarily on drilling and analysis in South Africa. During 2012, exploration drilling was undertaken at 10 project areas, with the objectives of meeting both statutory work programme requirement as well as providing geological evaluation information and geological models for project advancement through the various stage gates.

Exploration expenditure by commodity in 2012

Copper exploration expenditure of \$39 million consisted mainly of near-mine and greenfi elds exploration drilling in Chile where key activities included drilling at Los Bronces and Mantos Blancos. Greenfi elds exploration was also conducted in Argentina, Brazil, Chile, Colombia, Greenland, Indonesia, Peru, the US and Zambia.

Polymetallic (copper-nickel-platinum group elements) exploration expenditure (included within the Nickel commodity line as disclosed in note 7 to the fi nancial statements) amounted to \$28 million and concentrated on Sakatti in northern Finland. Exploration at this advanced project aimed to defi ne the limits of the orebody and to test other surrounding high priority targets. Greenfi elds polymetallic exploration was conducted elsewhere in northern Finland, western Brazil, the Musgraves region of Western Australia and the Canadian Arctic.

Nickel exploration expenditure was \$4 million and related mainly to nickel laterite exploration in the Morro Sem Boné district in Brazil. Elsewhere, near-mine exploration was undertaken at Niquelândia (Codemin), also in Brazil.

Phosphates and Niobium exploration expenditure was \$2 million and was focused on greenfi elds projects in central Brazil and near-mine exploration at Boa Vista (niobium).

Platinum exploration accounted for \$4 million and was focused on investigating new opportunities within South Africa's Bushveld Complex and on fulfi lling of the statutory work programme requirements to keep tenure in good standing. The potential for shallow resources that may be mined using opencast methods was investigated through drilling programmes during the year. Platinum exploration continued at Unki in Zimbabwe.

Since acquisition in August 2012, De Beers has spent \$23 million (\$59 million for the full year, on a 100% basis) on exploration programmes in Angola, Botswana, Canada and India. The exploration team continued to provide technical services to the resource extension programmes for the Jwaneng and Orapa mines in Botswana, and the Victor mine in Canada.

HIGH-TECH EXPLORATION IN FINLAND

A Low Temperature Superconducting Quantum Interference Device (LT-SQUID) is a very sensitive magnetometer that is capable of measuring and distinguishing between discrete magnetic responses using superconducting loops. The LT-SQUID is considered particularly useful for discriminating between metallic deposits such as nickel sulphides, which can be masked by certain rock types that can also hold an electric current – for example, shale.

The LT-SQUID was developed in collaboration between Anglo American and the Institute for Physical High Technology (IPHT) in Jena, Germany. The LT-SQUID is the sensor, cooled using liquid helium (-298°C), and measures the response to an electromagnetic current response after the current has been transmitted into the ground. The LT-SQUID has been employed by Anglo American fi eld teams to help search for so-called blind deposits that have no visible expression on the ground surface. It has revolutionised how we look at and model the picture beneath the ground surface, particularly at depth.

This has enabled Anglo American to discover signifi cant deposits such as Gamsberg East (zinc) in Namaqualand, South Africa. Conventional Transient Electromagnetic (TEM) methods would not have been enable to identify the fl at-lying metallic conductor located 250 metres beneath the ground surface, or distinguish between two metallic sulphide types that have different levels of electromagnetic conductance. The LT-SQUID sensor also helped to defi ne the geometric dimensions of the Gamsberg East

deposit as it enabled a greater penetration depth to be reached. Another example is at the Sakatti polymetallic project in Finland. Owing to the highly conductive nature of the interconnected mineralisation at the project, normal TEM geophysical techniques were not able to provide accurate readings. The team then used the LT-SQUID system, and that information ultimately supported the discovery of the main mineralised body.

Images 01 Project geoscientist Circé Malo-Lalande with the LT-Squid.

02 Exploration manager Mattias Johansson (foreground) and exploration geologist Craig Hartshorne examine drill cores.
03 Drilling in progress at the Sakatti drill site.
04 Drill operators Jarmo Kairaaja (left), and Tiejo Apukairaasa on Sakatti rig No. 8.

FINANCIAL PERFORMANCE

UNDERLYING OPERATING PROFIT (2011: \$11.1 bn)

UNDERLYING EARNINGS (2011: \$6.1 bn)

\$2.8 bn

UNDERLYING EARNINGS PER SHARE (2011: \$5.06)

(LOSS)/PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS (2011: \$6.2 bn)

REVIEW OF GROUP RESULTS

Anglo American reported underlying earnings of \$2.8 billion, compared with \$6.1 billion in 2011, with underlying operating profi t of \$6.2 billion, 44% lower than 2011.

This decrease in underlying operating profi t was mainly driven by the Platinum, Metallurgical Coal, Iron Ore and Manganese and Copper business units, whose fi nancial performance was affected by lower prices and higher costs, with the exception of Metallurgical Coal where costs decreased. There was a decline in realised prices across the majority of commodities produced by the Group.

Iron Ore and Manganese generated an underlying operating profi t of \$2,949 million, 33% lower. Within this commodity group, Kumba Iron Ore reported an underlying operating profi t of \$2,980 million, 34% lower than 2011, owing to lower average prices, the unprotected strike at Sishen and an increase in waste stripping, partially offset by the ramp up of Kolomela mine. Samancor reported an underlying operating profi t of \$103 million, 38% lower, driven by lower ore prices, partially offset by lower costs.

Metallurgical Coal delivered an underlying operating profi t of \$405 million, a 66% decrease, primarily due to lower realised export selling prices, partially offset by record production and higher sales.

Thermal Coal's underlying operating profi t of \$793 million was 36% lower, mainly as a result of lower export thermal coal prices for both South African and Colombian coal and, in South Africa, above infl ation cost increases. This was partially offset by increased sales volumes, mainly from the full incorporation of Zibulo as an operating asset, and despite the closure of high cost production sections.

Copper delivered an underlying operating profi t of \$1,687 million, 31% lower, as a result of lower realised sales prices, lower by-product quantities and higher operating, exploration and study costs, partly offset by increased sales volumes.

Nickel reported an underlying operating profi t of \$26 million, 54% lower, due to lower realised prices and an extended export ban imposed by the Venezuelan government from the beginning of June 2012 resulting in the cessation of production in September 2012, partially offset by a self-insurance recovery of \$59 million.

Platinum generated an underlying operating loss of \$120 million, due to lower metal prices, higher unit costs and the illegal strike that signifi cantly affected production and sales during the fi nal four months of the year, partially offset by a \$172 million positive stock adjustment.

Diamonds underlying operating profi t (on a 100% basis) fell by \$676 million to \$815 million, 45% lower, refl ecting the impact of diffi cult trading conditions brought about by predominantly weaker demand and changing product requirements from Sightholders. Anglo American's share of De Beers underlying operating profi t totalled \$496 million, a decrease of 25%, the overall reduction being partly offset by Anglo American's higher shareholding.

Other Mining and Industrial Core delivered a combined underlying operating profi t of \$169 million, a decrease of 8% compared to the prior year. This was driven by higher labour costs at both the Phosphates and Niobium operations and lower phosphate prices, partially offset by an increase in sales volumes of both phosphates and niobium.

Production change

Production increases were delivered at the Kumba Iron Ore, Metallurgical Coal, Thermal Coal, Copper, Nickel, and the Phosphates and Niobium business units.

Underlying operating profi t

\$ million	Year ended 31 Dec 2012	Year ended 31 Dec 2011
Iron Ore and Manganese	2,949	4,400
Metallurgical Coal	405	1,189
Thermal Coal	793	1,230
Copper	1,687	2,461
Nickel	26	57
Platinum	(120)	890
Diamonds	496	659
Other Mining and Industrial	337	315
Exploration	(206)	(121)
Corporate activities and unallocated costs	(203)	15
Operating profi t including associates before special items and remeasurements	6,164	11,095

Underlying operating profi t from the non-core businesses was \$168 million, a \$37 million increase, due to lower depreciation as a result of the transfer of Tarmac Quarry Materials and Scaw South Africa to 'held for sale' and the reversal of penalty provisions at Amapá which were in place at the end of 2011, partly offset by lower realised iron ore prices at Amapá.

Exploration costs for the year were \$206 million, a 70% increase, mainly driven by the inclusion of exploration costs at De Beers (following the acquisition of the additional 40% interest), increased drilling due to favourable weather conditions in Australia and Chile, and a ramp up in drilling activities at the Sakatti polymetallic project in Finland.

Corporate costs (after cost allocations) of \$203 million were incurred in 2012.

In 2011, following the reassessment of estimates of likely outcomes of existing insurance claims, liabilities decreased signifi cantly in the insurance captive, offsetting the unallocated corporate costs and resulting in an operating profi t for 2011 of \$15 million.

Production

Production increases were delivered at the Kumba Iron Ore, Metallurgical Coal, Thermal Coal, Copper, Nickel, Phosphates and Niobium business units.

Iron Ore and Manganese – production of iron ore increased by 4% to 43.1 Mt due to the ramp up of Kolomela, partially offset by the unprotected strike which resulted in lost production of approximately 5 Mt. Manganese ore production increased by 20% to 3.3 Mt.

Metallurgical Coal – production increased by 11% to 30.6 Mt, with record metallurgical coal production of 17.7 Mt, benefi ting from productivity improvements at both the open cut and underground operations and a reduction in weather related stoppages.

Thermal Coal – production improved by 1% to 68.7 Mt, despite the closure of high cost production sections in South Africa, driven by the Zibulo ramp up and strong operational performance supported by favourable weather conditions at Cerrejón.

Copper – production increased by 10% to 659,700 tonnes, mainly owing to the ramp up of the Los Bronces expansion project, partly offset by expected lower ore grades at Collahuasi and operational challenges at the Los Bronces mine and at Collahuasi.

Nickel – production increased by 35% to 39,300 tonnes due to the ramp up of Barro Alto, partially offset by the cessation of production at Loma de Níquel from September 2012.

Platinum – equivalent refi ned production was 8% lower than 2011 mainly due to the illegal strike action that occurred between September and November 2012 at the Rustenburg, Amandelbult, Union and Bokoni mines and operational challenges in the fi rst half of the year.

Diamonds – production decreased by 11% to 27.9 million carats, with Debswana production impacted by the Jwaneng slope failure. In light of prevailing rough diamond market trends, and in keeping with De Beers' stated production strategy for 2012, operations continued to focus on maintenance and waste stripping backlogs.

Phosphates – record production of 1.1 Mt of fertiliser, a 5% increase year on year, due to a number of asset optimisation initiatives which improved overall performance at Catalão and Cubatão.

Niobium – production increased 13%, as declining ore quality was more than offset by improvements in both throughput and recoveries.

FINANCIAL OVERVIEW

Group underlying operating profi t was \$6,164 million, 44% lower than 2011.

The main reason for the reduction in underlying operating profi t was a decline in the realised prices of most of the commodities produced by the Group. These included falls in realised prices of 29% in the case of export metallurgical coal, 19% in South African export thermal coal and 23% in iron ore.

The Group's results are affected by currency fl uctuations in the countries where the operations are based. The strengthening of the US dollar against the South African rand and the Brazilian real resulted in a \$945 million positive exchange variance in underlying operating profi t compared to 2011. CPI infl ation had a negative \$591 million impact on underlying operating profi t compared to the prior year.

Sales volumes were higher than 2011, owing to increased production at Kolomela and Los Bronces as the expansion projects ramped up, offset by operational issues at the Los Bronces mine and Collahuasi, as

well as the industrial action at Kumba and Platinum and the extended ban and subsequent loss of mining concessions at Loma de Níquel.

Industry-wide, above-CPI cost pressures continued, particularly in South Africa and Australia, although were mitigated by the continued positive performance of our asset optimisation and procurement programmes.

Group underlying earnings were \$2,839 million, a 54% decrease on 2011, which refl ects the operational results above and a reduction in our shareholding in Anglo American Sur (AA Sur), partially offset by the increased holding in Kumba Iron Ore. Net fi nance costs, before remeasurements, excluding associates, were \$288 million (2011: \$20 million).

The effective rate of tax, before special items and remeasurements and including attributable share of associates' tax, increased from 28.3% in 2011 to 29.0%.

Group underlying earnings per share were \$2.26 compared with \$5.06 in 2011.

Special items and remeasurements Operating special items Minas-Rio

An impairment charge of \$4,960 million has been recorded in relation to the Minas-Rio iron ore project (Iron Ore Brazil). Of this charge, \$1,105 million has been recorded against goodwill and \$3,855 million has been recorded against mining properties, with an associated deferred tax credit of \$960 million. The post-tax impairment charge is \$4,000 million.

Platinum operations

The impairment charge of \$860 million relates to certain Platinum projects and other assets, not in use, that are not considered economically viable in the current market environment. The charge includes a write-off of fair value uplifts associated with these assets held at a Group level of \$89 million.

Reversal of De Beers inventory uplift

Inventory held by De Beers at the date of the acquisition is required to be recognised at fair value under International Financial Reporting Standards (IFRS). This results in

Summary income statement

	Year ended	Year ended
\$ million Operating profi t before special items and remeasurements	31 Dec 2012 5,405	31 Dec 2011 9,668
Operating special items	(6,977)	(164)
Operating remeasurements	(116)	(65)
Operating (loss)/profi t from subsidiaries and joint ventures	(1,688)	9,439
Non-operating special items and remeasurements	1,394	183
Share of net income from associates (see reconciliation below)	432	977
Total profi t from operations and associates	138	10,599
Net fi nance costs before remeasurements	(288)	(20)
Financing remeasurements	(89)	203
(Loss)/profi t before tax	(239)	10,782
Income tax expense	(375)	(2,860)
(Loss)/profi t for the fi nancial year	(614)	7,922
Non-controlling interests	(879)	(1,753)
(Loss)/profi t for the fi nancial year attributable to equity shareholders of the Company	(1,493)	6,169
Basic earnings per share (\$)	(1.19)	5.10
Group operating profi t including associates before special items and remeasurements(1)	6,164	11,095
Operating profi t from associates before special items and remeasurements	759	1,427
Operating special items and remeasurements	(58)	(18)
Net profi t on disposals	–	20
Net fi nance costs (before special items and remeasurements)	(58)	(48)
Financing special items and remeasurements	1	(7)
Income tax expense (after special items and remeasurements)	(205)	(384)
Non-controlling interests (after special items and remeasurements)	(7)	(13)
Share of net income from associates	432	977

(1) Operating profi t before special items and remeasurements from subsidiaries and joint ventures

was \$5,405 million (2011: \$9,668 million) and attributable share from associates was \$759 million (2011: \$1,427 million). For special items and remeasurements, see note 5 to the fi nancial statements. negligible margins being realised upon the subsequent sale of inventory held at the acquisition date. The reversal of fair value uplifts on inventory sold in 2012 of \$421 million has been excluded from the Group's underlying earnings so as not to distort the operating margins of De Beers and to provide more useful information about the performance of the Group.

Other

A charge of \$159 million has arisen at Loma de Níquel due to the cancellation of its mining concessions in November 2012.

Other impairments and related charges of \$230 million (2011: \$70 million) relates to various impairments across the Group, including an impairment of \$42 million of fi xed assets relating to onerous contracts at Callide (Metallurgical Coal); an impairment of \$44 million relating to Wesizwe, an available for sale asset held in Platinum where the fair value has had a signifi cant and prolonged decline; and \$50 million of asset impairments recognised in Samancor, an associate investment.

The charge of \$386 million in relation to onerous contracts principally refl ects a provision increase of \$292 million for coal supply agreements inherited on acquisition of Callide in 2000.

Operating remeasurements

Operating remeasurements refl ect a net loss of \$112 million (2011: loss of \$74 million) principally in respect of non-hedge derivatives related to capital expenditure in Iron Ore Brazil. Derivatives which have been realised during the period had a cumulative net gain since their inception of \$71 million (2011: \$383 million). The depreciation charge arising due to the fair value uplift on the pre-existing 45% shareholding of De Beers, which was required on acquisition of a controlling stake, is \$41 million in 2012.

Non-operating special items

In May 2012, the Competition Commission approved the formation of a 50:50 joint venture between the Group and Lafarge combining their cement, aggregates, ready-mix concrete, asphalt and asphalt surfacing, maintenance services, and waste services businesses in the UK subject to a number of prior conditions.

Full year underlying operating profit variances

\$ bn

\$m

(1) Price variance calculated as increase/decrease in price multiplied by current period sales volume. (2) Inflation variance calculated using CPI on prior period cash operating costs that have been impacted

directly by inflation. (3) Volume variance calculated as the increase/decrease in sales multiplied by prior period profit margin; Full impact of Los Bronces expansion project (\$0.6 bn) and Kolomela (\$0.4 bn) operating profit vs. 2011 is included within Volume.

(4) Includes stripping and inventory movements.
(5) Lost sales volume measured at forgone 2012 cash contribution.
(6) De Beers was acquired on 16 August 2012. Variance reflects all movements associated with De Beers in 2012.

Reconciliation of loss for the year to underlying earnings

Tax

	Year ended 31 Dec 2012				Year ended 31 Dec 2011
\$ million (unless otherwise stated)	Before special items and remeasure ments	Associates' tax and non controlling interests	Including associates	Before special items and remeasure ments	Associates' tax and non controlling interests	Including associates
Profi t before tax	5,610	208	5,818	10,626	401	11,027
Tax	(1,488)	(202)	(1,690)	(2,741)	(385)	(3,126)
Profi t for the fi nancial year	4,122	6	4,128	7,885	16	7,901
Effective tax rate including associates			29.0%			28.3%

The completion

of our acquisition of an additional 40% interest in De Beers in August 2012 resulted in a cash outfl ow of \$4,816 million, net of cash acquired.

In July 2012, the Group accepted the conditions of the Competition Commission and consequently the associated assets of Tarmac Quarry Materials were classifi ed as held for sale and recognised at fair value less costs to sell. This resulted in a loss being recognised of \$135 million.

In December 2012 the Group agreed the sale of its 70% interest in the Amapá iron ore system. The net assets have been reclassifi ed to held for sale and recognised at fair value less costs to sell. This resulted in a loss being recognised of \$404 million.

Non-operating remeasurements

The non-operating remeasurement of \$1,988 million (2011: nil) refl ects the gain of \$2,017 million, net of transaction costs, resulting from the remeasurement to fair value of the Group's existing 45% shareholding held in De Beers at the date a controlling stake was acquired. This includes a \$2.7 billion uplift on depreciable assets which will unwind through operating remeasurements in the current and future years.

Financing remeasurements

Financing remeasurements refl ect a net loss of \$88 million (2011: gain of \$205 million) and relates to an embedded interest rate derivative, non-hedge derivatives relating to debt and other fi nancing remeasurements.

Special items and remeasurements tax

Special items and remeasurements tax amounted to a credit of \$1,110 million (2011: charge of \$118 million). This relates to a credit for one-off tax items of \$922 million (2011: credit of \$137 million), a tax remeasurement charge of \$189 million (2011: charge of \$230 million) and a tax credit on special items and

remeasurements of \$377 million (2011: charge of \$25 million).

The credit for one-off tax items of \$922 million (2011: credit of \$137 million) relates principally to the net deferred tax credit of \$960 million at Minas-Rio and a net deferred tax credit of \$70 million owing to the reassessment of deferred tax assets as a result of changes in tax regimes within operating segments, partially offset by the write-off of the deferred tax asset in Amapá of \$108 million following the decision to sell the mine.

Net fi nance costs

Net fi nance costs, before remeasurements, excluding associates, were \$288 million (2011: \$20 million). This increase was driven by a decrease in investment income of \$71 million, owing to lower average levels of cash and a higher interest expense of \$103 million, refl ecting the increase in debt during the year. Foreign exchange losses on net debt also increased by \$74 million compared with 2011.

Tax

The effective rate of tax before special items and remeasurements including attributable share of associates' tax for the year ended 31 December 2012 was 29.0%. The increase compared to the equivalent effective rate of 28.3% for the year ended 31 December 2011 is due to the reduced impact of certain non-recurring factors. The nonrecurring factors in 2012 include further recognition of previously unrecognised tax losses and the reassessment of certain withholding tax provisions across the Group. In future periods it is expected that the effective tax rate, including associates' tax, will remain above the United Kingdom statutory tax rate.

Balance sheet

Equity attributable to equity shareholders of the Company was \$37,657 million at 31 December 2012 (31 December 2011: \$39,092 million). This decrease refl ects the loss for the period of \$1,493 million. Investments in associates were \$2,177 million lower than at 31 December 2011, principally as a result of De Beers becoming a subsidiary following the acquisition of a further 40% shareholding. Property, plant and equipment increased by \$4,540 million compared to 31 December 2011, as a result of ongoing investment in growth projects and the acquisition of De Beers, partially offset by an increase in depreciation, the transfer of Amapá and Tarmac Quarry Materials to 'held for sale' and the disposal of Scaw South Africa.

Cash fl ow

Net cash infl ows from operating activities were \$5,562 million (2011: \$9,362 million). Underlying EBITDA was \$8,686 million, a decrease of 35% from \$13,348 million in the prior year, refl ecting weaker prices across the Group's core commodities and changes in operational performance.

Net cash used in investing activities was \$9,821 million (2011: \$4,853 million). Purchases of property, plant and equipment, net of related derivative cash fl ows, amounted to \$5,678 million, a decrease of \$86 million, refl ecting the Group's disciplined approach to capital allocation in the current economic environment while maintaining expenditure on strategic growth projects. Proceeds from disposals, principally the disposal of Scaw South Africa (net of cash and cash equivalents disposed), were \$100 million (2011: \$533 million). Movements in non-controlling interest during the year resulted in a cash infl ow of \$1,220 million mainly \$1,907 million from the disposal of 25.4% of AA Sur, partly offset by the purchase of 4.5% of Kumba for \$698 million.

Net cash infl ow from fi nancing activities was \$1,950 million compared with \$1,474 million in 2011. During the year the Group paid dividends of \$970 million to company shareholders,

Sensitivity analysis in respect of currency and commodity prices

Set out below is the impact on underlying earnings of a 10% fl uctuation in certain of the Group's commodity prices and exchange rates

	Average price(1)	10%(7) sensitivity
Commodity	2012	2011	US\$ million
Platinum(2)	\$1,555/oz	\$1,725/oz	150
Metallurgical Coal(3)	\$178/t	\$251/t	195
Thermal Coal(4)	\$92/t	\$114/t	209
Copper(5)	361c/lb	400c/lb	280
Nickel(5)	794c/lb	1,035c/lb	37
Iron Ore(6)	\$122/t	\$158/t	191
Palladium(2)	\$647/oz	\$736/oz	41
ZAR/USD	8.21	7.26	434
AUD/USD	0.97	0.97	190
CLP/USD	486	484	69

(1) 'oz' denotes ounces, 't' denotes tonnes, 'c' denotes cents, 'lb' denotes pounds.

(2) Source: Johnson Matthey Plc.

(3) Average realised FOB price of export metallurgical coal.

(4) Average realised FOB price of export thermal coal (South Africa).

(5) Being the average LME price.

(6) Average price represents average iron ore (South Africa) export price achieved. (7) Excludes the effect of any hedging activities. Stated after tax at marginal rate. Sensitivities are the average of the positive and negative and the impact of a 10% change in the average prices received and exchange rates

during 2012. Increases in commodity prices increase underlying earnings and vice versa. A strengthening of the South African rand, Australian dollar and Chilean peso relative to the US dollar reduces underlying earnings and vice versa.

and \$1,267 million in dividends to non-controlling interests.

The completion of our acquisition of an additional 40% interest in De Beers in August 2012 resulted in a cash outfl ow of \$4,816 million, net of cash acquired.

Liquidity and funding

Net debt, including related hedges, was \$8,615 million, an increase of \$7,241 million from \$1,374 million at 31 December 2011. The increase in net debt refl ects weaker operating cash fl ows owing to lower commodity prices in 2012 and the acquisition of 40% of De Beers, partially offset by the disposal of 25.4% in AA Sur.

Net debt at 31 December 2012 comprised \$17,759 million of debt, partially offset by \$9,312 million of cash and cash equivalents, and the current position of derivative liabilities related to net debt of \$168 million. Net debt to total capital(1) at 31 December 2012 was 16.4%, compared with 3.1% at 31 December 2011.

At 31 December 2012, the Group had undrawn committed bank facilities of \$9.3 billion.

(1) Net debt to total capital is calculated as net debt divided by total capital. Total capital is net assets excluding net debt.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, indicate the Group's ability to operate within the level of its current facilities for the foreseeable future.

Corporate activities and unallocated costs

Corporate costs which are considered to be value adding to the business units are allocated to each business unit. Costs reported externally as Group corporate costs only comprise costs associated with parental or direct shareholder-related activities.

Dividends

Anglo American's dividend policy will provide a base dividend that will be maintained or increased through the cycle. Consistent with the policy, the Board has recommended a fi nal dividend of 53 cents per share, giving a total rebased dividend for the year of 85 cents per share, subject to shareholder approval at the Annual General Meeting to be held on 19 April 2013. This refl ects confi dence in the underlying business and completes the reinstatement journey to rebase the dividend to be competitive with diversifi ed peers.

This recommendation is consistent with the commitment to have a disciplined balance between the maintenance of a strong investment grade rating, returns to shareholders and sequencing of future investment in line with resulting funding capacity. From time to time any cash surplus to requirements will be returned to shareholders.

Analysis of dividends

US cents per share	2012	2011
Interim dividend	32	28
Recommended
fi nal dividend	53	46
Total dividends	85	74

Related party transactions

Related party transactions are disclosed in note 37 to the fi nancial statements.

Basis of disclosure

This operating and fi nancial review (OFR) describes the main trends and factors underlying the development, performance and position of Anglo American plc (the Group) during the year ended 31 December 2012, as well as those likely to affect the future development, performance and position. It has been prepared in line with the guidance provided in the reporting statement on the operating and fi nance review issued by the UK Accounting Standards Board in January 2006.

Forward looking statements

This OFR contains certain forward looking statements with respect to the fi nancial condition, results, operations and businesses of the Group. These statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements.

EFFECTIVE RISK MANAGEMENT

"Understanding our key risks and developing appropriate responses is critical to our future success. We are committed to a robust system of risk identifi cation and an effective response to such risks."

Anglo American assessment of strategic, operational, project and sustainable development related risks

1. Identifying risks

A consistently applied methodology is used to identify key risks across the Group; at business units, operations and projects. This has been effected through the development, roll-out and ongoing implementation of a Group integrated risk management standard.

2. Analysing risks and controls to manage identifi ed risks Once identifi ed, the process will evaluate identifi ed risks to establish root causes, fi nancial and non-fi nancial impacts and likelihood of occurrence. Consideration of risk treatments is taken into account to enable the creation of a

prioritised register.

3. Determining management actions required Effectiveness and adequacy of controls are assessed. If additional controls are required these will be identifi ed and responsibilities assigned.

4. Reporting and monitoring Management is responsible for monitoring progress of actions to treat key risks and is supported through the Group's internal audit programme, which evaluates the design and effectiveness of controls. The risk management process is continuous, key risks are reported to the Audit Committee with sustainability risk also being reported to the S&SD Committee.

HOW WE MANAGE RISK

Management of risk is critical to the success of Anglo American. Our Group is exposed to a variety of risks that can have a fi nancial, operational or reputational impact. Effective management of risk supports the delivery of our objectives and the achievement of sustainable growth.

HOW DOES RISK RELATE TO OUR STRATEGIC INTENTS?

Risks can arise from events outside of our control or from operational matters. Each of the key risks described on the following pages can have an impact on our ability to achieve our strategic intents. This is illustrated by reference to each of our strategic intents; namely:

•Investing in world class assets in the most attractive commodities
•Organising effi ciently and effectively
•Operating safely, sustainably and responsibly
•Employing the best people.

As mining is a business that can span decades, many of its attendant risks are long term in nature, and there may not be any signifi cant change year on year. During 2012, however, we experienced changes in our risk profi le; these are indicated in each of our risk descriptions, with appropriate commentary where we have seen change.

We also recognise that risks cannot be viewed in isolation. Emergence of one risk may be caused by one or more other risks or may cause another risk to emerge. For example, project delivery risk can be infl uenced by risks relating to supply, infl ation, political matters, legal and regulatory requirements, infrastructure or community relations. This interconnectivity and the relationship of risks to our abovementioned four strategic elements requires signifi cant emphasis to be placed on the management of risk and the effectiveness of our risk controls, with the identifi cation and understanding of our risks being the fi rst step in what is a continuous process.

COMMODITY PRICES

Commodity prices for all products that Anglo American produces are subject to wide fl uctuation.

Impact: Commodity price volatility can result in a material and adverse movement in the Group's operating results, asset values, revenues and cash fl ows. Falling commodity prices could prevent us from completing transactions that are important to the business and which may have an adverse effect on Anglo American's fi nancial position – e.g. the inability to sell assets at the values or within the timelines expected.

If commodity prices remain weak for a sustained period, our ability to deliver growth in future years may be adversely affected as growth projects may not be viable at lower prices, and we may not be able to compete for new, complex projects that require signifi cant capital investment.

Root cause: Commodity prices are determined primarily by international markets and global supply and demand. Demand for commodities will largely be determined by the strength of the global economic environment.

Mitigation: The diversifi ed nature of the commodities that Anglo American produces provides some protection to this risk, and our policy is not to engage in commodity price hedging. We constantly monitor the markets in which we operate, reviewing capital expenditure programmes accordingly so as to ensure the supply of our products refl ects forecast market conditions.

Commentary: During 2012, prices in all the commodities we mine fell as a result of global economic weakness. Further detail of price movements is provided on page 5.

Increased risk	INVESTING	Page 14	ORGANISING Page 18
	OPERATING		EMPLOYING

CLIMATE CHANGE

Our operations are exposed to changes in climate and the need to comply with changes in the regulatory environment aimed at reducing the effects of climate change.

Impact: Potential impacts from climate change are diffi cult to assess and will depend on the circumstances at individual sites, but could include increased rainfall, fl ooding, water shortages and higher average temperatures. These may increase costs, reduce production levels or impact the results of operations.

Policy developments at an international, national and sub-national level, including those related to the 1997 Kyoto Protocol and subsequent international agreements and emissions trading schemes, could adversely affect the profi tability of the Group. Regulatory measures may infl uence energy prices, demand or the margins achieved for carbon intensive products such as coal.

Root cause: Anglo American is a signifi cant user of energy. We are also a major coal producer and exporter.

Mitigation: In addition to the initiatives to monitor and limit the impact of operations on the environment, we continuously seek to reduce energy input levels at our operations. Our asset optimisation programme seeks to make operations more energy effi cient.

No change in risk	INVESTING		ORGANISING Page 18
	OPERATING	Page 22	EMPLOYING

INVESTING	Page 14	ORGANISING Page 18	Change in risk during 2012 Increased risk
OPERATING	Page 22	EMPLOYING Page 32	No change in risk	Decreased risk

LIQUIDITY RISK

Our Group is exposed to liquidity risk in terms of being able to fund operations and growth.

Impact: If we are unable to obtain suffi cient credit as a result of prevailing capital market conditions, we may not be able to raise suffi cient funds to develop new projects, compete for new complex projects requiring signifi cant capital expenditure, fund acquisitions or meet our ongoing fi nancing needs. As a result, our revenues, operating results, cash fl ows or fi nancial position may be adversely affected.

Root cause: Liquidity risk arises from uncertainty or volatility in the capital or credit markets owing to perceived weaknesses of the global economic environment, or possibly as a response to shock events. Liquidity risk also arises when lenders are insecure about our long term cash generative capacity.

Mitigation: We have an experienced Treasury team which is responsible for ensuring that there are suffi cient committed loan facilities in place to meet short term business requirements after taking into account cash fl ows from operations and holdings of cash, as well as any Group distribution restrictions that exist. We limit exposure on liquid funds through a policy of minimum counterparty credit ratings, daily counterparty settlement limits and exposure diversifi cation.

OPERATING EMPLOYING

No change in risk INVESTING ORGANISING Page 18

POLITICAL, LEGAL AND REGULATORY

Wherever we operate, our businesses may be affected by political or regulatory developments, including changes to fi scal regimes or other regulatory regimes.

Impact: Potential impacts include restrictions on the export of currency, expropriation of assets, imposition of royalties or other taxes targeted at mining companies, and requirements for local ownership or benefi ciation. Political instability can also result in civil unrest and nullifi cation of existing agreements, mining permits or leases. Any of these may adversely affect the Group's operations or results of those operations.

Root cause: The Group has no control over local political acts or changes in local tax rates. It recognises that its licence to operate through mining rights is dependent on a number of factors, including compliance with regulations.

Mitigation: The Group actively monitors regulatory and political developments on a continuous basis.

Commentary: During 2012 we saw new or increased taxes and royalties introduced in Australia, Brazil, Chile, Colombia, South Africa and Zimbabwe, resolution of a legal dispute in Chile regarding the option over ownership of part of our Anglo American Sur assets and the loss of our mining concession in Venezuela. These matters are further explained on pages 62, 70 and 73 respectively and all are indicative of a more diffi cult political, legal and regulatory environment.

Increased risk	INVESTING	Page 14	ORGANISING Page 18
	OPERATING	Page 22	EMPLOYING	Page 32

EXTERNAL RISKScontinued Linking to our 4 strategic pillars for more information

INFLATION

The Group is exposed to potentially high rates of infl ation in the countries in which it operates.

Impact: Higher rates of infl ation may increase future operational costs if there is no concurrent depreciation of the local currency against the US dollar, or an increase in the dollar price of the applicable commodity.

This may have a negative impact on profi t margins and fi nancial results.

Root cause: Cost infl ation in the mining sector is more apparent during periods of high commodity prices as demand for input goods and services can exceed supply.

Mitigation: We closely manage costs through our asset optimisation and supply chain initiatives and, where necessary, through adjusting employee and contractor numbers.

Commentary: Despite commodity price reductions throughout 2012, cost infl ation in the mining sector continued during the period, which, combined with commodity price reductions, squeezed operating margins. Further detail is provided on pages 42–47.

Increased risk	INVESTING	ORGANISING Page 18
	OPERATING	EMPLOYING

COUNTERPARTY RISK

The Group is exposed to counterparty risk from customers, certain suppliers and holders of cash.

Impact: Financial losses may arise should those counterparties become unable to meet their obligations to the Group.

Root cause: Severe economic conditions or shock events as experienced in recent years can have a major impact on the ability of fi nancial institutions and other counterparties with whom we have relationships to meet their obligations.

Mitigation: Our Group Treasury team is responsible for managing counterparty risk with banks where Anglo American places cash deposits. However, the Treasury operations of joint ventures and associates are independently managed and may expose the Group to fi nancial risks greater than the Group's own policies would permit.

For other counterparty risks our businesses have credit management procedures in place.

No change in risk	INVESTING	ORGANISING Page 18
	OPERATING	EMPLOYING

CURRENCY RISK

The Group is exposed to currency risk when transactions are not conducted in US dollars.

Impact: Fluctuations in the exchange rates of the most important currencies infl uencing our own operating costs and asset valuations (the South African rand, Chilean peso, Brazilian real, Australian dollar, and pound sterling) may materially affect the Group's fi nancial results.

Root cause: The global nature of the Group's businesses exposes the Group to currency risk.

Mitigation: Given the diversifi ed nature of the Group, the Group's policy is generally not to hedge currency risk. Mitigation in the form of foreign exchange hedging is limited to debt instruments and capital expenditure on major projects.

No change in risk	INVESTING	ORGANISING Page 18
	OPERATING	EMPLOYING

OPERATIONAL RISKS Linking to our 4 strategic pillars for more information

HEALTH AND SAFETY

Failure to maintain the high levels of safety management can result in harm to our employees, contractors, communities near our operations and damage to the environment.

Occupational health risks to employees and contractors include noise-induced hearing loss, occupational lung diseases and tuberculosis (TB).

In sub-Saharan Africa in particular, HIV/AIDS is a threat to economic growth and development.

Impact: In addition to injury, health and environmental damage, impacts could include fi nes and penalties, liability to employees or third parties, impairment of Anglo American's reputation, industrial action or inability to attract and retain skilled employees. Government authorities may force closure of mines on a temporary or permanent basis or refuse mining right applications.

The recruitment and retention of skilled people required to meet growth aspirations can be affected by high rates of HIV/AIDS.

Root cause: Mining is a hazardous industry and working conditions such as weather, altitude and temperature can add to the inherent dangers of mining, whether underground or in open pit mines.

Mitigation: Anglo American sets a very high priority on safety and health matters. A safety risk management process, global standards and a safety and environment assurance programme form part of a consistently applied robust approach to mitigating safety risk.

Anglo American provides anti-retroviral therapy to employees with HIV/AIDS and undertakes education and awareness programmes to help prevent infection or spread of infection.

No change in risk	INVESTING		ORGANISING
	OPERATING	Page 22	EMPLOYING

ENVIRONMENT

Certain of our operations create environmental risk in the form of dust, noise or leakage of polluting substances from site operations and uncontrolled breaches of tailings dam facilities, generating harm to our employees, contractors, the communities near our operations, air quality, water purity and land contamination.

Impact: Potential impacts include fi nes and penalties, statutory liability for environmental remediation and other fi nancial consequences that may be signifi cant.

Governments may force closure of mines on a temporary or permanent basis or refuse future mining right applications.

Root cause: The mining process, including blasting and processing of orebodies, can generate dust and noise and requires the storage of waste materials in liquid form.

Mitigation: The Group implements a number of initiatives to monitor and limit the impact of its operations on the environment.

No change in risk	INVESTING		ORGANISING
	OPERATING	Page 22	EMPLOYING

INVESTING	Page 14	ORGANISING Page 18		Change in risk during 2012 Increased risk
OPERATING	Page 22	EMPLOYING	Page 32	No change in risk	Decreased risk

EXPLORATION

Exploration and development are costly activities, with no guarantee of success, but are necessary for future growth.

Impact: Failure to discover and develop new mineral resources of suffi cient magnitude could have an adverse bearing on future results and the Group's fi nancial condition.

Root cause: Exploration and development are speculative activities and often take place in challenging or remote locations from a climate, altitude or political perspective.

Mitigation: The Group invests considerable sums each year in focused exploration programmes to enable resource discovery and development to reserves. This investment includes the use of leading technology in exploration activity.

No change in risk	INVESTING Page 14		ORGANISING Page 18
	OPERATING	Page 22	EMPLOYING

SUPPLY RISK

The inability to obtain key consumables, raw materials, mining and processing equipment in a timely manner.

Impact: Any interruption to the Group's supplies or increase in costs has a negative effect on our fi nancial position and future performance.

Root cause: During strong commodity cycles, increased demand can be experienced for such supplies, resulting in periods when supplies are not always available to meet demand.

Anglo American has limited infl uence over manufacturers and suppliers.

Mitigation: We take a proactive approach to developing relationships with critical suppliers and to leveraging the Group's purchasing power. Contingency plans are developed to mitigate loss of critical supplies.

OPERATING Page 22 EMPLOYING No change in risk INVESTING ORGANISING Page 18

CONTRACTORS

Inability to employ the services of contractors to meet business needs or at expected cost levels.

Impact: Disruption of operations or increased costs may arise if key contractors are not available to meet production needs. Delays in start-up of new projects may also occur.

Root cause: Mining contractors are used at several Group operations to develop mining projects, mine and deliver ore to processing plants. In periods of high commodity prices, demand for contractors may exceed supply.

Mitigation: Effective planning and the establishment of effective working relationships with critical contractors help mitigate this risk.

No change in risk	INVESTING	ORGANISING
	OPERATING	EMPLOYING	Page 32

ORE RESERVES AND MINERAL RESOURCES

Anglo American's Ore Reserves and Mineral Resources estimates are subject to a number of assumptions that may be incorrect.

Impact: Deviations from the estimated price of commodities, production costs and mining and processing recovery rates may have an impact on the fi nancial condition and prospects of the Group.

Root cause: All assumptions related to Ore Reserves and Mineral Resources are long term in nature and are subject to volatility owing to economic, regulatory or political infl uences.

Mitigation: Anglo American is experienced in managing Ore Reserves and Mineral Resources and has robust procedures in place to reduce the likelihood of signifi cant variation. All factors are consistently monitored by management.

The Group's procedure on reporting of Ore Reserves and Mineral Resource estimates is summarised on page 191.

No change in risk	INVESTING	Page 14	ORGANISING Page 18
	OPERATING		EMPLOYING

OPERATIONAL PERFORMANCE AND PROJECT DELIVERY

Failure to meet production targets or project delivery timetables and budgets.

Impact: Increased unit costs may arise from failure to meet production targets, thus affecting our operational and fi nancial performance. Failure to meet project delivery timetables and budgets may delay cash infl ows, increase capital costs and reduce profi tability, as well as have a negative impact on the Group's reputation.

Root cause: Increasing regulatory, environmental, access and social approvals can increase construction costs and introduce delays.

Operational performance can be infl uenced by technical and engineering factors as well as events or circumstances that have an impact on other critical inputs to the mining and processing of minerals.

Mitigation: Management oversight of operating performance and project delivery through regular executive management briefi ngs, a continuous focus on improvement of operations through our asset optimisation programme, and consistent application of the company's methodology for new projects are vital aspects in managing this risk.

Commentary: While some of our growth projects ramped up production during 2012 as planned, our key project in Brazil, Minas-Rio is behind schedule as a result of permit delays and legal challenges, as described on pages 58 and 59. In addition, some of our business units did not meet expected production volumes due to operational performance challenges as indicated on page 43. Production performance was also affected by industrial strike action in South Africa as described on pages 57 and 80.

Increased risk	INVESTING	Page 14	ORGANISING Page 18
	OPERATING	Page 22	EMPLOYING	Page 32

OPERATIONAL RISKScontinued Linking to our 4 strategic pillars for more information

EVENT RISK

Damage to physical assets from fi re, explosion, natural catastrophe or breakdown of critical machinery.

Impact: The direct costs of repair or replacement combined with business interruption losses can result in fi nancial losses.

Root cause: Some of our operations are located in areas exposed to natural catastrophes such as earthquake/extreme weather conditions. The impact of climate change may intensify the severity of weather events.

The nature of our operations exposes us to potential failure of mining pit slopes and tailings dam walls, fi re, explosion and breakdown of critical machinery, with long lead times for replacement.

Mitigation: Specialist consultants are engaged to analyse such event risks on a rotational basis and provide recommendations for management action in order to prevent or limit the effects of such a loss.

Contingency plans are developed to respond to signifi cant events and restore normal levels of business activity. Anglo American purchases insurance to protect itself against the fi nancial consequences of an event, subject to availability and cost.

OPERATING Page 22 EMPLOYING No change in risk INVESTING ORGANISING

EMPLOYEES

The ability to recruit, develop and retain appropriate skills for the Group.

Strikes or other industrial relations disputes frequently occur.

Impact: Failure to retain skilled employees or to recruit new staff may lead to increased costs, interruptions to existing operations and delay in new projects.

Industrial disputes have an adverse effect on production levels, costs and the results of operations.

Root cause: We are subject to global competition for skilled labour. Our assets and development projects are often in remote places or in countries where it is a challenge to recruit suitably skilled employees.

In the key countries where the Group operates, the majority of employees are members of trade unions. Negotiations over wage levels or working conditions can sometimes fail to result in agreement.

Mitigation: Anglo American's objective is to be the employer of choice in the mining sector. A comprehensive human resources strategy has been devised to support that objective, focused on the attraction, retention and development of talented employees and the effective deployment of talent across the Group. The Group seeks constructive relationships and dialogue with trade unions and employees in all its businesses.

Commentary: During the second half of 2012 we suffered from strike action in our Platinum and Kumba Iron Ore business units in South Africa. These strikes had a signifi cant impact on production levels as described on pages 57 and 80.

Decreased risk	INVESTING	ORGANISING
	OPERATING	EMPLOYING Page 32

BUSINESS INTEGRITY

Failure to prevent acts of fraud, bribery, corruption or anti-competitive behaviour.

Impact: Potential impacts include prosecution, fi nes, penalties and reputational damage.

Anglo American may suffer fi nancial loss if it is the victim of a fraudulent act.

Root cause: In certain countries where the Group operates the risk of corruption is high, as indicated by indices prepared by independent non-governmental organisations (NGOs).

Mitigation: Anglo American has very clear principles on the manner in which it conducts its business and expects all employees to act in accordance with its values. Policies, procedures and awareness programmes are in place to ensure consistent understanding of the Group's expectations.

The Group's internal control environment is designed to prevent fraud and is regularly reviewed by an internal audit team to provide assurance that controls are designed and operating effectively.

Commentary: The continued implementation of our programme of measures to raise awareness, understanding and management of bribery risk during 2012 should have a positive impact in reducing the likelihood of this risk materialising. The global spread of our business, however, means we can never eliminate this risk.

Decreased risk	INVESTING		ORGANISING
	OPERATING	Page 22	EMPLOYING

JOINT VENTURES

Failure to achieve expected standards of health, safety and environment performance in joint ventures.

Impact: If similar standards are not implemented in joint ventures, higher costs or lower production may result and have a bearing on operational results, asset values or the Group's reputation.

Root cause: Some of the Group's operations are controlled and managed by joint venture partners, associates or by other companies. Management of non-controlled assets may not comply with the Group's standards.

Mitigation: The Group seeks to mitigate this risk by way of a thorough evaluation process before commitment to any joint venture and through implementation of ongoing governance processes in existing joint ventures.

Commentary: During 2012, we completed the acquisition of the Oppenheimer family shares in the De Beers business, which includes a number of joint ventures. We also completed the Tarmac joint venture with Lafarge in early 2013, (refer page 89). Thus, as the number of joint ventures in the Group increases, the profi le of this risk has increased in consequence.

Increased risk	INVESTING	Page 14	ORGANISING Page 18
	OPERATING	Page 22	EMPLOYING

ACQUISITIONS AND DIVESTMENTS

Failure to achieve expected benefi ts from any acquisition or value from assets or businesses sold.

Impact: Failing to deliver expected benefi ts from acquisitions can result in adverse fi nancial performance, lower production volumes or problems with product quality. The Group could fi nd itself liable for past acts or omissions of the acquired business without any adequate right of redress.

Failure to achieve expected values from the sale of assets or delivery beyond expected receipt of funds may result in higher debt levels, underperformance of those businesses and possible loss of key personnel.

Root cause: Benefi ts may not be achieved as a result of changing or incorrect assumptions or materially different market conditions or defi ciencies in the due diligence process.

Delays in the sale of assets or reductions in value may arise due to changing market conditions.

Mitigation: Rigorous guidelines are applied to the evaluation and execution of all acquisitions, including those that require the approval of the Investment Committee and Group Management Committee and, subject to size, the Board.

Commentary: The acquisition of Oppenheimer family shares in De Beers has enabled benefi ts to be identifi ed that will be delivered during the integration process. This acquisition increases the profi le of this risk. Please refer to pages 83–85 for further detail.

Increased risk	INVESTING	Page 14	ORGANISING Page 18
	OPERATING	Page 22	EMPLOYING

INFRASTRUCTURE

Inability to obtain adequate supporting facilities, services and installations (water, power, road, rail and port, etc.).

Impact: Failure to obtain supporting facilities may affect the sustainability and growth of the business, leading to loss of competitiveness, market share and reputation.

Failure of rail or port facilities may result in delays and increased costs as well as lost revenue and reputation with customers. Failure to procure shipping costs at competitive market rates may reduce profi t margins.

Root cause: The potential disruption of ongoing generation and supply of power is a risk faced by Anglo American in a number of countries in which it operates. Our operations and projects can be located in countries or regions where power and water supplies are not certain and may be affected by population growth, the effects of climate change or lack of investment by owners of infrastructure.

We rely upon effective rail and port facilities for transporting our products and will be expected to provide shipment of product in some circumstances to customers' premises. We use third parties to provide these services.

Mitigation: We seek to work closely with suppliers of infrastructure to mitigate the risk of failure and have established contingency arrangements. Long term agreements with suppliers are sought where appropriate.

COMMUNITY RELATIONS

Disputes with communities may arise from time to time.

Impact: Failure to manage relationships with local communities, government and NGOs may disrupt operations and negatively affect Anglo American's reputation as well as our ability to bring projects into production.

Root cause: We operate in several countries where ownership of rights in respect of land and resources is uncertain and where disputes in relation to ownership or other community matters may arise.

The Group's operations can have an impact on local communities, including the need, from time to time, to relocate communities or infrastructure networks such as railways and utility services.

Mitigation: We have developed comprehensive processes to enable our business units to effectively manage relationships with communities and we actively seek to engage with all communities impacted by our operations.

OPERATING Page 22 EMPLOYING No change in risk INVESTING ORGANISING Page 18

IRON ORE AND MANGANESE

Paulo Castellari-Porchia CEO – Iron Ore Brazil

UNDERLYING OPERATING PROFIT (2011: \$4,400 m) \$2,949 m

SHARE OF GROUP UNDERLYING OPERATING PROFIT (2011: 40%)

UNDERLYING EBITDA (2011: \$4,586 m)

Key fi nancial and non-fi nancial performance indicators
\$ million (unless otherwise stated)(1)	2012	2011
Underlying operating profi t	2,949	4,400
Kumba Iron Ore	2,980	4,491
Iron Ore Brazil	(5)	(141)
Samancor	103	165
Projects and Corporate	(129)	(115)
Underlying EBITDA	3,198	4,586
Net operating assets	9,356	12,427
Capital expenditure	2,077	1,659
Share of Group underlying operating profi t	48%	40%
Share of Group net operating assets	18%	28%
Non-fi nancial indicators(2)	2012	2011
Number of fatal injuries
Kumba Iron Ore	2	–
Iron Ore Brazil	–	1
Lost-time injury frequency rate
Kumba Iron Ore	0.10	0.08
Iron Ore Brazil	0.01	0.01
Total energy consumed in 1,000 GJ
Kumba Iron Ore	7,603	7,045
Iron Ore Brazil	713	2,074
Total greenhouse gas emissions in 1,000 tonnes CO2 e
Kumba Iron Ore	945	907
Iron Ore Brazil	49	112
Total water used for primary activities in 1,000 m3
Kumba Iron Ore	8,803	8,179
Iron Ore Brazil	895	5,273

(1) In 2012, Amapá was reclassifi ed from Iron Ore and Manganese to Non-core within the Other Mining and Industrial (OMI) segment to align with internal management reporting. Financial comparatives have been reclassifi ed to align with current presentation.

01 Construction of the pump station at our Minas-Rio iron ore project in Brazil.

Source: CRU, AME, company reports and Anglo American Commodity Research estimates (1) Global iron ore, Fe unit basis

Rest of World 49 Mt Source: CRU, AME, company reports and Anglo American Commodity Research estimates

(1) Global iron ore, Fe unit basis

BUSINESS OVERVIEW

Our Iron Ore portfolio is based in South Africa and Brazil. In South Africa, we have a 69.7% (2011: 65.2%) shareholding in Kumba Iron Ore Limited, a leading supplier of seaborne iron ore. Our Brazilian interests comprise the Minas-Rio project (composed of Iron Ore Brazil's 100% share in Anglo Ferrous Minas-Rio Mineração S.A., and its 49% holding in LLX Minas-Rio, which owns the port of Açu currently under construction, and from which the project's iron ore will be exported). Our 70% interest in the Amapá iron ore system is now held in Other Mining and Industrial.

Kumba, listed on the Johannesburg Stock Exchange, produces a leading quality lump ore and also produces premium fi ne ore, in a lump-to-fi ne ratio of 60:40. Kumba operates three mines – Sishen mine in the Northern Cape, which produced 33.7 million tonnes (Mt) of iron ore in 2012; the new Kolomela mine, situated close to Sishen mine, which was brought into production during 2011 and produced 8.5 Mt during 2012; and Thabazimbi mine in Limpopo, with an output of 0.8 Mt.

Export ore is transported via the Sishen/Kolomela-Saldanha iron ore export channel (IOEC) to Saldanha Port. The rail and port operations are owned and operated by the South African parastatal, Transnet.

Kumba is well positioned to supply the growing Asia-Pacifi c and Middle East markets and European steel markets. In 2012, the company exported 90% of its total iron ore sales volumes of 44.4 Mt, with 69% of these exports destined for China and the remainder for Europe, Japan, South Korea and India.

Our Minas-Rio iron ore project is located in the states of Minas Gerais and Rio de Janeiro and will include open pit mines and a benefi ciation plant in Minas Gerais producing high grade pellet feed. On completion of Phase 1, ore will be transported through a 525 kilometre slurry pipeline to the port of Açu in Rio de Janeiro state.

Kumba produces a leading quality lump ore and also produces a premium fi ne ore.

OPERATING DRIVING PIT SAFETY TO A NEW LEVEL

As its vehicle population increases, one of the world's biggest open pit operations is tackling the issue of vehicle collisions.

As no suitable, off-the-shelf solutions were available, Sishen's engineers joined forces with FLARM, specialists in aviation collision avoidance technology, to design a system tailor-made for open pit mining.

The ensuing collision avoidance system (CAS) links all vehicles and safety features in one intelligent system. It allows for vehicles to be remotely monitored, and manual control to be overridden. Notably, CAS eliminates haul trucks' notoriously blind spots, giving drivers a much better all-round view.

As operators gain experience in CAS, Sishen is seeing a signifi cant fall in vehicle collisions and 'near misses'.

Meanwhile, FLARM has established SAFEmine, a company set up specifi cally to bring Sishen's CAS technology to a worldwide market.

Image

Kumba's Keitumetse Hynes has been trained in CAS. She drives a haul truck at the Sishen iron ore mine in South Africa.

Our Manganese interests consist of a 40% shareholding in Samancor Holdings, which owns Hotazel Manganese Mines and Metalloys, both in South Africa, and a 40% shareholding in each of the Australianbased operations Groote Eylandt Mining Company (GEMCO) and Tasmanian Electro Metallurgical Company (TEMCO), with BHP Billiton owning 60% and having management control. Samancor is the world's largest producer of manganese ore and is among the top global producers of manganese alloy. Its operations produce a combination of ores and alloys from sites in South Africa and Australia.

INDUSTRY OVERVIEW

Global demand for iron ore is linked primarily to the state of the global steel industry and, more specifi cally, to the steel manufacturing sector in China. The country is the largest steel producer and consumer in the world and accounts for more than two-thirds of global seaborne iron ore imports.

Manganese alloy is a key input into the steelmaking process. Manganese high-grade ore is particularly valuable to alloy producers because it is proportionately more effi cient than low-grade ore in the alloying process.

STRATEGY

A key element of Anglo American's strategy is to grow its position in iron ore and to supply premium iron ore products against a background of declining quality global iron ore supplies. We have a unique iron ore resource profi le, with extensive, high quality resource bases in South Africa and Brazil.

Kumba seeks to maximise total shareholder value by enhancing the value of its current operations through its asset optimisation programmes, capturing value across the value chain through its commercial and logistics strategies, executing its growth projects effi ciently, and ensuring that it has the organisational capability to execute its strategy.

The company plans to grow its business organically in order to achieve production of 70 Mtpa from

Source: Anglo American Commodity Research

(1) QAMOM is a pricing mechanism based on average quarter in arrears minus one month.

South Africa and, in the longer term, through expanding its production footprint into other countries in Africa.

Minas-Rio will capture a signifi cant part of the pellet feed market with its premium product featuring high iron content and low contaminants. Phase 1 of the Minas-Rio project will produce 26.5 Mtpa, with potential optimisation to 29.8 Mtpa.

During the year Anglo American completed a detailed cost and schedule review of the Minas-Rio iron ore project. The review included third party input and examined the outstanding capital expenditure requirements in light of current development progress and the disruptive challenges faced by the project. The review included a detailed re-evaluation of all aspects of the outstanding schedule, with a focus on maximising value and mitigating risk. Following completion of the review, capital expenditure for the Minas-Rio project is projected to increase to \$8.8 billion, if a centrally held risk contingency of \$600 million is utilised in full. On the basis of the revised capital expenditure requirements and assessment of the full potential of Phase 1 of the project (excluding at this stage the potential for future expansions to 90 mtpa), Anglo American has recorded an impairment charge of \$4 billion at 31 December 2012, on a post-tax basis. The fi rst phase of the project will begin its ramp up at the end of 2014.

Operating safely, sustainably and responsibly

Kumba faces a number of material issues in its current operating environment and at the forefront is meeting rising expectations and demands from stakeholders – including government, employees, communities and shareholders – in a fi nancially and resource constrained economic and social environment. Achieving and maintaining our licence to operate also remains of the utmost importance – including social and environmental compliance – amidst increasing regulatory, cost and governance requirements in South Africa. The attraction, retention and development of human resources remain critical priorities for Kumba.

We address these issues through a considered and proactive approach to talent management and retention as well as workplace health and safety, responsible environmental management, and the application of leading social performance standards and management systems. At the core of each of these strategic work streams is a culture of regular and transparent two-way engagement.

01 Moving sections into position along the 525 kilometre iron ore slurry pipeline at our Minas-Rio project in Brazil.

Following successful commissioning in 2011, Kolomela continued its ramp up ahead of expectations and delivered an outstanding performance in 2012, producing 8.5 Mt of iron ore.

02 Preparation work under way on installing power supply at the site of Minas-Rio's milling plant.

end of 2012, with steel mills returning to the market, which was refl ected in a marked increase in index iron ore prices. Overall, index prices averaged \$130/t (CFR 62% Fe Platts) in 2012, 23% lower than the \$169/t average achieved in 2011.

Operating performance Kumba Iron Ore

Underlying operating profi t decreased by 34% from \$4,491 million to \$2,980 million principally as a result of 23% weaker average export iron ore prices, partly offset by a 7% increase in export sales volumes. Total operating costs rose by 16%, driven primarily by a \$254 million increase in operating costs at Kolomela mine owing to operating costs being capitalised in 2011, above infl ation cost increases and the mining of 14.5 Mt of additional waste at Sishen mine.

Total production of iron ore increased by 4% to 43.1 Mt due to the ramp up of Kolomela, partially offset by the impact of the unprotected strike during the fourth quarter. Total tonnes mined at Sishen rose by 4% to 171.6 Mt (2011: 165.0 Mt), of which waste mined amounted to 133.5 Mt, an increase of 12% (2011: 119.0 Mt). Iron ore production at Sishen, however, decreased by 13% to 33.7 Mt (2011: 38.9 Mt) mainly owing to the effects of the unprotected strike. On 3 October, around 300 Sishen employees commandeered most of the mining equipment at the mine. The situation ended on 16 October and production recommenced on 20 October, though on a limited basis as attendance in the mining section remained low in the immediate aftermath of the strike. Operations are subsequently being ramped up. Production rates continue to improve and are expected to return to normal operating levels by the end of the fi rst half of 2013.

Sishen lost around 5 Mt of production as a result of the industrial action and the subsequent ramp up of operations. These losses exacerbated the production challenges experienced earlier in the year resulting from mining feedstock and quality constraints that affected the availability of material supplied to the mine's two processing plants.

FINANCIAL AND OPERATIONAL OVERVIEW

Underlying operating profi t decreased by 33% from \$4,400 million to \$2,949 million, principally as a result of weaker average export iron ore prices at Kumba and lower prices and alloy volumes at Samancor. This was partially offset by an increase in export iron ore at Kumba and record manganese ore volumes at Samancor.

Safety and environment Kumba Iron Ore

Regrettably, Kumba suffered its fi rst loss of life since 2010, when two employees were fatally injured at Sishen mine during 2012. Kumba recorded a lost-time injury rate (LTIFR) of 0.10 (2011: 0.08), a 25% increase year on year. Kolomela continued its impressive safety record and achieved 29 million man-hours without a fatal incident or LTI between March 2010 and October 2012.

Iron Ore Brazil

There were no losses of life at Iron Ore Brazil sites in the year. The LTIFR of 0.01 was in line with the prior year.

Markets

Global crude steel production increased by 2% in 2012 to 1,550 Mt (2011: 1,526 Mt). This increase was driven primarily by China, where crude steel output increased by around 3% to 717 Mt (2011: 695 Mt). In the rest of the world, crude steel output was fairly fl at at 833 Mt.

Seaborne iron ore supplies were subject to adverse weather conditions in both Brazil and Australia in the fi rst quarter of 2012, and ongoing Indian supply disruptions following the ban on iron ore mining in Goa. For the year as a whole, seaborne supplies were 0.3% higher, reaching a level of 1,062 Mt.

Considerable price volatility marked 2012, especially during the third quarter when prices fell by as much as 36%, as Chinese steel mills depleted stockpiles and reduced raw material inventory levels to as little as 17 days' worth of production requirements. Iron ore prices reached a high of \$151/t (62% Fe CFR China) in April 2012, but fell to a low of \$89/t in early September, before stabilising at around \$130/t towards the end of the year. The market recovered at the

Following successful commissioning in 2011, Kolomela continued its ramp up ahead of schedule and delivered an outstanding performance in 2012, producing 8.5 Mt. Production has exceeded monthly design capacity since July 2012, and reached record levels during the second half of the year. Total tonnage mined increased by 26% to 43.5 Mt (2011: 34.6 Mt), of which waste mined was 33.5 Mt, 11% higher than the prior year fi gure of 30.3 Mt.

Kumba's sales volumes were 2% higher at 44.4 Mt (2011: 43.5 Mt). Export sales volumes for the year increased by 7% to 39.7 Mt (2011: 37.1 Mt) as production losses at Sishen were offset by production from Kolomela and by sales from stock. The production losses caused by the unprotected strike reduced export stock levels across the value chain and impacted export spot sales volumes. Notwithstanding the impact of the strike, Kumba met all its export customer sales commitments for 2012. Domestic sales volumes to AMSA reduced by 27% to 4.7 Mt (2011: 6.4 Mt). Export sales volumes to China accounted for 69% of the company's total export volumes for the year, compared to 68% in 2011.

Iron Ore Brazil

Iron Ore Brazil generated an underlying operating loss of \$5 million, refl ecting the pre-operational state of the Minas-Rio project.

Samancor

Underlying operating profi t declined by 38% to \$103 million (2011: \$165 million), driven by lower prices and lower alloy volumes, partly offset by lower costs and strong ore sales volumes. A slowdown in steel production weighed heavily on ore and alloy prices.

Production of ore increased by 20% from 2.8 Mt to a record 3.3 Mt (attributable basis) owing to a consistently strong operating performance and improved plant availability at both GEMCO in Australia and Hotazel in South Africa. Alloy

production, however, decreased by 34% to 198,400 tonnes (attributable basis) following the termination of energy-intensive silica-manganese production at the Metalloys plant in South Africa and the temporary suspension of production at TEMCO in Australia during the fi rst half of the year. TEMCO subsequently returned to full capacity during the third quarter.

Projects

The components of Kumba's growth include new developments, expansions at existing operations, and growth though technological advances that will allow the processing of lower grade ore.

Kumba is currently studying opportunities to expand Kolomela's production through a benefi ciation process, which could add a further 6 Mtpa to its output. The project has progressed to pre-feasibility study and further decisions will be made in due course, depending on prevailing market conditions.

The SEP 1B commenced construction during the year, and is expected to be commissioned in 2013, within the \$48 million capex budget.

The growth portfolio is constantly being reviewed taking into account the macroeconomic environment, the outcome of project studies and the status of the IOEC expansion study.

Construction is under way at the fi rst phase of the 26.5 Mtpa Minas-Rio iron ore project, with optimisation to 29.8 Mtpa. Anglo American announced in December 2012 that all three injunctions that had disrupted the project in the year, contributing to the delay of fi rst ore on ship (FOOS) to the end of 2014, had been lifted.

We announced in December 2012 that all three injunctions that had disrupted the Minas-Rio project during the year, contributing to the delay of fi rst ore on ship to the end of 2014, had

been lifted.

Construction progress is in line with the revised construction schedule announced in July 2012, namely:

•The mine and benefi ciation plant are on track – 92% of the earthworks have been completed at the benefi ciation plant, the fi rst of two grinding mills has been installed and the civil works for the secondary crusher are complete;
•At the 525 kilometre slurry pipeline, almost 50% of the pipeline has been laid (approximately 247 kilometres), with 76% of the land cleared for earthworks and pipe installation to take place;
•The fi ltration plant is on schedule for completion by June 2013;
•The port's two stackers and reclaimer have been erected and the shiploader installation is under way.

01 At the Kumba/Kolomela rail loading facility iron ore is transferred to rail wagons for the 861 kilometre journey to the dedicated iron-ore export terminal at Saldanha Bay on South Africa's Atlantic coast.

02 The jig plant at Sishen mine is one of the biggest of its type in the world.

The primary drivers of the capital expenditure increase from the previous estimate in 2011 relate to:

•The delay in FOOS from late 2013 to late 2014;
•Scope changes, including those agreed as part of the review process and taking into consideration additional land access costs and purchases, increased earth and civil works required following access to various sites along the pipeline and the increased costs of meeting licence conditions;
•Construction infl ation costs, including contract adjustments and mining equipment price increases;
•A centrally held risk contingency of \$600 million to accommodate a number of potential factors to achieve the FOOS date of the end of 2014, including the potential for additional price escalation, productivity acceleration and fi nalisation of the extent of earth and civil works required on land that is yet to be accessed.

Following its approval in 2011, the \$279 million GEEP2 project (Anglo American's 40% share: \$112 million) will increase GEMCO's benefi ciated product capacity from 4.2 Mtpa to 4.8 Mtpa through the introduction of a dense media circuit by-pass facility. The project is expected to be completed, on schedule and budget, in late 2013. The expansion will also address infrastructure constraints by increasing road and port capacity to 5.9 Mtpa, creating 1.1 Mtpa of latent capacity for future expansion.

The addition of a \$91 million (on a 100% basis) high carbon ferromanganese furnace at the Metalloys smelter in South Africa will add an additional 130,000 tonnes of capacity per year. Hot commissioning was completed, on schedule, in the fourth quarter of 2012, with full production expected in the second quarter of 2013.

Kolomela mine remains on track to produce 9 Mt in 2013, in line with design capacity.

Outlook

A similar level of growth in global crude steel production is expected for 2013, with China's production rising marginally to about 740 Mt, while growth in production in other developing countries is expected to be countered by a reduction in output in some of the developed markets. In 2013, Indian iron ore production is expected to remain under pressure as a result of domestic policy changes. However, new supply capacity, primarily from Australia, is expected to partially offset this reduction in Indian supply.

The start of 2013 has seen a rapid recovery in iron ore prices. The consensus view is that this rally will not be sustained throughout the year; however some positive sentiment in relation to Chinese steel consumption growth has been restored and is expected to provide support to prices throughout the year. Seaborne iron ore supply growth may lead to iron ore prices softening in the second half of 2013, but on average prices are anticipated growth to be fi rmer than in 2012.

The knock-on effect of the 2012 unprotected strike at Sishen mine is expected to result in lower production volumes than originally planned in 2013. Sishen mine is anticipated to produce at least 37.0 Mt in 2013. The ramp up in waste mining at Sishen mine continues and will continue to put upward pressure on the mine's cash unit costs. Kolomela mine remains on track to produce 9 Mt in 2013, in line with design capacity. Export sales volumes are expected to be in line with 2012 levels.

Due to a weaker market, a supply side response provided price support for manganese ore in the latter part of 2012. The recovery in pricing is expected to continue into 2013, however, muted demand expectations are expected to limit the rate and extent of the recovery in the near term.

Kumba Iron Ore update Sishen supply agreement

arbitration A dispute arose between Sishen Iron Ore Company Proprietary Limited (SIOC) and ArcelorMittal South Africa Limited (AMSA) in February 2010, in

relation to SIOC's contention that the contract mining agreement concluded between them in 2001 had become inoperative as a result of the fact that AMSA had failed to convert its old order mining rights. This dispute has been referred to arbitration. On 9 December 2011, SIOC and AMSA agreed to delay the arbitration proceedings in relation to the Sishen Supply Agreement until the fi nal resolution of the mining rights dispute. This arbitration is only expected to commence in the fourth quarter of 2013, with possible resolution only expected in the third quarter of 2014 at the earliest.

An Interim Pricing Agreement (IPA2) between SIOC and AMSA was in place until 31 July 2012 and was extended to 31 December 2012.

In December 2012 a further interim agreement was concluded, after negotiations which were facilitated by the Department of Trade and Industry (DTI). The further interim agreement will govern the sale of iron ore from the Sishen mine to AMSA for the period 1 January 2013 to 31 December 2013, or until the conclusion of the legal processes in relation to the 2001 Sishen Supply agreement (whichever is sooner), at a weighted average price of \$65/t. Of the total 4.8 Mt, about 1.5 Mt is anticipated to be railed to Saldanha Steel and the rest to AMSA's inland operations.

21.4% undivided share of the Sishen mine mineral rights

On 3 February 2012 both the Department of Mineral Resources (DMR) and Imperial Crown Trading 289 Proprietary Limited (ICT) submitted applications for leave to appeal against the High Court judgment. SIOC applied for leave to present a conditional cross-appeal, in order to protect its rights. The Supreme Court of Appeal (SCA) hearing will be held on 19 February 2013, and the SCA judgement is expected to be received early in the second half of 2013.

The High Court order did not affect the interim supply agreement between AMSA and SIOC, which was in place until 31 July 2012 and was extended to 31 December 2012. SIOC will continue to take the necessary steps to protect its shareholders' interests in this regard.

METALLURGICAL COAL

UNDERLYING OPERATING PROFIT (2011: \$1,189 m) \$405 m

SHARE OF GROUP UNDERLYING OPERATING PROFIT (2011: 11%)

UNDERLYING EBITDA (2011: \$1,577 m) \$877 m

Key fi nancial and non-fi nancial performance indicators

\$ million (unless otherwise stated)	2012	2011
Underlying operating profi t	405	1,189
Underlying EBITDA	877	1,577
Net operating assets	5,219	4,692
Capital expenditure	1,028	695
Share of Group underlying operating profi t	7%	11%
Share of Group net operating assets	10%	11%
Non-fi nancial indicators	2012	2011
Number of fatal injuries	0	0
Lost-time injury frequency rate	1.75	2.47
Total energy consumed in 1,000 GJ	14,787	13,695
Total greenhouse gas emissions in 1,000 tonnes CO2 e	3,919	3,629
Total water used for primary activities in 1,000 m3	14,717	14,385

01 Mine site offi cer Nicolette Martens and production supervisor Gordon Barwick inspect the conveyor near the coal handling and preparation plant at Moranbah North, in Queensland, Australia. (1) Throughout the Metallurgical Coal commentary, all volumes are expressed on an attributable basis.

(2) CRU Metallurgical Coal Market Report (February 2013)

(3) Customs Information (Global Trade Information Services Inc.)

BUSINESS OVERVIEW

Anglo American is Australia's second largest metallurgical coal producer and third largest global exporter of metallurgical coal.(1)

Its coal operations in Australia are based on the east coast, from where the business serves a range of customers throughout Asia and the Indian sub-continent, Europe and South America. Our operation in Canada, Peace River Coal, mainly serves customers in Europe, Japan and South America.

Metallurgical Coal operates six mines in Australia and one metallurgical coal mine, Peace River Coal, in British Colombia, Canada. In Australia there is one wholly owned mine, and fi ve in which Metallurgical Coal has a majority interest. Five of the mines are located in Queensland's Bowen Basin: Moranbah North (metallurgical coal), Capcoal (metallurgical and thermal coal), Foxleigh (metallurgical coal), Dawson (metallurgical and thermal coal) and Callide (thermal coal). Drayton mine (thermal coal) is in the Hunter Valley, New South Wales. All of the mines are in well-established locations and have direct access to rail and port facilities at Dalrymple Bay and Gladstone in Queensland and Newcastle in New South Wales.

Moranbah North (88%) is an underground longwall mining operation with a mining lease covering 100 km2 . Coal is mined from the Goonyella Middle Seam, approximately 200 metres below the surface. The mine's annual capacity is 4.5 million tonnes (Mt) of hard coking coal for steel manufacturing.

Capcoal (70%) operates two underground mines and an open cut mine. Together, they produced around 6.0 Mt of hard coking, pulverised coal injection (PCI) and thermal coals in 2012.

Dawson (51%) is an open cut operation, with production of 4.6 Mt of coking and thermal coal in 2012.

Foxleigh (70%) is an open cut operation which produced 1.9 Mt of high quality PCI coal in 2012.

Peace River Coal (100%) is an open cut operation in Canada, with an output of 1.4 Mt of metallurgical coal in 2012, an increase of 47% over the prior year.

Metallurgical Coal owns an effective 23% interest in the Jellinbah and Lake Vermont mines in Queensland, producing 2.1 Mt of coking, PCI and thermal coals in 2012.

Anglo American has agreed to acquire a 58.9% interest in the Revuboè metallurgical coal project in Mozambique from the Talbot Estate for a total cash consideration of A\$540 million (approximately US\$555 million). The Revuboè project is an incorporated joint venture and includes Nippon Steel Corporation (33.3% interest) and POSCO (7.8% interest). Revuboè comprises hard coking and thermal coal suitable for open cut mining, with the potential to support the export of 6 to 9 million tonnes per annum (Mpta) on a 100% basis.

The transaction remains subject to a number of conditions and is in line with Anglo American's strategic commitment to grow the global metallurgical coal business to supply our customers from each of the key metallurgical coal supply regions of Australia, Canada and Mozambique.

Metallurgical Coal's resource base, consisting of Measured, Indicated and Inferred (in LOM) Resources additional to Coal Reserves, totals 3.8 billion tonnes on a 100% basis (2.7 billion tonnes on an attributable basis). Details of Metallurgical Coal Resources appear in the Coal Reserves and Resources section of the Annual Report, pages 200–203.

INDUSTRY OVERVIEW

Metallurgical coal, composed of coking coal and PCI coal, is an essential raw material in blast-furnace steel production, which represents approximately 70% of global crude steel output.

Global metallurgical coal supply amounts to approximately 1 billion tonnes per year. China is the biggest consumer of metallurgical coal, with total consumption of approximately 730 Mt(2) in 2012. Owing to its large domestic metallurgical coal production, China only needs to import about 7%, or 50 Mt(3), of its total metallurgical coal requirement. This, however, represents a signifi cant portion (20%) of the total global seaborne metallurgical coal market.

Metallurgical coal, composed of coking coal and PCI coal, is an essential raw material in blast-furnace steel production.

ORGANISING CAPCOAL OPEN CUT – AUSTRALIAN MINE OF THE YEAR

Metallurgical Coal's Capcoal Open Cut operation won the Mining Prospect Award's Australian Mine of the Year Award in 2012 owing to safety improvements, increased throughput at the coal handling and preparation plant (CHPP) and production milestones delivered over an 18 month period.

The site experienced a real step change in safety, with the total recordable case frequency rate decreasing by 75% since 2010 and the electrical maintenance workshop achieving 22 years' lost-time injury free in July 2012.

The site experienced the benefi ts of an upgrade to the CHPP, which increased capacity at the plant with the installation of a new 5 Mt capacity module. In June 2012, the CHPP achieved record feed tonnes with 1.4 Mt of coal processed through the plant in the month.

The introduction of a new rope shovel at Capcoal has allowed the site to take advantage of double sided loading. In the fi rst half of 2012, the mine experienced record metallurgical coal production, delivering its highest fi rst half of the year run of mine tonnes at 3.3 Mt, a 28% improvement on the previous best half production.

Image

Metallurgical Coal's Capcoal open cut mine in Queensland.

Source: AME, Wood Mackenzie, CRU, company reports and Anglo American Commodity Research estimates

Rest of World 29 Mt Source: AME, Wood Mackenzie, CRU, company reports and Anglo American Commodity Research estimates

In 2012, the international seaborne metallurgical coal market totalled around 250 Mt(2), the major consuming regions being Japan, South Korea, Taiwan, Europe, India, China and Brazil. On average, Australia supplies roughly two-thirds of the seaborne metallurgical coal market.

Historically, annual contract pricing has predominated in the market. A shift to shorter term pricing in 2010–2012 saw the majority of contracts priced on a quarterly basis, with a growing proportion being priced on a monthly basis.

The Queensland State Budget was delivered in September 2012, with a royalty rate increase which equates to a 22% increase on the royalty rate payable per tonne of coal sold for \$200/t or more, with effect from 1 October 2012.

STRATEGY

Emerging markets, particularly in the Asia-Pacifi c region, are likely to remain the driving force behind metallurgical coal demand. In light of this, Metallurgical Coal's strategy is to increase the value of the business by optimising existing operations and investing in growth projects in the supply regions best placed to produce the high-margin export metallurgical coals sought by our customers. To implement this strategy:

•A structured programme of asset optimisation has been designed to deliver industry-best operational performance over the existing asset base, targeting longwall performance at the underground operations and key equipment at the open cut mines;
•An attractive organic growth pipeline with the potential to triple hard coking coal production to satisfy growing market demand, including opportunities in Australia and Canada. To underpin its industry leading growth plans, Anglo American has several export port options under study in Queensland, Australia, and has secured port access for the Roman Project in Canada;

Metallurgical Coal has an attractive organic growth pipeline with the potential to triple hard coking coal production to satisfy growing market demand. •In line with demand from the steelmaking industry in both existing and emerging markets, Metallurgical Coal is realising increased value from developing superior specialised product offerings tailored to individual customers in the steel sector.

Operating safely, sustainably and responsibly

Water management and rehabilitation are key environmental focus areas for Metallurgical Coal. Climate variability in the regions in which we operate requires water management strategies that are equally effective in periods of fl ood and drought. Our rehabilitation strategy requires disciplined management of disturbed land and the development of mine closure plans.

To play our part in mitigating the emissions which may contribute to climate change and reduce our exposure to the carbon pricing mechanism, we have invested more than \$120 million over the past fi ve years to abate 8 Mt of CO2 e emissions using available commercial-scale technologies.

FINANCIAL AND OPERATIONAL OVERVIEW

Metallurgical Coal recorded an underlying operating profi t of \$405 million, 66% lower than the 2011 record of \$1,189 million. This was driven by a 29% decrease in export metallurgical coal prices, partially offset by a 25% increase in metallurgical coal sales volumes. Productivity improvements at both the open cut and underground operations and a reduction in weather related stoppages, supported by the rigorous preparation for seasonal rain, led to a signifi cant increase in metallurgical coal production and sales.

Year-on-year FOB cash unit costs improved, with a 10% reduction at the Australian export operations, and a 20% reduction achieved in the second half of the year.

Safety and environment

There were no fatal injuries at our Metallurgical Coal operations in 2012. The lost-time injury frequency rate of 1.75 is the lowest on record and represented a 29% improvement

2012 Metallurgical coal production

Operating and fi nancial review

over 2011 and was attributable to visible and proactive leadership and accountability at all levels, a focus on contractor management, and a reduction in the number of risks associated with vehicles and machinery.

Markets

Anglo American

weighted average achieved sales prices (\$/tonne)	2012	2011
Export metallurgical coal (FOB)	178	251
Export thermal coal (FOB)	96	101
Domestic thermal coal	37	35
Attributable sales volumes ('000 tonnes)	2012	2011
Export metallurgical coal	17,413	13,983
Export thermal coal	6,043	6,274
Domestic thermal coal	6,921	7,455

Prices for seaborne metallurgical coal dropped sharply in the latter half of the year, resulting in the average 2012 hard coking coal price falling by 27% to \$210/t from the 2011 average hard coking coal benchmark price of \$289/t. Overall supply of metallurgical coal was ahead of 2011 levels, owing to increased exports from the US, while Australian hard coking coal supply remained below 2010 levels.

Hard coking coal prices fell, with lower quality PCI and semi-soft prices falling more signifi cantly. The majority of Anglo American's metallurgical coal sales were placed against term contracts with quarterly negotiated price settlements.

Hard coking coal accounted for 67% of Metallurgical Coal's export metallurgical coal sales in 2012.

Operating performance

Attributable

production ('000 tonnes)	2012	2011
Export metallurgical coal	17,664	14,190
Export thermal coal	6,046	6,064
Domestic thermal coal	6,925	7,362

Export metallurgical coal production increased by 24% to 17.7 Mt, with record production in the second half, and the full year, while thermal coal production was in line with the prior year at 13.0 Mt. Production improved at both underground and open cut operations by 29% and 22% respectively, with record run of mine production achieved at all of the export open cut operations. Increased production was driven by asset optimisation programmes and a reduction in rain-related stoppages, supported by rain mitigation initiatives implemented during 2011.

Record coal production was achieved at the Capcoal open cut mine, with a 28% increase over the prior year, driven by best in class rates on large capacity shovels and optimal alignment of equipment to pit conditions.

Dawson delivered a notable turnaround in performance with total production increasing by 18% to a record of 4.6 Mt. This was due to improved equipment performance and the optimisation of the terrace mine design that was implemented in 2012.

Peace River Coal in Canada signifi cantly lifted its coal production by 47%, underpinned by productivity improvements and upgrades to the coal handling and preparation plant.

At the underground operations in Australia, production increased by 29%, driven by improved longwall performance. Moranbah delivered a 45% increase in volumes as a result of a recovery from the partial drift failure and a 47% increase in cutting hours in the second half of the year compared to the fi rst half.

Thermal coal production was impacted by wet weather in New South Wales and industrial action in the fi rst quarter at Drayton.

Projects

Phase 1 of our wholly owned Grosvenor project continues to be developed on schedule. All key permits and licences are in place and engineering and procurement activities are progressing to plan. Construction has commenced on site, with the access road complete and bulk earthworks well under way. Production of longwall coal is forecast to commence in 2016.

Record coal production was achieved at the Capcoal open cut mine, with a 28% increase over the prior year.

Studies for the next phase of our investment programme include Grosvenor Phase 2, a 6 Mtpa second longwall; and Moranbah South, a 12 Mtpa (on a 100% basis), 50%-owned joint venture, comprising two longwalls. Exploration and environmental approval activities to support these projects are in progress. Concept studies are also under way to develop options to further expand our operations in Australia and British Columbia. The Drayton South project is planned to replace export thermal capacity for the Drayton mine in New South Wales.

Outlook

Strong production from Australia combined with exports from the US led to oversupply into the weakened market during 2012, resulting in substantially lower spot and monthly settlement prices in the third and fourth quarters. It is anticipated that there will be a rebalancing of the market during the fi rst half of 2013, with demand recovery from China and idling of some high cost US and Australian production. Price differentiation between premium and lower quality products is expected to remain, with continued supply of second tier products from the US.

Metallurgical Coal is positioned to take advantage of any future coal price increases as a result of the focus on delivering high margin, low cost capacity, and the demonstrated benefi ts of asset optimisation initiatives.

THERMAL COAL

UNDERLYING OPERATING PROFIT (2011: \$1,230 m) \$793 m

SHARE OF GROUP UNDERLYING OPERATING PROFIT (2011: 11%)

13%

UNDERLYING EBITDA (2011: \$1,410 m) \$972 m

Key fi nancial and non-fi nancial performance indicators

\$ million (unless otherwise stated)	2012	2011
Underlying operating profi t	793	1,230
South Africa	482	779
Colombia	358	482
Projects and corporate	(47)	(31)
Underlying EBITDA	972	1,410
Net operating assets	1,965	1,886
Capital expenditure	266	190
Share of Group underlying operating profi t	13%	11%
Share of Group net operating assets	4%	4%
Non-fi nancial indicators	2012	2011
Number of fatal injuries	2	2
Lost-time injury frequency rate	0.20	0.19
Total energy consumed in 1,000 GJ	5,742	5,823
Total greenhouse gas emissions in 1,000 tonnes CO2 e	1,620	2,583
Total water used for primary activities in 1,000 m3	8,525	8,260

01 Production geologist Elsie Phelane and drilling assistant Thabo Mdluli check core samples in October 2011 at Zibulo, now Thermal Coal's newest colliery.

BUSINESS OVERVIEW

Our Thermal Coal business operates in South Africa and Colombia. In South Africa, Thermal Coal wholly owns and operates seven mines. It also has a 73% stake in two mines, Kriel and the new Zibulo colliery, a multi-product operation which produces thermal coal for both export and Eskom, the state-owned power utility, with the balance held by Inyosi Coal, a broad-based black economic empowerment entity. In addition, Thermal Coal has a 50% interest in the Mafube colliery and Phola washing plant.

Six of the mines collectively supply 23 million tonnes per annum (Mtpa) of thermal coal to both the export and local markets. New Vaal, New Denmark and Kriel collieries are domestic product operations supplying 29 Mtpa of thermal coal to Eskom. Isibonelo mine produces 5 Mtpa of thermal coal for Sasol Synthetic Fuels, the coal-to-liquids producer, under a 20 year supply contract.

Thermal Coal's South African operations currently route all export thermal coal through the Richards Bay Coal Terminal (RBCT), in which it has a 24.2% shareholding, to customers throughout the Mediterranean-Atlantic and Asia-Pacifi c regions. Export production volumes are expected to increase in the future owing to yield improvements and increased production of lower calorifi c value coal.

In Colombia, Anglo American, BHP Billiton and Xstrata each have a one-third shareholding in Cerrejón, the country's largest thermal coal exporter. In 2011, an expansion (P40) was approved to increase this capacity by 8 Mtpa to 40 Mtpa by 2015 (13.3 Mtpa attributable). Cerrejón owns and operates its own rail and deep water port facilities and sells into the export thermal and pulverised coal injection (PCI) markets.

Thermal Coal's attributable measured and indicated resources in addition to coal reserves totals some 2.6 billion tonnes as detailed in the Coal Reserves and Resources section of the Annual Report, pages 204–207.

Demand for seaborne thermal coal has increased by 73.5% since 2001.

INDUSTRY OVERVIEW

Thermal coal is the most abundant source of fossil fuel energy in the world. Exceeding known reserves of oil and gas, it accounts for more than 40% of electricity generation. Thermal coal has dominated global energy demand, accounting for 45% of primary energy demand growth from 2011–2012. The near 55% increase in coal demand over the past decade is roughly equivalent to three times US coal consumption on an energyadjusted basis.

The bulk of coal production is used in power generation; decisions that affect the energy mix of power generation therefore infl uence coal demand. These include long term industry dynamics for nuclear, gas and renewable power generation and policy decisions on climate/ environmental legislation.

In 2012, export seaborne thermal coal accounted for 910 Mt or 17.5% of total coal production, with a large proportion of seaborne production coming from four key basins: Indonesia, Australia, Colombia and South Africa. Demand for seaborne thermal coal has increased by 73.5% since 2001, and is expected to continue to grow for at least the next decade, driven by India and China's import requirements.

Consequently, the key risks to the medium term growth of export seaborne thermal revolve around the ability of India and China to sustain their rates of economic growth, as well as logistical constraints and cost infl ation pressures.

In the last few years, the coal industry has seen growth in US exports, particularly to Europe, due to the availability of low priced US natural gas. In 2012, US exports peaked to 55 Mt from 25 Mt in 2010, driving down export coal prices. US power utilities continue to substitute coal with gas-powered generation; however the long term view is that the natural gas price will remain between \$4-6/million British Thermal Unit (mmBtu), at which point most of the coal volumes currently lost to gas should revert to being economically viable.

ORGANISING CARRYING THEIR PROPER WEIGHT

Loading of haul trucks has been identifi ed as one of Landau's biggest opportunities for improvement.

An internal survey found that contractor operators had been consistently underloading the colliery's fl eet of haul trucks. They did so to avoid the vehicles' cut-out switch being activated automatically once a truck reached its maximum permitted capacity – a practice that resulted in throughput ineffi ciencies at this round the clock operation.

Faced with this under-performance, the mine instigated a plan that included comparing Landau's haul truck operations with its peers, using the lessons learned to adopt best-practice operator training. This was then supplemented by systematic recalibration of truck loads with calibrated weights.

These actions resulted in a 20% improvement in truck load factor in 2012 and signifi cant cost savings.

Image

A front end loader loads coal on to a conveyor belt in the open pit.

01 Engineering professionals in training Keith Roelofse and Clair Nel carrying out a routine lift-cage inspection at Zibulo.

STRATEGY

The business is focused on being a high margin producer of thermal coal, with a growth strategy based on participating in and expanding into the most attractive export markets, while maintaining its domestic market commitments. It aims to deliver on this ambition, in the near term, by developing its current portfolio of expansion projects. In the longer term, if appropriate, the business will consider asset purchases to supplement growth.

Thermal coal demand is being driven by Asian economic growth and its reliance on low cost, readily available supply. China and India will constitute the majority of thermal coal growth, with demand likely to exceed domestic thermal coal supply, thereby causing an upswing in seaborne thermal coal markets in future years. In South Africa, demand for new coal supply is increasing and is expected to continue to grow in order to supply Eskom's future coal requirements.

In support of its strategy to maximise the value of its portfolio of operating mines, Thermal Coal's current primary focus is on implementing a collection of asset optimisation initiatives (Project Khulisa) and integrated mine planning (Project EVO). The goal of Khulisa (meaning 'to grow') is to determine Thermal Coal's true performance potential and implement programmes to achieve these targets. In 2012, the project identifi ed and pursued a total of 88 initiatives, ranging from operational improvements to changing mind-sets and behaviours. Project Khulisa will continue in 2013.

In addition to developing and growing operations in its existing geographies, Thermal Coal is constantly evaluating potential opportunities in new and strategic geographies.

In 2012, Thermal Coal identifi ed and pursued a total of 88 asset optimisation initiatives as part of Project Khulisa.

Operating safely, sustainably and responsibly

Two principal risks facing Thermal Coal are water and climate change. Coal mining has the potential to affect the quality of water in catchments that are already under stress – a risk that is mitigated by careful operational water management and our leading water treatment facilities. Two carbon- and energy-related risks Thermal Coal is engaging on are the South African government's proposed energy price increases, which could double the energy bill in South Africa over the next few years, and the anticipated introduction of a long term price on carbon. In South Africa, we are participating in a fact-building exercise with the government to help shape effective carbon policy that is aligned with the country's development objectives.

FINANCIAL AND OPERATIONAL OVERVIEW

Thermal Coal generated an underlying operating profi t of \$793 million, a 36% decrease, mainly driven by lower average export thermal coal prices and above-infl ation cost pressures. This was partly offset by the closure of high cost sections, a weaker South African rand and increased sales volumes from the full incorporation of Zibulo as an operating asset, supported by record production at Cerrejón.

Feasibility studies on the New Largo

project were completed in 2012. There are two stages to the project: Stage 1 comprises a 23 kilometre overland conveyor, which will run from an existing coal processing plant to Eskom's Kusile power station, transporting a secondary product as well as other third-party coal. Stage 2 entails the construction of a new opencast colliery and associated infrastructure. The project is expected to be presented for board approval once all environmental permits have been obtained for both stages of the project and the coal supply and other commercial agreements have been concluded.

The Cerrejón expansion project (P40), to increase the port and logistics chain capacity to handle a total mine output of 40 Mtpa (currently 32 Mtpa), is being implemented and is expected to be delivered on schedule.

Outlook

Projects

The international seaborne thermal coal market is expected to remain oversupplied into 2013. Pricing pressure, therefore, is expected to remain. Thermal coal production cuts are already taking effect to some extent and producers around the globe continue to review operations and growth projects which could favourably impact prices. Global seaborne demand is expected to continue to grow in 2013, driven mainly by China and India. The Chinese domestic market price and the high US break-even price for producers should act, respectively, as a natural fl oor and ceiling for seaborne thermal coal prices.

Safety and environment

Sadly, two colleagues lost their lives while working at Thermal Coal operations in South Africa in 2012. Thorough incident investigations were conducted to ensure that the root causes of these incidents are understood, corrected and shared across the Group.

Thermal Coal has been on a journey of continuous improvement in safety over the past fi ve years, refl ected in the decrease in the lost-time injury frequency rate (LTIFR) from 0.31 in 2008 to the current 0.20.

Markets

Anglo American weighted average achieved sales prices (\$/tonne)	2012	2011
South Africa export thermal coal (FOB)	92	114
South Africa domestic thermal coal	21	21
Colombia export thermal coal (FOB)	89	101

Attributable

sales volumes ('000 tonnes)	2012	2011
South Africa export thermal coal(1)	17,151	16,532
South Africa domestic thermal coal(1) (2)	40,110	40,454
Colombia export thermal coal	10,926	10,685

(1) Includes capitalised sales from Zibulo mine of 1,580,800 (export) and 632,200 (domestic) tonnes for the year ended 31 December 2011.

(2) Includes domestic metallurgical coal of 91,800 tonnes for the year ended 31 December 2012 (year ended 31 December 2011: 318,000 tonnes).

The international seaborne market experienced an overall decline in prices during the year owing to oversupply. The average API4 index price fell by 20% to \$93/t (2011: \$116/t) and closed the year at \$90/t (2011: \$105/t).

Although international seaborne demand grew by 14% to 910 Mt, it remained below supply growth as a result of unprecedented US export volumes, strong production growth and fewer weather-related supply disruptions from the major supply regions of Indonesia, Australia, Colombia and South Africa. Cheap US natural gas displaced a signifi cant volume of US domestic thermal coal in

South African thermal coal exports into Asia continued to increase, principally driven by India.

2012, as utility companies switched from coal to gas.

For the South African thermal coal industry, exports into Asia continued to increase, principally driven by India. Asia accounted for 66% of South African thermal coal shipments (2011: 64%). South African thermal coal exports increased by 4% to 68.3 Mt (2011: 65.7 Mt), supported by a more stable performance by Transnet Freight Rail (TFR) and drawdown from stockpiles. TFR railed 68.5 Mt to the RBCT, a 4% increase over 2011.

Operating performance Attributable

production ('000 tonnes)	2012	2011
South Africa export thermal coal(1) (2)	17,132	16,328
Colombia export thermal coal	11,549	10,752
South Africa Eskom coal(1)	33,706	35,296
South Africa domestic other(2)	6,293	5,383

(1) Includes capitalised production from Zibulo mine of 1,521,800 (export) and 633,400 (domestic) tonnes for the year ended 31 December 2011.

(2) Includes domestic metallurgical coal of 91,800 tonnes for the year ended 31 December 2012 (year ended 31 December 2011: 323,400 tonnes).

South Africa

Underlying operating profi t from South African operations decreased by 38% to \$482 million, driven by lower average export thermal coal prices and above-infl ation cost increases in labour, power and fuel. This was partly offset by the incorporation of Zibulo as an operating asset, a weaker South African rand and higher sales volumes, supported by a more stable TFR rail performance.

Export production increased by 5% as a result of Zibulo's continued ramp up and a change to include lower calorifi c value coals, resulting in higher yielding products at Zibulo and Goedehoop, partly offset by the planned closure of high cost sections at Goedehoop, Greenside and pits at Kleinkopje.

Colombia

At Cerrejón, underlying operating profi t of \$358 million was 26% down on 2011 owing to the impact of lower thermal coal prices, compensated to some extent by a strong operational performance and drier weather conditions, with record production and sales.

COPPER

UNDERLYING OPERATING PROFIT (2011: \$2,461 m) \$1,687 m

SHARE OF GROUP UNDERLYING OPERATING PROFIT (2011: 22%)

27%

UNDERLYING EBITDA (2011: \$2,750 m) \$2,179 m

Key fi nancial and non-fi nancial performance indicators

\$ million (unless otherwise stated)	2012	2011
Underlying operating profi t	1,687	2,461
Underlying EBITDA	2,179	2,750
Net operating assets	8,536	7,643
Capital expenditure	996	1,570
Share of Group underlying operating profi t	27%	22%
Share of Group net operating assets	17%	17%
Non-fi nancial indicators	2012	2011
Number of fatal injuries	0	1
Lost-time injury frequency rate	0.20	0.19
Total energy consumed in 1,000 GJ	15,559	12,887
Total greenhouse gas emissions in 1,000 tonnes CO2 e	1,601	1,467
Total water used for primary activities in 1,000 m3	35,667	28,701

01 José Arancibia, operator, at the Mantoverde electrowinning copper cathode plant.

BUSINESS OVERVIEW

Applications that make use of copper's electrical conductivity make up approximately 60% of total global demand.

We have interests in six copper operations in Chile. The Mantos Blancos and Mantoverde mines are wholly owned and we hold a 50.1% interest in Anglo American Sur (AA Sur), which includes the Los Bronces and El Soldado mines and the Chagres smelter. We also have a 44% shareholding in the Collahuasi mine. The mines produce a combination of copper in concentrate and copper cathode together with associated by-products such as molybdenum and silver.

In addition, we have a controlling interest in the Quellaveco (81.9%) and Michiquillay (100%) projects in Peru and a 50% interest in the Pebble project in Alaska.

INDUSTRY OVERVIEW

Copper's principal use is in the wire and cable markets because of the metal's electrical conductivity and corrosion resistance. Applications that make use of copper's electrical conductivity, such as wire (including the wiring used in buildings), cables and electrical connectors, make up approximately 60% of total global demand. The metal's corrosionresistant properties fi nd numerous applications, particularly plumbing pipe and roof sheeting, in the construction industry, which accounts for a further 20% of demand. Copper's thermal conductivity also makes it suitable for use in heat-transfer applications such as air conditioning and refrigeration, which constitute some 10% of total demand. Other applications include structural and aesthetic uses.

Access to quality orebodies, located in regions providing stable political, social and regulatory support for responsible and sustainable mining, are likely to continue to be the key factor distinguishing project returns and mine profi tability. However, such orebodies are scarce, and it will be increasingly necessary for mining companies to develop mines in more challenging environments. With no fundamental technological shifts expected in the short to medium term, forecast long term demand is likely to be underpinned by robust growth in copper's electrical uses, particularly wire and cable in construction,

automobiles and electricity infrastructure. The key growth area will continue to be the developing world, led by China and, in the longer term, India, where early-stage industrialisation and urbanisation on a large scale continues to propel copper demand growth. Moreover, the intensity of copper consumption is still at a high level in the case of China, while in India it is on an upward trajectory. This is in contrast with the advanced economies and their much lower levels of intensity.

In spite of near term supply growth that could well be noticeably above that of the past six or seven years, constraints on the supply side are likely to prove a structural feature of the market. This will be driven by continuing declines in ore grades at maturing existing operations and new projects, a lack of capital investment and underexploration in the industry, as well as political and environmental challenges in many current and prospective copper areas.

The industry is capital-intensive and is likely to become more so as high grade surface deposits are exhausted and deeper and/or lower grade deposits are developed in more challenging locations. Combined with the need to develop infrastructure in new geographies, this requires greater economies of scale if mines are to be commercially viable. Scarcity of water in some countries, such as Chile and Peru, is also necessitating the construction of capital- and energyintensive desalination plants.

During the period 2000–2011, China increased its share of fi rst-use refi ned metal consumption from 12% to an estimated 39%. Consumption continued to increase in 2012, while demand elsewhere fell in aggregate for the second year running, moving China's share of refi ned demand above 40%.

OPERATING WATER MANAGEMENT IN THE ANDES

Our Copper business in Chile was faced with the challenge of increased water requirements in an already water-constrained environment. With signifi cant demand on water by various local users, the Los Bronces operation needed to minimise its use of fresh water from the Metropolitan Region catchment area, home to more than 7 million people.

When expanding Los Bronces, we constructed a water recirculation system stretching from the Las Tórtolas tailings dam back to the Los Bronces mine. The system returns water, previously used to transport ore, back to the mine, located some 3,600 metres above sea level. Water is pumped through a pipeline 52.5 kilometres long, with a total elevation difference of 2.5 kilometres from end to end.

At a total cost of \$180 million, the decision to opt for a water recirculation system went well beyond short term economic considerations. A feat of world class engineering was required – entailing a trade-off between higher energy requirements and carbon emissions on the one hand and water savings on the other – if the mine was to have the capability to adapt successfully to current and anticipated future water supply limitations.

The initiative has reduced the mine's water requirement from 0.81 to 0.52 million m3 /tonne, with more than 22 million m3 being recirculated during 2012.

Image

Las Tórtolas tailings dam, close to the Los Bronces copper mine in Chile.

STRATEGY

We continue to believe our Copper business has attractive long term fundamentals. Short term growth is being delivered from the successful ramp up of the Los Bronces expansion following delivery of its fi rst production in the fourth quarter of 2011. The expansion produced a total of 196,100 tonnes of copper in 2012 and is now running at full capacity. Additional growth in the medium term is expected to come from the Quellaveco project in Peru, which is targeted to be put forward for board approval in 2013. We continue to explore for low operating cost and long life development opportunities and evaluate longer term projects, including Michiquillay, Pebble, Los Bronces District and West Wall.

On 24 August 2012, Anglo American completed the disposal of 25.4% of AA Sur, to a Codelco and Mitsui joint venture company for a cash consideration of \$1.9 billion. As part of this transaction, all litigation between Anglo American and Codelco has been terminated. The agreement demonstrates our focus on delivering value to shareholders. We remain fully committed to our major inward investment programme in the Chilean business and to continuing our signifi cant social and community investment commitments in Chile.

In September 2011, we announced our participation in a sales process to dispose of our effective 16.8% interest in Palabora Mining Company in South Africa. On 11 December 2012, we reached an agreement to sell our interest for ZAR893 million (approximately \$103 million), subject to regulatory approvals in South Africa and China which are expected to take four to six months.

We continue to explore for low operating cost and long life development opportunities and evaluate longer term projects, including Michiquillay, Pebble, Los Bronces District and West Wall.

Copper stocks and price

Source: Anglo American Commodity Research LME Stocks Copper price (c/lb)

Operating safely, sustainably and responsibly

Water effi ciency, re-use and recycling are a particular focus for our Copper operations, which are situated in extremely water-scarce regions. The business is implementing 11 different water projects to achieve its water reduction target.

FINANCIAL AND OPERATIONAL OVERVIEW

Copper generated an underlying operating profi t of \$1,687 million, a 31% decrease. Higher sales volumes from the Los Bronces expansion were more than offset by the lower average copper price and higher operating, exploration and study costs. Lower grade profi les in particular impacted production, and consequently unit costs, at Collahuasi, Los Bronces, and Mantos Blancos.

Safety and environment

Copper's lost-time injury frequency rate (LTIFR) was 0.20 (2011: 0.19), while no fatal incidents occurred at managed operations. The business' safety efforts have involved closing gaps identifi ed in the risk and change management reviews conducted in 2011, with a particular focus on leadership, contractor management, and fi ghting fatigue.

Copper's energy initiatives have delivered a 3-4% reduction, if the impact of the Los Bronces expansion is excluded. A portfolio of additional energy savings programmes is under way to sustain the progress made in 2012.

Markets

Average price	2012	2011
Average market prices (c/lb)	361	400
Average realised prices (c/lb)	364	378

The copper price rose in the early part of 2012, from 343 c/lb at the start of the year to 387 c/lb by May. As Europe's sovereign debt crisis took hold and Chinese economic growth slowed, concerns grew over the outlook for the world economy and the price softened into the second half of the year. Yet despite an environment of macroeconomic uncertainty, which continues to have an impact on demand, the price recovered in September, held up on the back of supply-side shortfalls, and ended the year at 359 c/lb. For the full year, the realised price averaged 364 c/lb, a decrease of 4% compared with 2011. This included a positive provisional price adjustment for 2012 of \$47 million versus a net negative adjustment in the prior year of \$278 million.

Operating performance

Attributable production (tonnes)	2012	2011
Copper	659,700	599,000

Total copper production (including our share of the Collahuasi joint venture) of 659,700 tonnes was 10% higher than in 2011. This was mainly due to the increased contribution from the Los Bronces expansion, offset by lower production at the established Los Bronces operation and at Collahuasi and Mantos Blancos.

Production at Los Bronces was 65% higher at 365,300 tonnes, with the mine benefi ting from the 196,100 tonnes (2011: 19,000 tonnes) achieved from the expansion as it ramped up to full production. The new processing plant reached throughput design capacity ahead of expectations in August 2012. This increase in output was partially offset by lower grades accessed during the year. Production at the established Los Bronces operation was impacted by reduced pit fl exibility, lower stockpiles and safety driven reductions in slope angles.

Production at El Soldado increased by 15% to 53,800 tonnes, owing to improved plant performance, expected higher ore grades and better recoveries. Production at Mantoverde also increased, by 6%, to 62,300 tonnes, driven by improved

(2012 estimated refined copper consumption) 2012 estimated world total: 19.9Mt Mt
China
Europe 3.8	8.2
Rest of world 3.3
N. America 1.9
Japan 1.0
South Korea 0.7
India 0.6
Brazil 0.4

Source: Brook Hunt – a Wood Mackenzie company

crushing performance. Mantos Blancos' production of 54,200 tonnes decreased by 25%, affected by an incident involving a loader necessitating a change in mine plan, resulting in a lower ore grade area being mined.

Our share of production at Collahuasi fell by 38% to 124,100 tonnes, partly owing to anticipated lower grades being mined during the year. This was exacerbated by lower recoveries, adverse weather conditions in the early months, safety stoppages and a ball mill failure.

In response to the performance issues at Collahuasi, the joint venture partners put in place a business improvement plan, with an Anglo American and Xstrata joint management team assuming leadership from July. The team has implemented a number of improvement plans aimed at delivering improved operating performance in 2013. A new CEO was appointed at Collahuasi with effect from 19 December 2012.

Projects

In Peru, the Quellaveco project received three critical permits in the fourth quarter: an amendment to the environmental impact assessment, the benefi ciation concession and the key water permit. Community engagement continued through the 'dialogue table' process, where agreement was reached in July in relation to water usage, environmental responsibility and Anglo American's social contribution over the life of the mine. Anglo American is targeting submission of the project to its Board for approval in 2013. The concept level study for the Michiquillay project was completed and is under review. declining average grades. Leading copper consumers

Activity at the Pebble project in Alaska continues, with the focus on completing a pre-feasibility study and preparing to commence permitting. The draft Bristol Bay Watershed Assessment was released by the Environmental Protection Agency (EPA) in May 2012. The EPA has announced that it has revised the draft watershed assessment report to take account of feedback and it intends to have the revised assessment peer reviewed and commented on publicly with a view to fi nalising the assessment in 2013.

In Peru, the Quellaveco project received three critical permits in the fourth quarter: an amendment to the environmental impact assessment, the benefi ciation concession and the key water permit.

At Collahuasi, the project to increase concentrator plant throughput to 160,000 tonnes of ore per day was reduced in scope and the pre-feasibility study on the further expansion potential was put on hold, both pending restoring operational stability of current operations.

Outlook

Production levels in 2013 are expected to benefi t from the expanded Los Bronces operation running at full capacity for the full year. Mine development and improving mine fl exibility will be a continued focus at Los Bronces, which will also impact costs. Increased production is also expected at Collahuasi following implementation of the improvement plans put in place during 2012, as well as the No. 3 ball mill coming back in to operation from November 2012, and planned mining of higher ore grade phases.

Challenges remain in managing continuing industry-wide input cost pressures, and this will be a key focus for the business in 2013.

Ongoing market concerns arising from uncertainties over the near term outlook for the global economy may lead to short term volatility in the copper price. The medium to long term fundamentals for copper, however, remain strong, predominantly driven by robust demand from the emerging economies and supply constraints owing to ageing mines and steadily

NICKEL

UNDERLYING OPERATING PROFIT (2011: \$57 m) \$26 m

SHARE OF GROUP UNDERLYING OPERATING PROFIT (2011: 1%)

0.4%

UNDERLYING EBITDA (2011: \$84 m) \$50 m

Key fi nancial and non-fi nancial performance indicators

\$ million (unless otherwise stated)	2012	2011
Underlying operating profi t	26	57
Underlying EBITDA	50	84
Net operating assets	2,509	2,535
Capital expenditure	100	398
Share of Group underlying operating profi t	0.4%	1%
Share of Group net operating assets	5%	6%
Non-fi nancial indicators	2012	2011
Number of fatal injuries	1	–
Lost-time injury frequency rate	0.11	0.23
Total energy consumed in 1,000 GJ	19,154	15,364
Total greenhouse gas emissions in 1,000 tonnes CO2 e	1,421	1,423
Total water used for primary activities in 1,000 m3	7,090	7,138

01 Risk engineer Renner Ferreira de Freitas on the observatory of the Barro Alto ferronickel plant, which is steadily ramping up to full capacity.

BUSINESS OVERVIEW

Our Nickel business unit comprises two Brazilian operating assets: Codemin and Barro Alto, both ferronickel producers in the state of Goiás. Within the portfolio there are also two promising growth projects, Jacaré and Morro Sem Boné, both laterite deposits which are also located in Brazil.

In Venezuela, despite attempts by Minera Loma de Níquel to obtain concession and permit renewal to enable a continuation of our operations, the application for renewal was refused and the concessions and permits granted by the government expired on 10 November 2012.

As of 10 November 2012, therefore, Anglo American's mining and production activities at Loma de Níquel ceased permanently and, in light of this, Anglo American has taken action to end its working relationship with the majority of its Loma de Níquel employees and is seeking to wind up the operations in an orderly fashion.

INDUSTRY OVERVIEW

Nickel demand is linked to the state of the stainless steel industry, which consumes two-thirds of the metal and all ferronickel production. Nickel used in the manufacture of alloy steel and other non-ferrous alloys accounts for a further 17% of output.

China is the largest stainless steel producing country, with more than 44% of world production in 2012, with 70% of the related nickel requirement produced domestically. Of this, nickel pig iron (NPI) accounted for around 60% in 2012. The next most important producer is Europe, which accounts for 22% of world output, while the US produces 6%.

Nickel can be produced from two different ore types: sulphides and laterites. This has resulted in a large number of processing technologies that have made the industry a very complex one, with high processing costs and capital intensity. Production is concentrated among the biggest fi ve producers, which between them are responsible for almost half of global output.

The nickel industry faced a variety of challenges in 2012. Demand was affected by the European debt crisis and the slowdown in the Chinese economy, while the supply side continued to face increased capital expenditure pressure and technical issues that delayed the ramp up of many projects in the industry.

STRATEGY

Our Nickel business focuses on the safe and responsible operation of world class assets that have long life of mine and competitive production costs. We leverage our expertise in operating ferronickel plants to ensure we have optimal processes in place across our operations; our Codemin plant celebrated 30 years of operations in 2012.

Delivery of effi cient production is supported by our asset optimisation initiatives which are driving improved output, reduced costs and revenue enhancements, and will extend the lives of both our operations.

At full production, both Barro Alto and Codemin are positioned in the fi rst half of the industry's cash cost curve.

In addition to driving value from existing operations, Nickel continues to assess its portfolio of expansionary and exploration projects.

Our strategy and growth ambitions rely on attracting and retaining a suitably qualifi ed workforce. The mining industry in Brazil continues to face a diffi cult labour market, with a shortage of qualifi ed people with specifi c knowledge of the mining industry. Only by addressing and overcoming this challenge will we be able to deliver on our strategy. One of the ways we are doing so is through our tailored trainee programme designed to develop engineers and other professionals capable of meeting our future needs.

Our Nickel business focuses on the safe and responsible operation of world class assets that have long life of mine and competitive production costs.

EMPLOYING TRAINING OUR FUTURE PROFESSIONALS

One of the ways we are addressing the shortage of qualifi ed people at our Nickel operations in Brazil is through our tailored trainee programme to develop engineers into future leaders.

The selection process for the inaugural intake in 2012 took place during the preceding year, with 11,649 graduates competing for 31 vacancies. Those selected were knowledgeable in such areas as: supply chain, sustainable development, geology, production and maintenance, human resources and information management.

In early 2012, the trainees were sent to gain hands-on work experience at Barro Alto, Niquelândia, our São Paulo corporate offi ce and Nickel's project offi ce in Belo Horizonte. The trainees are working, on a rotation basis, at the various sites, until the programme ends in mid-2013. On successful completion of the programme, the trainees will be considered completely prepared professionals, ready to meet the challenges of their career in Anglo American.

Image

Part of the inaugural intake of graduate trainees at our Nickel business in Brazil. 01 Electricians Cesar Augusto de Lima and Antonio Milhomen Silva next to one of Barro Alto's 185 metre rotary kilns, where nickel-bearing ore is reduced prior to smelting.

Operating safely, sustainably and responsibly

Safety and sustainable development are central to our strategy. We manage safety and environment risks through our Integrated Management System, which is certifi ed to the ISO 9001, ISO 14001 and OHSAS 18001 global standards and we continue to focus on risk identifi cation and control, employee training and leadership commitment. Our environmental strategy includes a focus on water, energy and greenhouse gas emissions. We have made pleasing progress in these areas and incorporated what we have learned from Codemin into the design of Barro Alto.

Our opencast mining processes can have a notable impact on the landscape, and can be diffi cult to fully rehabilitate, particularly in sloped areas. We have partnered with biodiversity NGOs and scientifi c groups to develop regional specifi c plans for the remediation of fauna and fl ora in order to determine the best solutions to overcome this diffi culty, while aligning them to our closure plans.

Recognising the importance of the role we play in the local community, we also have invested signifi cantly in long term programmes related to female empowerment, sexual and reproductive health, citizenship and rural entrepreneurship. In recognition of this work, the business received the 'Sustainable Company of the Year 2012' award from Exame business magazine, one of the most prestigious sustainability awards in Brazil.

FINANCIAL AND OPERATIONAL OVERVIEW

Underlying operating profi t for the year was \$26 million (net of \$32 million project evaluation operating costs), 54% lower than in 2011. It included a self-insurance recovery of \$59 million (offset at Anglo American Group) and an amount of \$12 million in terms of the favourable settlement of an outstanding tax claim with the Brazilian government. The results, however, were affected signifi cantly by a 23% decline in the London Metal Exchange (LME) nickel price and by an extended

Nickel's environmental strategy includes a focus on water, energy and greenhouse gas emissions and we have incorporated what we have learned from Codemin into the design of Barro Alto.

Source: Anglo American Commodity Research LME Stocks LME Price

Leading nickel consumers

(2012 estimated refined nickel consumption) 2012 estimated world total: 1,700 kt

kt
China
Europe	404	705
Japan 163
N. America 144
South Korea 79
India 66
Rest of World 58
Taiwan 57
South Africa 22

Source: Brook Hunt – a Wood Mackenzie company

export ban imposed by the Venezuelan government from the beginning of June, resulting in the cessation of production in September. The underlying operating result for Barro Alto was capitalised throughout 2012.

Safety and environment

Regrettably, a fatal incident occurred at the Barro Alto mine, ending Nickel's record fi ve year fatality-free period. The incident has sparked renewed efforts to prevent further harm.

The business' lost-time injury frequency rate (LTIFR) improved by 52% to 0.11 (2011: 0.23).

Markets

Average nickel price (c/lb)	2012	2011
Average market price (LME, cash)	794	1,035
Average realised price (c/lb)	765	1,015

Despite LME nickel price

strengthening at the start of 2012, with the nickel price reaching 983 c/lb at the end of January, prices dropped to a low of 689 c/lb in August owing to the worsening macroeconomic environment which affected stainless steel production and nickel demand.

The nickel market recorded a surplus of 50,000 tonnes for the year compared with a surplus of 32,000 tonnes in 2011. Nickel consumption increased by 4.9% to 1.7 million tonnes (Mt), but supply also rose following the ramping up of a number of new nickel plants. The growth in supply was lower than expected as a result of problems at many new operations.

Operating performance Attributable

production
(tonnes)	2012	2011
Nickel	39,300	29,100

Nickel production increased by 35% to 39,300 tonnes, with the increasing production profi le from Barro Alto offsetting the lower output from Loma de Níquel.

Barro Alto, which produced its fi rst metal in March 2011, delivered around 21,600 tonnes of nickel in 2012.

Production and the ramp up schedule at the new operation was, however, affected by three major stoppages during the year in order to address kiln performance issues and to rebuild the sidewalls in line 1's electric furnace, following a partial collapse.

Since the end of the fi nal stoppage, with the furnace returning to a temperature which can support normal operations in mid-December, line 1 has achieved a feed rate averaging 85% of nominal capacity.

As a preventative measure, line 2's electric furnace sidewalls are now also being rebuilt and following this, the operation is expected to complete its ramp up to nominal capacity.

Issues in the furnace hearths were discovered during the year. The situation is being closely monitored by the operation, together with the supplier, and since discovery has not worsened. With continued close monitoring this is not expected to alter the ability to reach nominal capacity.

Barro Alto, which produced its fi rst metal in March 2011, delivered around 21,600 tonnes of nickel in 2012.

Production from Loma de Níquel totalled 8,100 tonnes in the year, 40% lower than 2011, as a result of the cessation of operations, exacerbated by the extended export ban.

Codemin's production was stable at around 9,600 tonnes, with a decline in grade being offset by a series of asset optimisation initiatives.

Projects

The unapproved projects in the pipeline at Jacaré and Morro Sem Boné have the potential to signifi cantly increase the Group's total nickel production. The pre-feasibility study of Jacaré was completed in the year and we will focus on obtaining environmental licences during 2013.

Outlook

Production in 2013 is expected to be higher than 2012 as the increasing contribution from Barro Alto more than offsets the loss of Loma de Níquel. Barro Alto is targeting to reach full capacity during 2013.

Both demand and supply are expected to increase further in 2013 and a surplus of 13,000 tonnes is forecast. The market is expected to remain relatively challenging owing to the prevailing macroeconomic environment and ramp up of new nickel supply, including NPI – though any further underachievement in terms of the ramping up of new nickel supply could provide some upside to current forecasts.

PLATINUM

Chris Griffi th CEO – Anglo American Platinum Limited

UNDERLYING OPERATING (LOSS)/PROFIT (2011: \$890 m)

\$(120)m

SHARE OF GROUP UNDERLYING OPERATING PROFIT (2011: 8%)

(2)%

UNDERLYING EBITDA (2011: \$1,672 m) \$580 m

Key fi nancial and non-fi nancial performance indicators

\$ million (unless otherwise stated)	2012	2011
Underlying operating (loss)/profi t	(120)	890
Underlying EBITDA	580	1,672
Net operating assets	10,419	11,191
Capital expenditure	822	970
Share of Group underlying operating profi t	(2)%	8%
Share of Group net operating assets	20%	25%
Non-fi nancial indicator	2012	2011
Number of fatal injuries	7	12
Lost-time injury frequency rate	1.15	1.27
Total energy consumed in 1,000 GJ	24,399	25,168
Total greenhouse gas emissions in 1,000 tonnes CO2 e	5,743	5,991
Total water used for primary activities in 1,000 m3	28,755	31,248

01 No. 1 shaft at Siphumelele, one of our Platinum business' fi ve mines at its Rustenburg section, the world's biggest producer of primary platinum.

Our Platinum business, based in South Africa, is the world's leading primary producer of platinum, and accounts for approximately 40% of the world's newly mined production of the metal. Platinum mines, processes and refi nes the entire range of platinum group metals (PGMs): platinum, palladium, rhodium, ruthenium, iridium and osmium. Base metals such as nickel, copper and cobalt sulphate are important secondary products and are signifi cant contributors to earnings.

BUSINESS OVERVIEW

Platinum's operations exploit the world's richest reserve of PGMs, known as the Bushveld Complex, which contains PGM-bearing Merensky, UG2 and Platreef ores. Access to an excellent portfolio of ore reserves ensures Platinum is well placed to be the world's major platinum producer for many years to come.

Platinum wholly owns 10 mining operations currently in production, a tailings re-treatment facility, three smelters, a base metals refi nery and a precious metals refi nery. Concentrating, smelting and refi ning of the output are undertaken at Rustenburg Platinum Mines' (RPM) metallurgical facilities.

Platinum's 100%-owned mining operations currently consist of the fi ve mines at Rustenburg Section – Khomanani, Bathopele, Siphumelele, Thembelani and Khuseleka; Amandelbult Section's two mines, Tumela and Dishaba; as well as Mogalakwena and Twickenham mines. Union mine is 85% held, with a black economic empowerment (BEE) partner, the Bakgatla-Ba-Kgafela traditional community, holding the remainder. The Unki mine in Zimbabwe is currently wholly owned pending the implementation of the state's recently approved indigenisation plan.

Platinum also has 50:50 joint ventures with a BEE consortium, led by African Rainbow Minerals, at Modikwa platinum mine; and with XK Platinum Partnership in respect of the Mototolo mine. In addition, Platinum has 50:50 pooling and sharing agreements with Aquarius Platinum covering the shallow reserves of the Kroondal and

Since 2000, China has been the leading platinum jewellery market, followed by Europe, Japan and North America.

Marikana mines. The company owns 49% of Bokoni mine and holds, through RPM, 27% of Atlatsa Resources. Platinum is in partnership with Royal Bafokeng Resources, and has a 33% shareholding in the combined Bafokeng-Rasimone platinum mine (BRPM) and Styldrift properties. Platinum, through RPM, holds 12.6% of RB Plats' issued share capital.

INDUSTRY OVERVIEW

PGMs have a wide range of industrial and high technology applications. Demand for platinum is driven primarily by its use in autocatalysts to control emissions from both gasoline and diesel engine vehicles, and in jewellery. These uses are responsible for 70% of total net platinum consumption. PGMs, however, have a wide range of other applications, predominantly in the chemical, electronic, medical, glass and petroleum industries.

Our Platinum business is the major funder and supporter of the Platinum Guild International (PGI), which plays a key role in encouraging demand for platinum and in establishing new platinum jewellery markets. Since 2000, China has been the leading platinum jewellery market, followed by Europe, Japan and North America.

Industrial applications for platinum are driven by technology and, especially in the case of autocatalysts, by legislation. With the rapid spread of exhaust emissions legislation, more than 94% of new vehicles now have autocatalysts fi tted. The intensifying stringency of emissions legislation will drive growth in PGM demand.

Palladium's principal application, accounting for some 45% of demand, is in autocatalysts, particularly in gasoline vehicles. The metal is also used in electronic components, dental alloys and, more recently, has become an emerging jewellery metal in markets such as China.

Rhodium is an important metal in autocatalytic activity, which accounts for nearly 80% of net demand.

STRATEGIC PORTFOLIO REVIEW

On 15 January 2013, Anglo American announced the proposals of its portfolio review, the objective of which was to assess the options available to create a sustainable, competitive and profi table Anglo American Platinum. The entire value chain was reviewed, including costs, resources, mining, processing, the marketing and commercial strategy, as well as the optimal shape and size of the portfolio.

The main recommendation is to reduce Platinum's production target by around 400,000 ounces a year to between 2.1 and 2.3 million ounces per annum and to more closely align output with expected demand, while retaining the fl exibility to meet potential increased demand. This recommendation may be achieved through the proposals made within the consultation process embarked upon in terms of the requirements of the Labour Relations Act 66 of 1995, i.e. the closure of Khuseleka and Khomanani mines (four shafts) and placing them on long term care and maintenance, and through consolidating Rustenburg into three operating mines. Should these proposals ultimately be implemented, production at Rustenburg mines would reduce to a sustainable level of between 320,000 and 350,000 ounces a year.

Production from high cost assets will be replaced with that from low cost, high quality assets over the next decade. The production profi le indicates excess smelting and refi ning capacity in the short to medium term and provides an opportunity to improve capital effi ciency. Options are being evaluated to fi ll capacity and reduce costs. The cost base will also be reduced to align with the revised production levels, with a focus on labour and organisational structure.

Operating and fi

nancial review

STRATEGY

In reformulating its strategy, Platinum has reviewed the business across the entire value chain to address structural challenges that have eroded profi tability over time with the intention of creating a safe, sustainable, competitive and profi table platinum business for the long term benefi t of all its stakeholders.

This will be achieved through the alignment of baseline production with long term demand expectations, focusing on a high quality portfolio of operations to produce PGMs on an economically sustainable basis. An organisational design has been developed to ensure that the operations are supported by an appropriate level of overhead, while the commercial strategy aims to ensure value and stability for Platinum and customers, while promoting new PGM applications. Operationally, the business intends to increase exposure to lower risk, higher margin, less capital intensive mines, supporting a signifi cant reduction in the cost base and a more effi cient allocation of capital. Flexibility for long term growth options will nevertheless be retained, ensuring Platinum is well positioned should demand increase above expectation.

Platinum continues to take its social responsibility seriously, particularly to its employees and surrounding communities. The implementation of the strategy aims to deliver a stable, competitive and profi table business that will be best placed to sustain and create employment over the long term.

Operating safely, sustainably and responsibly

The journey to zero harm remains a key strategic objective. Although the company's safety strategy remains sound, it continues to review and adjust it in order to ensure that it specifi cally targets the major causes of injuries and fatalities. Platinum is also working tirelessly with its partners in government and its workforce to implement more effective means of addressing major risks and non-compliance with standards.

Platinum's implementation of its strategy aims to deliver a stable, competitive and profi table business that will be best placed to sustain and create employment over the long term.

Source: Anglo American Commodity Research Rand Pt. basket Platinum

Gross platinum demand

Platinum price

Gross platinum supply by country

Rand (oz)

'000 oz

Source: Johnson Matthey Interim Review 2012

01 At Mogalakwena North, maintenance work takes place on a spare grizzly unit, which forms part of the mine's secondary crusher circuit. Keeping

a complete spare unit in working order cuts downtime to a minimum when the original grizzly has to go in for maintenance.

FINANCIAL AND OPERATIONAL OVERVIEW

Platinum recorded an underlying operating loss of \$120 million in 2012, compared with \$890 million underlying operating profi t in 2011. This was primarily due to lower sales volumes, the impact of higher mining infl ation on costs and lower average realised prices. Platinum sales volumes for the period were lower owing to the two month illegal industrial action experienced at most of the mining operations in the fourth quarter. This was compensated in part by a weaker average rand against the dollar and a positive stock adjustment of \$172 million. Cash operating costs per equivalent refi ned platinum ounce increased by 21% to ZAR16,364 (2011: ZAR13,552), primarily due to the impact of the strike and increases in the costs of labour, electricity, diesel and key inputs of processing operations. Productivity decreased by 4% to 6.05m2 (2011: 6.32m2 ).

Refi ned platinum production and sales decreased by 6% and 17% respectively.

Safety and environment

Seven employees lost their lives during the period and Platinum extends its sincere condolences to their families, friends and colleagues. The causes of the loss of life included falls of ground and transport related incidents. The company's safety performance has improved since 2007, and the fatal injury and lost-time injury frequency rates have come down by 54% and 44% respectively.

The proactive management of safety risks resulted in a decrease in the number of safety stoppages during the year. In 2012, there were 52 safety stoppages in Platinum's operations, compared with 81 in 2011. Since the safety stoppages were contained to the areas where deviations were observed, the impact on production was considerably reduced in 2012.

Markets

Gross platinum demand declined by 140,000 ounces, or 2%, in 2012, as a result of weaker demand for autocatalyst and industrial applications more than offsetting increases in jewellery demand initiated by lower platinum pricing. Primary supply of platinum was negatively affected by labour stoppages and mine closures in South Africa. In addition, autocatalyst recycling decreased by 16% in the year, in response to lower platinum prices.

The palladium market moved from a surplus in 2011 to a signifi cant defi cit in 2012. South African output was lower for the same reasons as for platinum, while less metal was sold from Russian stockpiles. Gross demand for palladium rose by 15%, or 900,000 ounces, in 2012, following an increase in demand from the autocatalyst sector and a return of investor interest.

Following a prolonged surplus, the rhodium market moved into balance in 2012, with reductions in supply balancing increased demand from the autocatalyst and chemical sectors.

Autocatalysts

Global light vehicle sales grew by 5% in 2012 to 81 million units refl ecting, for vehicles lighter than 3.5 tonnes, growth in North America, Japan and the BRIC nations (Brazil, Russia, India and China). This growth was offset by weakness in Europe and other regions. Ongoing economic uncertainty in Europe, for example, continued to impact demand for new vehicles there, with sales approximately 8% below those in 2011.

Increased substitution of palladium for platinum, together with a rise in the production of gasoline vehicles in North America and China, resulted in a 7% increase in demand for palladium. Higher output of gasoline vehicles in 2012 also underpinned a 6% increase in rhodium demand.

Supplies of PGMs from recycling of spent catalysts decreased by 12% to 2.8 million ounces.

01 Unki mine's concentrator plant in Zimbabwe.

02 Fitter assistant Moses Nyamunda and chairlift operator Sankie Mafoko working on maintaining the conveyors at Marikana No. 4 shaft decline.

Jewellery

Gross platinum demand for the fabrication of jewellery rose by 10% to 2.7 million ounces, as strong demand from China and India balanced generally weaker economic conditions across the globe. With platinum trading at a discount to gold throughout the year, manufacturers were able to receive higher margins, encouraging the use of platinum in China, while demand in India continues to grow faster than other markets in percentage terms.

Gross demand for platinum for the fabrication of jewellery in China rose by 14% in 2012, to approximately 1.9 million ounces, of which recycled platinum jewellery represented half a million ounces. Platinum purchases by manufacturers increased by 16% to 1.4 million ounces.

Industrial

Following record demand for platinum in 2011, as purchasers addressed delayed consumption, platinum offtake for industrial applications decreased by 16% to 1.7 million ounces.

Investment

Investment demand for platinum was fl at at 460,000 ounces in 2012, although the performance during the year was erratic. Japanese buyers of large bars were very active in the months when the price was lower than Yen 4,000/gram (\$1,550 per ounce). The release of the Canadian Platinum Maple Leaf and the Australian Platinum Platypus bullion coins also boosted interest in demand.

After signifi cant liquidation of palladium ETFs in 2011, positive sentiment resulted in a 16% increase in net holdings in 2012, to 2.04 million ounces.

Operating performance Production

Platinum's own mines, including Western Limb Tailings Retreatment, produced 1.46 million of equivalent refi ned platinum ounces, a decrease of 9%.

The illegal strike action at our mining operations from 18 September to 15 November 2012 resulted in a loss of platinum production of 306,000 ounces, of which 82,000 ounces were lost during the subsequent ramp up period.

Equivalent refi ned platinum production for the year totalled 2.22 million ounces, 8% down on 2011.

Production at the Western Limb operations (Rustenburg, Union and Amandelbult mines) was negatively affected by the industrial action during the second half of 2012. Production at the Rustenburg Complex mines decreased by 43,300 ounces, or 8%, while Union and Amandelbult mines' production decreased by 13% and 23% respectively.

Mogalakwena mine output decreased by 2% to 300,200 ounces, following lower throughput at the concentrators and lower head grade. The fall in production was partly compensated by higher volumes from Unki mine. Equivalent refi ned platinum production at Unki increased by 20% to 62,100 ounces as the mine exceeded its ramp up schedule, reaching steady state production levels ahead of schedule.

The new nickel tank house at the Base Metal Refi nery continues to experience some operational challenges and this is expected to impact production in 2013.

Refi ned platinum production decreased by 6% to 2.38 million ounces as the processing of pipeline stocks into refi ned ounces in the second half of 2012 reduced the impact of the industrial action.

Projects

Several projects were halted during the year owing to the current diffi cult economic and operating environment, including the Thembelani 2 shaft, Tumela 4 shaft, and slag cleaning furnace 2 projects. The subsequent write-down for Thembelani 2 shaft project was ZAR2.2 billion (\$251 million) while the write-down for Tumela 4 shaft, slag cleaning furnace 2 and other projects was ZAR4.4 billion (\$579 million).

Outlook

Despite the lacklustre outlook for global economic growth, Platinum believes that global platinum demand is likely to be balanced in the short term. Overall platinum demand is expected to grow marginally in 2013, despite the lack of economic growth in the European market. Tightening emissions legislation in all markets, and the overall global increase in vehicle production, especially in China and India, is expected to offset lower volumes in Japan, North American and Europe. Jewellery demand is expected to grow, primarily owing to the continuing growth in the popularity of platinum jewellery in China and India and the expansion of retail outlets in China by Hong Kong jewellers.

Primary supply challenges are expected to continue during 2013, with higher mining infl ation exerting margin pressure and the increased risk of supply disruptions from industrial action in South Africa. The ongoing constraint on capital investment posed by low prices continues to limit South African output. However, supplies of metal from the recycling of spent autocatalysts are expected to rise as pipeline stocks are processed.

Palladium demand is expected to grow in 2013, supported by global vehicle production growth, particularly in China, and tightening emissions legislation. Primary supply is also expected to be constrained by the same factors as those affecting platinum production. As a result, the palladium market is expected to remain in defi cit in 2013.

The rhodium market is expected to remain in balance during 2013. Modest growth in autocatalyst and new industrial demand is likely to be balanced by an increase in recycled supply.

Following the conclusion of the recent portfolio review, Platinum expects to produce between 2.1 and 2.3 million ounces of refi ned platinum in 2013.

Cost infl ation challenges are likely to continue in 2013, with mining infl ation expected to remain above the average infl ation rate in South Africa. In spite of the diffi cult infl ationary environment, Platinum aims to contain cash unit costs to between ZAR16,000 and ZAR16,500 per equivalent refi ned platinum ounce. The unit cost target excludes the cost of implementing the portfolio review proposals.

Platinum's project portfolio has been aligned with the proposals of the portfolio review, with the capital expenditure target reduced by 25% to ZAR100 billion over the next decade. Capital allocation will continue to focus on the highest return and lowest risk opportunities.

DIAMONDS

UNDERLYING OPERATING PROFIT (2011: \$659 m) \$496 m

SHARE OF GROUP UNDERLYING OPERATING PROFIT

UNDERLYING EBITDA (2011: \$794 m) \$711m

Key fi nancial and non-fi nancial performance indicators

	Year ended 31 Dec 2012			Year ended 31 Dec 2011
\$ million (unless otherwise stated)	De Beers (100%)	Anglo American share(1)	De Beers (100%)(2)	Anglo American share(1)
Underlying operating profi t	815	496	1,491	659
Underlying EBITDA	1,075	711	1,763	794
Net operating assets	12,944	12,944
Capital expenditure	249	94
Share of Group underlying operating profi t	n/a	8%
Share of Group net operating assets	n/a	25%
Group's associate investment in De Beers(3)	n/a	n/a	n/a	2,230
Non-fi nancial indicators		2012		2011
Number of fatal injuries		3		7
Lost-time injury frequency rate		0.13		0.15

(1) Amounts based on the Group's 45% shareholding to 16 August 2012 and a 100% basis thereafter. Underlying earnings from 16 August 2012 excludes the 15% non-controlling interest.

(2) Underlying operating profi t and underlying EBITDA for 2011 on a 100% basis is provided for information.

(3) Excludes outstanding loans owed by De Beers, including accrued interest of \$301 million in 2011.

01 The diamond recovery process plant at Venetia, South Africa's biggest diamond mine, which produced just over 3 million carats in 2012.

INVESTING FOREVERMARK – A UNIQUE PROMISE

De Beers' mines are located in four countries: Botswana, Canada, Namibia and South Africa.

When it comes to purchasing luxury products, consumers want assurance of the superior quality and provenance of the product. De Beers Group provides this through Forevermark, our proprietary diamond brand, available in over 900 retail partners in 12 markets including the core diamond jewellery markets of China, Japan, India and the US.

Every Forevermark diamond comes with a promise of quality and integrity, symbolised by the unique inscription inside the diamond. Each one is inscribed with the Forevermark icon and a unique identifi cation number using patented technology developed by the De Beers Group. Since the launch of Forevermark, more than 500,000 diamonds have received the Forevermark inscription as evidence that they have met the brand's high standards of quality, ethical integrity and provenance.

The rigorous standards that apply to Forevermark incorporate the De Beers Best Practice Principles Assurance Programme that provides consumers with assurance that the entire journey of their diamond has met the highest standards of ethical, social and environmental performance, and can be worn with pride.

Image

The unique Forevermark inscription.

For more information turn to page 84

BUSINESS OVERVIEW

De Beers is the world's leading diamond company. Together with its joint venture partners, De Beers produces approximately 35% of the world's rough diamonds by value, and employs more than 23,000 people around the world.

In August 2012, Anglo American completed its acquisition of the 40% shareholding in De Beers, for a total cash consideration of \$5.2 billion, thereby increasing Anglo American's shareholding in De Beers to 85%. The remaining interest is held by the Government of the Republic of Botswana (GRB).

De Beers operates across key parts of the diamond value chain, including exploration, production, the selling of rough diamonds, the marketing of polished diamonds through its proprietary diamond brand, Forevermark, and retail sales through De Beers Diamond Jewellers (DBDJ), a 50:50 joint venture with LVMH Moët Hennessy Louis Vuitton SA.

De Beers' mines are located in four countries: Botswana, Canada, Namibia and South Africa. All operations are open pit with the exception of Snap Lake, an underground mine in Canada, and Namdeb Holdings' alluvial and marine mining operations in Namibia.

Consumer demand forecasts \$ Polished wholesale prices USA 37% China/Hong Kong 13% India 9% Japan 10% Gulf 8% Rest of World 22% Source: De Beers 2012

Consumer demand forecasts

In Canada, De Beers wholly owns its two mining operations; Victor, located in Northern Ontario; and Snap Lake, in the Northwest Territories. De Beers

In Botswana, De Beers' interests are held through the Debswana Diamond Company, a 50:50 joint venture with the GRB. Debswana's operations include Jwaneng, the world's richest diamond mine; Orapa, the world's largest open-pit diamond mine; Letlhakane; and Damtshaa.

In South Africa, De Beers has a 74% interest in De Beers Consolidated Mines (DBCM), with the remaining 26% held by Ponahalo Holdings, which is a black economic empowerment consortium. DBCM's operations include Venetia, which produces about 70% of De Beers production from South Africa; Voorspoed, a source of large and exotic coloured diamonds; and Kimberley Mines, a tailings

In Namibia, De Beers' interests are held through Namdeb Holdings (NH), a 50:50 joint venture with the Government of the Republic of Namibia (GRN). Diamonds are mined on land by Namdeb, and at sea by Debmarine Namibia, both of which are wholly owned by NH. Marine mining is performed by a fl eet of

processing facility.

fi ve mining vessels.

Note: These fi gures provide estimates and forecasts of the size and growth of main diamond consumer markets based on pipeline and consumer research commissioned by De Beers Group Strategy. 2012 results are preliminary. also has a 51% shareholding in a joint venture in Gahcho Kué, a project in the vicinity of Snap Lake. The project is at an advanced permitting stage. When operational, Gahcho Kué is expected to produce approximately 4.5 million carats per annum over a life of mine of 11 years.

De Beers sells rough diamonds through two distribution channels: over 90% is sold via long term contract sales to clients (known as Sightholders), with the remainder being sold via regular auctions. De Beers is also an equal joint venture partner in DTC Botswana and in Namibia DTC with the GRB and GRN, respectively. The local companies facilitate local sales and benefi ciation, and are intermediaries in the global selling function.

As part of its long term contract sales, De Beers sorts and values production into 14,000 price points. These diamonds are aggregated and sold to Sightholders at one of 10 Sights each year.

De Beers is a global leader in the use of innovative online systems to auction rough, uncut diamonds to small, mid-tier and large manufacturing, retailing and trading businesses.

De Beers participates at the polished end of the value chain through its proprietary diamond brand, Forevermark, and, at the retail end, through DBDJ.

Diamonds inscribed as Forevermark provide consumers with confi dence that their diamonds are beautiful, rare and responsibly sourced. They are available in carefully selected, authorised jewellers in the major consumer markets around the world.

DBDJ's high-end retail stores are located in the most fashionable areas in the world, including New York, Beijing, Hong Kong, London, Paris, Tokyo and Dubai.

Element Six is the global leader in the design, development and production of synthetic diamond supermaterials for a range of applications. It comprises two businesses: Technologies which is wholly owned; and Abrasives, in which De Beers has a 60% interest (Umicore SA hold the remaining 40%).

In 2012, De Beers continued the migration of its Londonbased sales operations to Gaborone, Botswana.

INDUSTRY OVERVIEW

Around 60% of the world's diamonds, by value, originate from south and central Africa, with signifi cant sources also found in Russia, Australia and Canada.

Most diamonds come from the mining of kimberlite deposits. Another important source of gem diamonds, however, has been secondary alluvial deposits formed by the weathering of primary kimberlites and the subsequent deposition of released diamonds in rivers and beach gravels.

Rough or uncut diamonds are broadly classifi ed either as gem or industrial quality, with gem being overwhelmingly (>99%) the larger of the two markets by value. The primary world market for gem diamonds is retail jewellery, where aspects such as size, colour, shape and clarity have a large impact on valuation.

STRATEGY

De Beers' vision is to unlock the full economic value of its leadership position in the diamond industry.

De Beers is a demand-driven business, with a clear understanding that consumer desire is the overwhelming source of value for its diamonds. With growth in demand for diamonds expected to outstrip production growth in the medium to long term, the company aims to maximise the value of every carat mined, sorted and sold. To achieve this objective, De Beers focuses on optimising the value of its mining assets, selling to selected leading diamantaires and offering consumers the integrity and confi dence of its brands.

Operating safely, sustainably and responsibly

De Beers goes beyond maintaining the company's social licence to operate, to ensure consumers can be confi dent in the ethical integrity of De Beers' diamonds. De Beers' activities in support of sustainable development are a core part of the company's business model and span the diamond pipeline.

Upstream, this strategy includes ensuring employee safety, health and well-being; and effective environmental stewardship. De Beers also works in partnership with host governments and other stakeholders to assist in the provision of long term and sustainable economic development, including support for local and indigenous procurement, enterprise development, social investment, and benefi ciation.

Through benefi ciation, De Beers supports the development of value-adding downstream activities in producer countries. In 2012, De Beers continued the migration of its London-based sales operations to Gaborone, Botswana. Agreed in 2011, as part of a 10-year sales agreement between De Beers and the GRB for the sorting, valuing and sale of Debswana's diamond production, the relocation of De Beers' international aggregation and sales activity will be completed by the end of 2013. The move will bolster De Beers' long term benefi ciation activities in the region, through helping establish southern Africa as a world leading downstream diamond centre.

De Beers also supports initiatives to drive best practice throughout the diamond pipeline. These include the Kimberley Process Certifi cation Scheme, an inter-governmental initiative that seeks to eliminate confl ict diamonds from the global supply chain, as well as a bespoke ethical, environmental and social assurance programme that covers more than 300,000 diamond sector workers across the world.

FINANCIAL AND OPERATIONAL OVERVIEW

De Beers' underlying operating profi t (on a 100% basis) fell by \$676 million to \$815 million, 45% lower, refl ecting the impact of diffi cult trading conditions brought about predominantly by weaker demand and changing product requirements from Sightholders. Anglo American's share of underlying operating profi t from De Beers totalled \$496 million, a decrease of 25%, the overall reduction being partly offset by Anglo American's higher shareholding.

Safety and environment

In 2012, De Beers recorded three fatalities (2011: 7) and a lost-time injury frequency rate (LTIFR) of 0.13 (2011: 0.15). Safety remains the fi rst priority for De Beers and the company continues to drive improvement in safety performance through the ongoing roll-out of a standardised safety management system that aims to embed a safety culture across the business. Following a slope failure and tragic loss of life at Jwaneng in June, pit operations were suspended for a period of seven weeks to allow for a comprehensive geotechnical review, ensuring that it was safe to recommence mining.

Markets

Demand for diamond jewellery in the key markets of the US, China and Japan grew, albeit at a slower pace than in 2011. This, together with higher polished stock levels, resulted in a decline in polished prices particularly in the third quarter of the year. Although rough diamond prices remained broadly stable in the fi rst half of 2012, a combination of weaker polished prices, high levels of cutting centre stock and tightening liquidity in the mid-stream, resulted in a price correction during the third quarter. By the end of 2012, rough diamond prices stabilised, refl ecting a modest improvement in consumer demand during the holiday sales season in most major diamond jewellery markets.

Operating performance Mining and manufacturing

De Beers' full-year production declined by 11% to 27.9 million carats (2011: 31.3 million carats). In light of prevailing diamond market trends, as well as operational challenges, the company's stated strategy of producing to demand has been maintained. Operations continue to focus on maintenance and waste stripping backlogs, while a number of factors impacted production at specifi c sites. At Debswana, this included the Jwaneng mine slope failure in June. DBCM saw lower grades from Venetia and production was also impacted by the disposal of Finsch in September 2011. Canada's Snap Lake showed signifi cant improvement during 2012 as work continues on optimising the mine to enable economic access to the promising, though challenging, orebody.

Debmarine Namibia's Grand Banks mining vessel was re-commissioned in 2012 and Namdeb's Elizabeth Bay mining area in Northern Bay was brought back into operation during the year.

Element Six experienced a challenging year, with weakness in a number of key end-markets, particularly in the second half of the year. In response, Element Six focused on cost containment and improved operational performance and made signifi cant progress on a number of its strategic milestones, including improved customer service and innovation.

Sales

De Beers' total sales decreased to \$6.1 billion (100% basis), primarily as a result of diminished demand for rough diamonds, changing product requirements from Sightholders and reduced availability of some goods.

Brands

Forevermark continued to grow strongly in 2012, particularly in the core markets of China, Japan, India and the US, and was launched in South Africa, Canada and the UAE. It is now available in more than 900 retail partners in 12 markets. Since the launch of Forevermark, more than 500,000 diamonds have been inscribed with a unique identifi cation number showing that they have met the brand's high standards of quality, ethical integrity and provenance.

DBDJ faced the challenging market conditions experienced by most high-end jewellers in 2012, but continued to focus on expanding its store network in China, a market of signifi cant opportunity for high-end jewellery brands. New stores were opened in Shanghai and Nanjing, giving DBDJ fi ve stores in China, with an additional store scheduled to open in 2013. Franchise partners will open further stores in Kuala Lumpur, Baku and Vancouver in 2013. DBDJ currently has 43 stores in leading diamond consumer markets around the world.

Other

The agreement entered into by De Beers in the US in 2006 to settle all outstanding class actions against it became unconditional and effective in May. The \$295 million settlement, plus interest, held in escrow since 2006 is now being distributed in accordance with the court ordered plan.

De Beers Diamond Jewellers currently has 43 stores in leading diamond consumer markets around the world.

Projects

In Botswana, construction of the infrastructure at Jwaneng's Cut-8 project is largely complete. Cut-8 will provide access to approximately 95 million carats of mainly high quality diamonds and extend the life of the world's richest diamond mine to at least 2028.

In South Africa, the Venetia underground project was approved by the De Beers and Anglo American Boards. Environmental authorisation was granted in July and the Environmental Management Plan was approved by the Department of Mineral Resources in October. The fi nal outstanding regulatory clearances were obtained in February 2013 and the project will commence shortly. De Beers will invest approximately \$2 billion to build the new underground mine, which will extend the life of the resource until 2042 and replace the open pit as South Africa's largest diamond mine.

In Canada, the Environmental Impact Review documentation for the Gahcho Kué project has been submitted for review and the Review Panel is expected to issue a decision report in 2013.

Outlook

De Beers expects moderate growth in diamond jewellery demand in 2013. This will be supported primarily by a more positive picture emerging from China and India compared to 2012. Some upside is possible in the US, while trading conditions in other markets are likely to be challenging. The rough diamond manufacturing sector closed 2012 with high levels of inventory, particularly in the higher-end categories of diamonds, and faces continued pressure in terms of liquidity. In the medium to long term, industry fundamentals are expected to strengthen as diamond production plateaus and demand continues to increase.

OTHER MINING AND INDUSTRIAL

Ruben Fernandes CEO – Phosphates and Niobium

Duncan Wanblad Group Director Other Mining and Industrial – Tarmac, Amapá and Scaw Metals

UNDERLYING OPERATING PROFIT (2011: \$315 m) \$337 m

SHARE OF GROUP UNDERLYING OPERATING PROFIT (2011: 3%)

UNDERLYING EBITDA (2011: \$540 m)

Key fi nancial and non-fi nancial performance indicators

\$ million (unless otherwise stated)(1)	2012	2011
Underlying operating profi t	337	315
Phosphates	91	134
Niobium	81	52
Amapá	54	120
Tarmac	73	(38)
Scaw Metals	49	37
Zinc	–	20
Corporate	(11)	(10)
Underlying EBITDA	485	540
Net operating assets	786	3,843
Capital expenditure	260	225
Share of Group underlying operating profi t	5%	3%
Share of Group net operating assets	2%	9%
Non-fi nancial indicators(2)	2012	2011
Number of fatal injuries
Phosphates and Niobium	–	–
Amapá, Tarmac and Scaw Metals	1	1
Lost-time injury frequency rate
Phosphates and Niobium	0.39	0.15
Amapá, Tarmac and Scaw Metals	0.25	0.21
Total energy consumed in 1,000 GJ(3)	2,710	2,222
Total greenhouse gas emissions in 1,000 tonnes CO2 e (3)	93	65
Total water used for primary activities in 1,000 m3 (3)	8,313	8,569

(1) In 2012, Amapá was reclassifi ed from Iron Ore and Manganese to Non-core within the Other Mining and Industrial segment to align with internal management reporting. Financial comparatives have been reclassifi ed to align with current presentation.

(2) In a given year, non-fi nancial data is reported within the business unit that had management control of the operation, therefore non-fi nancial data for Amapá is reported within OMI and Iron Ore Brazil for 2012 and 2011 respectively.

(3) Non-fi nancial performance data given for Phosphates and Niobium only.

01 A granulator at Phosphates' Cubatão plant, where fertiliser is made into granulated form.

BUSINESS OVERVIEW

Phosphates

Our Phosphates business is the second largest integrated phosphate fertiliser producer in Brazil. Its operations are vertically integrated, covering mining of phosphate ore, benefi ciation of the ore to produce phosphorus pentoxide (P2O⁵ ) concentrate, and processing into intermediate and fi nal products.

Our phosphates mine at Ouvidor, in Goiás state, currently produces, on average, around 5.9 Mt of ore per annum (dry basis). It is a prime phosphate deposit, containing some of Brazil's highest grades of ore (approximately 13% P2O⁵ ). The company has approximately 15% of current Brazilian phosphate mineral resources and has a remaining mine life of 40 years at current production rates.

Run-of-mine phosphate ore is treated at a benefi ciation facility on the same site, and approximately 1.36 million tonnes per annum (Mtpa) of fi nal phosphate concentrate is produced at an average grade of around 35% P2O⁵ . Phosphates operates two chemical processing complexes: one in Catalão in Goiás, the other at Cubatão in the state of São Paulo. The company produces a wide variety of products for the Brazilian agriculture sector, including low analysis (approximately 20% P2O⁵ content) and high analysis (40%-55% P2O⁵ content) phosphate fertilisers, dicalcium phosphate (DCP) for the animal feed industry, as well as phosphoric and sulphuric acids for the food and animal feed industries.

Niobium

Our Niobium business is located in the cities of Catalão and Ouvidor, in Goiás state, Brazil, and is one of the world's three principal niobium producers.

In operation since 1973, our Boa Vista mine produces and exports approximately 4,000 tonnes of niobium per year. Now, approaching the end of the weathered ore, the Niobium business is investing in adapting the existing plant to process fresh rock.

Our phosphates mine, containing some of Brazil's highest grades of ore has approximately 15% of current Brazilian phosphate mineral resources.

INDUSTRY OVERVIEW Phosphates

Phosphate fertiliser demand is driven by strong fundamental trends, including expanding food needs from a growing global population, changing dietary habits in major emerging economies such as China and India, and increased demand for biofuels.

Brazil, a major agricultural nation, is the fourth largest phosphate market globally and needs to import almost 50% of its required phosphate fertilisers. Our phosphates mine, situated in Brazil's under-supplied Central-West region, gives us a competitive cash-cost advantage.

Niobium

As an alloying agent, niobium brings unique properties to high strength steel alloys (HSSA), such as increased formability, corrosion resistance, weldability and strength under tough working environments, including extreme high or low temperatures.

Around 90% of total global niobium consumption is used as an alloying element, in the form of ferroniobium (FeNb) in high strength steels, which are used in the manufacture of automobiles, ships and high pressure pipelines, as well as in the petroleum and construction industries. The product is exported to major steel plants in Europe, the US and Asia.

STRATEGY

Phosphates and Niobium's core strategy is to expand the existing operations and mineral reserves in both commodities through a rigorous focus on operational excellence, and the execution of selected low cost and high returning projects.

At Phosphates, signifi cant brownfi eld expansion opportunities are currently being evaluated in order to meet the expected growing demand needs of the Brazilian agricultural market, which is strategically placed to address the global shifts in dietary habits and where the outlook for the production of fertiliser products is very positive.

At Niobium, our investment in the Boa Vista Fresh Rock project is expected to consolidate the business as the second largest producer of niobium worldwide, feeding mainly into, and increasing our market share in, the HSSA market.

ORGANISING VALUE FROM WASTE AT PHOSPHATES

Phosphates is applying the 'reduce, re-use, recycle' philosophy on an industrial scale.

A leading Brazilian producer of phosphate fertilisers, each year Phosphates generates 7,800 tonnes of phosphate waste, with 20% being re-used at the granulation stage of production. The rest was traditionally sold as a low-value by-product or disposed of in waste lagoons.

Following laboratory and, later, industrial-scale tests, a Phosphates technical team demonstrated that phosphate waste could also be re-used in the intermediate acidulation stage. The technique was put into full-scale production in March 2012.

Phosphate waste recovered and re-used has now increased to 40% – with a target of 60%. This has led to lower production costs, with no loss of quality, and the environmental benefi t of signifi cantly reduced waste disposal.

Image Laboratory analyst Thiago Araujo. 01 Phosphates stockpile in Cubatão.

02 Processing plant and water-treatment area at Cubatão.

FINANCIAL AND OPERATIONAL OVERVIEW

Safety and environment

In 2012, no fatalities were recorded in Phosphates and Niobium, however the LTIFR increased to 0.39 (2011: 0.15). All 14 injuries were of low potential severity and most involved injury to hands and feet. The lessons learned from the incident investigations are being used to improve risk assessment, promote safe behaviour and prevent unsafe operating conditions.

Water consumption was marginally reduced as more water was re-used, particularly at the phosphate operations. While energy consumption decreased year on year, CO2 emissions increased due to an alignment of conversion factors with Group standards.

Markets

Phosphates

Fertiliser demand in Brazil rose around 4% in 2012, refl ecting the strong fundamentals of the Brazilian agricultural sector. Brazilian fertiliser consumption has been growing faster than the global average and this performance is expected to continue in future years, supported by favourable weather conditions, plentiful access to water and the widespread use of advanced farming techniques by Brazilian farmers. Continued high prices of soybean and corn have also incentivised farmers to increase grain production through more intensive fertiliser application.

This favourable market scenario resulted in Phosphates reporting a record fertiliser sales performance of 1.2 Mt for the year.

Niobium

Global steel mill activity was subdued in 2012, with producers reluctant to resume idle operations, replenish stocks, and to commit to further investment in their businesses. Despite the challenging environment, however, increased production of HSSA in both emerging and developed countries, ensured that niobium demand remained strong for the year.

Operating performance Phosphates

Despite record fertiliser sales, underlying operating profi t decreased by 32% to \$91 million, driven mainly by unfavourable international fertiliser

Brazilian fertiliser consumption has been growing faster than the global average and this performance is expected to continue in future years.

prices, coupled with increased labour costs and general infl ationary pressures. DCP sales were also adversely affected by diffi culties in the cattle industry, which had a negative impact on the operating results.

Phosphates production increased by 5% to a record of 1.1 Mt, due to a number of asset optimisation initiatives which improved overall performance at Catalão and Cubatão.

Niobium

Niobium generated an underlying operating profi t of \$81 million, a 56% increase over 2011. Sales volumes of niobium rose by 15%, mainly due to an increase in production arising from a better performance at the tailings plant and improvements in the concentration process at the Boa Vista mine. Unit production costs declined owing to lower aluminium and power prices and more effi cient use of consumables, combined with the impact of higher production.

Projects Niobium

The Boa Vista Fresh Rock project continued to make progress, with additional capital expenditure approved in June 2012. The existing plant will be adapted to process new rock instead of oxide ore, leading to an increase in production capacity to approximately 6,500 tonnes of niobium per year (2012: 4,400 tonnes).

Outlook Phosphates

Strong grain prices continue to support fertiliser demand, and fertiliser prices are expected to remain high during 2013. The market expects farmers to expand the area given over to agriculture, as the current ratio between fertiliser and grain prices remains positive.

In addition, the high level of corn prices will be a motivating factor for an aggressive 'mini crop' (a smaller secondary crop, mainly corn, grown in the fi rst half of the year) in the fi rst quarter of 2013.

Niobium

Demand is expected to remain subdued in Europe and in Pacifi c Rim/East Asian countries, such as Japan, South Korea and, to a lesser degree, China.

Production is expected to decline in 2013, owing to lower grades and recoveries as lower quality ore is extracted from Boa Vista mine as it approaches the end of the weathered ore and encounters lower grades and higher contaminants. Tailings production is also expected to decrease as a result of lower niobium grades contained in the phosphate tailings.

AMAPÁ

Amapá generated an underlying operating profi t of \$54 million, a decrease of \$66 million on the prior year.

Production increased signifi cantly, in line with planned ramp up and also due to higher mass recovery in the benefi ciation plant as a result of the plant's improved stability. The operation is now at design production capacity. Higher sales were also achieved following fewer delays associated with transportable moisture limits. Transhipment at Trinidad and Tobago from smaller capacity Handymax to the larger capacity Capesize vessels for onward shipment to the Middle and Far East was successfully implemented in the second half of 2012.

The favourable impact of improved production and higher sales, however, was more than offset by a sharp decrease in prices during 2012, though tight cost control and improved operating effi ciencies, partly compensated their effect. Underlying operating profi t also benefi ted from the reversal of penalty provisions, which were in place at the end of 2011, as a result of contract renegotiations.

Regrettably, one fatality occurred at Amapá iron ore system in Brazil during 2012. The LTIFR has improved over the past six years, and encouragingly, the severity of injuries also continues to decline.

On 4 January 2013, Anglo American announced an agreement to sell its 70% interest in Amapá to Zamin Ferrous Ltd. The transaction is subject to regulatory approval and is expected to complete in 2013. We have always maintained that we did not envisage holding our interest in Amapá over the long term and, in July 2012, reported that we had transferred responsibility for Amapá to our Other Mining and Industrial business unit and stated that we were exploring the possibility of divesting our interest.

Anglo American has transformed the operational performance of Amapá since acquisition in 2008, increasing annual production from 1.2 Mt in 2008 to 6.1 Mt in 2012.

TARMAC

Tarmac reported an underlying operating profi t of \$73 million, compared with a loss of \$38 million in 2011. Tarmac's underlying EBITDA was \$148 million, 44% higher than in 2011.

Quarry materials

The business' profi tability was at higher levels than last year, mainly as a result of the operation being treated as 'held for sale' from the end of July 2012, and the subsequent cessation of recorded depreciation. There has been a decline in asphalt volumes, with few major road schemes commencing in 2012 as a result of the UK government's austerity measures. Private-sector growth remained muted throughout the year, thus keeping pressure on ready-mix concrete prices and volumes, but was offset in part by the resilient central London market. A continued focus on maximising the use of substitute fuel and recycled asphalt materials is helping to mitigate the impact of rising hydrocarbon costs and to support margins.

On 7 January 2013, Anglo American and Lafarge announced the completion of their 50:50 joint venture which will combine their cement, aggregates, ready-mix concrete, asphalt and asphalt surfacing, maintenance services, and waste services businesses in the UK. The joint venture will be known as Lafarge Tarmac. Completion of the Lafarge Tarmac joint venture followed fi nal clearance from the UK Competition Commission, predicated on the completed sale of a portfolio of Tarmac and Lafarge construction materials operations in the UK, which also occurred on 7 January 2013.

Building products

Performance was affected by the continued general economic downturn, compounded by disruption to building activity following unseasonal wet weather during the summer months.

The weak building products market resulted in a highly competitive pricing environment affecting sales volumes, although cost reduction projects and improvements in operating effi ciencies are helping to mitigate some of the impact.

In early 2013, Anglo American and Lafarge announced the completion of their 50:50 joint venture.

A number of initiatives continue to be developed to ensure improved longer term performance, but the short term remains diffi cult owing to the prevailing weak market conditions.

SCAW METALS

Scaw Metals experienced a 32% increase in underlying operating profi t to \$49 million for the 11 months to end November 2012 compared with the full year 2011, mainly as a result of the company being treated as 'held for sale' from 24 April 2012, and the subsequent cessation of recorded depreciation.

Cast Products showed a marked improvement, owing to fi rm demand across all segments and a reduction in costs following the closure of a loss making foundry in the prior year. Grinding Media reported a decrease in underlying operating profi t as a result of lower demand from the mining sector owing to industrial action in the second half of 2012. This business is expected to recover as mining operations revert to full production. The performance of Wire Rod Products suffered as a consequence of a decline in mining activity, but nevertheless reported stable earnings. Demand for construction products remained weak, but in spite of this the Rolled Products business, through cost containment measures and operational improvements, was able to minimise its losses.

Total production of steel products was 611,600 tonnes for the 11 months to end November 2012, a decrease of 9.7% over the full year 2011.

On 24 April 2012, Anglo American announced the sale of its interest in Scaw South Africa to an investment consortium led by the Industrial Development Corporation of South Africa and the Group's partners in Scaw South Africa, being Izingwe Holdings (Pty) Limited, Shanduka Resources (Pty) Limited and the Southern Palace Group of Companies (Pty) Limited. On 23 November, the sale of Scaw South Africa and related companies completed for a total consideration of ZAR3.4 billion (\$440 million) on a cash- and debt-free basis as announced.

GOVERNANCE

IN THIS SECTION 90 Chairman's introduction

92 The Board

94 Executive management

96 The role of the Board

98 Board in action

100 Board committees

104

Audit Committee report

108

Remuneration report

128 Directors' report

134 Statement of directors' responsibilities

"Corporate governance is a dynamic process that requires continuous review and improvement."

CHAIRMAN'S INTRODUCTION

In 2012 we saw both the 20th anniversary of the introduction of the UK Corporate Governance Code (the Code) and, in September, its latest incarnation as the Financial Reporting Council (FRC) published revisions aimed at enhancing corporate reporting and audit. These events serve to underline the fact that corporate governance is a dynamic process that requires continuous review and improvement. For me they also highlight the wisdom of Sir Adrian Cadbury and his committee in devising a principlesbased approach that has enabled and encouraged the periodic updating of the Code to ensure it remains relevant.

At Anglo American, I am pleased to confi rm once again that we complied with the Code for the period. The following section sets out how we have complied and, on our website, we provide a handy checklist that relates our corporate governance arrangements to each of the relevant principles in the Code. Nonetheless, we recognise that corporate governance arrangements are never 'complete', and must continually adapt and evolve. The following section explains how we endeavour to achieve that and I hope this is of interest to shareholders. In this introduction I will briefl y draw attention to just two areas that I hope illustrate our commitment to continuous improvement.

BOARD EVALUATION

One of the ways in which we seek to adapt and improve our governance arrangements is via the annual Board evaluation. In 2012, the evaluation was conducted by an external facilitator and led to recommendations for, inter alia, enhancing the quality of our strategic discussions and re-programming our scheduled Board agenda somewhat to include discussions of a range of areas highlighted by directors.

I regard an external board evaluation as a very useful process although, in well-established companies, one should not expect the annual evaluation to result in revolutionary changes nor be surprised if the results often focus on the same areas. What it does provide is an independent, external perspective on the effectiveness of our Board and a valuable opportunity for directors to take the time to refl ect specifi cally on how we are doing and where we might improve.

The following section sets out how we have complied and, on our website, we provide a handy checklist that relates our corporate governance arrangements to each of the relevant principles in the Code. For more information visit

www.angloamerican.com

90 Anglo American plc Annual Report 2012

Board and Committee meetings – frequency and attendance

	Independent	Board (six meetings)	Audit (three meetings)	S&SD (four meetings)	Remuneration (four meetings)	Nomination (fi ve meetings)
Sir John Parker	N/a	All	–	Three	–	All
Cynthia Carroll	No	All	–	All	–	–
René Médori	No	All	–	–	–	–
David Challen	Yes	All	All	–	All	All
Sir CK Chow	Yes	All	–	–	All	All
Sir Philip Hampton	Yes	Five	All	–	All	–
Phuthuma Nhleko	Yes	All	All	–	–	–
Ray O'Rourke	Yes	All	All	All	–	–
Mamphela Ramphele(1)	Yes	1/4	–	1/3	–	1/3
Anne Stevens(2)	Yes	All	All	–	–	–
Jack Thompson	Yes	All	–	All	All	–
Peter Woicke	Yes	All	–	All	All	All

(1) Meetings attended prior to retirement.

(2) Meetings attended since appointment.

DIVERSITY

We continue to develop the mix of skills and experience on the Board. During the year, it included three female directors (achieving a 27% representation of women on the Board – excluding the chairman) and comprised individuals with engineering, banking, mining, telecoms, construction and automotive sector backgrounds, hailing from the US, UK, South Africa, France, Germany, Ireland and Hong Kong.

As the justifi able clamour for diversity on company boards intensifi es, there is a risk that this comes to be seen as a mere compliance issue. It is not. Making sure we utilise all of the talent available to us, and fostering a mix of skills and backgrounds to provide challenge and different perspectives around the board table, is all about making better decisions in the interests of the Company.

As the justifi able clamour for diversity on company boards intensifi es, there is a risk that this comes to be seen as a mere compliance issue. It is not.

The following sections of this report contain much information detailing our compliance with the Code. What I hope is also clear is our commitment to the spirit of the Code and our belief that good corporate governance is good business – that it is about making the best decisions we can, for the right reasons, in the long term interests of the Company.

Sir John Parker Chairman

THE BOARD

CHAIRMAN

Sir John Parker GBE, FREng, DSc (Eng), ScD (Hon), DSc (Hon), DUniv (Hon), FRINA

70, joined the Board as a nonexecutive director on 9 July 2009 and became chairman on 1 August 2009. Sir John is also chairman of the Nomination Committee and is a member of the Safety and Sustainable Development (S&SD) Committee.

He is a non-executive director of Carnival Corporation and EADS as well as deputy chairman of DP World. Sir John is also President of the Royal Academy of Engineering and a Visiting Fellow of the University of Oxford.

Sir John was previously chairman of National Grid plc, senior non-executive director and chair of the Court of the Bank of England, joint chair of Mondi and chair of BVT and P&O plc.

CHIEF EXECUTIVE

Cynthia Carroll MSc, MBA, DSc (Hon)

56, was appointed CEO on 1 March 2007, having joined the Board on 15 January 2007. Cynthia chairs the Group Management Committee (GMC) and the Executive Committee (ExCo) and sits on the S&SD Committee. She is a non-executive director of BP plc and chairs Anglo American Platinum and De Beers. Cynthia is the former president and CEO of Alcan's Primary Metals Group and a former director of AngloGold Ashanti Ltd and Sara Lee Corporation.

In October 2012 Cynthia announced her decision to step down as CEO with effect from 3 April 2013. She will also step down from the Board at the AGM on 19 April 2013.

FINANCE DIRECTOR

René Médori

Doctorate in Economics

55, was appointed to the Board on 1 June 2005, becoming fi nance director on 1 September 2005. René is a member of GMC and ExCo and chairman of the Investment Committee. He is a non-executive director of Anglo American Platinum. René recently joined the board of Petrofac Limited as a non-executive director. He is a former fi nance director of The BOC Group plc and was a non-executive director of SSE plc (formerly Scottish and Southern Energy plc) until June 2012.

SENIOR INDEPENDENT DIRECTOR

David Challen MA, MBA

69, joined the Board on 9 September 2002 and was appointed as the senior independent non-executive director in April 2008. He is chairman of the Audit Committee and a member of the Nomination and Remuneration Committees. David is currently chairman of the EMEA governance committee at Citigroup and senior non-executive director of Smiths Group plc. He is currently a deputy chairman of the UK's Takeover Panel. Previously he was chairman of J. Henry Schroder & Co. Limited, where he spent most of his professional career.

NON-EXECUTIVE DIRECTORS

Sir CK Chow DEng (Hon), CEng, FREng, HonFHKIE, FIChemE

62, was appointed to the Board on 15 April 2008 and is a member of the Nomination and Remuneration Committees. He is currently chairman of Hong Kong Exchanges and Clearing Limited and a non-executive director of AIA Group Limited.

Sir CK was appointed as a member of the Executive Council of the Hong Kong Special Administrative Region in July 2012. He is chairman of the Hong Kong General Chamber of Commerce, and was recently appointed chairman of the Advisory Committee on Corruption by the Hong Kong SAR Government. Between 2003 and 2011 he was CEO of the MTR Corporation in Hong Kong. Former positions include those of CEO of Brambles Industries, GKN PLC and non-executive chairman of Standard Chartered Bank (Hong Kong) Limited. Prior to joining GKN PLC he worked for The BOC Group plc for 20 years, joining its board in 1993.

Sir Philip Hampton MA, ACA, MBA

59, joined the Board on 9 November 2009. He is chairman of the Remuneration Committee and a member of the Audit Committee. Sir Philip is chairman of The Royal Bank of Scotland and brings to Anglo American signifi cant fi nancial, strategic and boardroom experience across a number of industries.

His previous appointments include chairman of J Sainsbury plc; fi nance director of Lloyds TSB Group plc, BT Group plc, BG Group plc, British Gas plc and British Steel plc, executive director of Lazards, and non-executive director of RMC Group plc and Belgacom SA.

Phuthuma Nhleko

BSc (Eng), MBA 52, joined the Board on 9 March 2011 and is a member of the Audit Committee. Phuthuma is also a non-executive director of BP plc and chairman of Pembani Group (Pty) Limited.

He previously served as a director on a number of boards in South Africa, including Nedbank Group, Alexander Forbes, Bidvest and Old Mutual (SA).

Ray O'Rourke

KBE, HonFREng, CEng, FICE, FIEI 66, joined the Board on 11 December 2009. He is a member of the Audit and S&SD Committees.

Ray founded the O'Rourke Group in 1977, having begun his career at Kier and J Murphy & Sons. In 2001, the O'Rourke Group acquired John Laing to form Laing O'Rourke, now Europe's largest privately owned construction company, of which Ray is chairman and CEO.

Ray has a proven track record in delivering complex and large-scale projects around the world, mobilising large numbers of people with great success and applying leading project management practices. As a member of the S&SD Committee, he has a keen interest in safety.

Anne Stevens

PhD, BSc 64, joined the Board on 15 May 2012 and is a member of the Audit Committee. She has served on the

board of Lockheed Martin Corporation as a non-executive director since 2002 and is also the chairman and CEO of a privately held IT services business, SA IT.

Anne's 16-year career with Ford Motor Company culminated in her appointment as chief operating offi cer (COO) for the Americas, a position she held until 2006.

Prior to joining Ford in 1990, Anne spent ten years in a number of engineering, product development and sales and marketing roles at Exxon Chemical Co and three years as chairman and CEO of Carpenter Technology.

Anne brings a wealth of experience from a number of global industries. Her engineering training and wideranging commercial acumen and experience gained across North, Central and South America has strengthened the experience of the Board.

Jack Thompson

BSc, PhD 63, joined the Board on 16 November 2009 and is a member of the Remuneration and S&SD Committees. He will become chairman of the S&SD Committee upon the retirement of Peter Woicke in April 2013. He is currently a non-executive director of Molycorp Minerals LLC and Tidewater Inc.

Jack was previously chairman and CEO of Homestake Mining Co., vice chairman of Barrick Gold Corp. and has served on the boards of Centerra Gold Inc., Century Aluminum Co., Phelps Dodge Corp., Rinker Group Ltd. and Stillwater Mining.

Jack brings experience gained at all levels of the mining industry and has received wide recognition as a mining executive.

Peter Woicke

MBA 70, joined the Board on 1 January 2006, is chairman of the S&SD Committee and is a member of the Nomination and Remuneration Committees.

He is currently a member of the board of trustees of the Ashesi University Foundation and a member of the boards of Saudi Aramco, the Institute for Human Rights and Business and the Chesapeake Bay Foundation.

From 1999 to 2005, Peter was executive vice president of the International Finance Corporation (IFC). Prior to joining the IFC, Peter held numerous positions for nearly 30 years with J.P. Morgan and he was also a managing director of the World Bank.

Peter has indicated that he wishes to retire from the Board this year and accordingly will not be standing for re-election at the AGM in April.

INCOMING CEO

Mark Cutifani

BE (Mining Engineering) 54, has been appointed as a director and CEO with effect from 3 April 2013. Mark is currently CEO of AngloGold Ashanti Limited, a position he has held since 2007. Before joining AngloGold Ashanti, Mark was COO at Vale Inco where he was responsible for Vale's global nickel business. Prior to this he held senior executive positions with the Normandy Group, Sons of Gwalia, Western Mining Corporation, Kalgoorlie Consolidated Gold Mines and CRA (Rio Tinto).

Mark has over 35 years' experience of the mining industry across a wide range of geographies and commodities.

non-executive director

NOMINATED INDEPENDENT NON-EXECUTIVE DIRECTOR

Byron Grote

PhD Quantitative Analysis 64, is a non-executive director of Unilever NV and Unilever plc and a member of the Cornell University Johnson Graduate School of Management Advisory Council.

He joined The Standard Oil Company of Ohio in 1979 and in 1985 became director of planning for its mining subsidiary, Kennecott.

In 1988 Byron was appointed as commercial vice president for BP's Alaskan North Slope production activities. In 1989 he became commercial general manager of BP exploration, based in London, and then group treasurer and CEO of BP fi nance in 1992. In 1994 he took up the position of regional chief executive in Latin America. In 1995 Byron became deputy CEO of BP Exploration.

Following the merger of BP and Amoco in 1999, Byron was appointed executive vice president, exploration and production. He was appointed to the BP board in 2000 and he served for two years as CEO of BP Chemicals and then as BP's chief fi nancial offi cer (CFO) from 2002 until 31 December 2011. He will retire from the board of BP in April 2013.

Byron has been nominated for election as a director at the AGM on 19 April 2013.

Governance

EXECUTIVE MANAGEMENT Cynthia Carroll Brian Beamish

The Company has two principal executive committees. The Group Management Committee (GMC) (which meets fortnightly) is responsible for formulating strategy for discussion and approval by the Board, monitoring performance and managing the Group's portfolio. The Executive Committee (ExCo) (which meets at least every two months for a two-day session) is responsible for developing and implementing Group-wide policies and programmes and for the adoption of best practice standards across the Group.

GMC AND EXCO MEMBERS

Cynthia Carroll See page 92 for biographical details.

René Médori

See page 92 for biographical details.

Brian Beamish

BSc (Mechanical Engineering) 56, is Group director, mining and technology. He is a member of the S&SD and Investment Committees and is a non-executive director of Anglo American Platinum and De Beers. He was CEO of Base Metals between 2007 and 2009 and prior to this spent 20 years at Anglo American Platinum and its forerunner, Johannesburg Consolidated Investment Company Limited, including four years as executive director of operations between 1996 and 1999. Brian has more than 30 years of mining industry experience in various commodities and geographies.

Mervyn Walker MA

53, is Group director, HR and corporate affairs. He is a solicitor by training and joined Anglo American in 2008 from Mondi, where he was group HR and legal director. He is currently also non-executive chairman of pension schemes for AMEC plc. Mervyn previously held a series of senior roles at British Airways, including HR director, legal director, director of purchasing and director of UK airports.

David Weston MBA, BSc (Eng)

54, is Group director, business performance and projects. He is a member of the S&SD and Investment Committees. He spent 25 years with Shell and was president of Shell Canada Products before joining Anglo American in 2006 as CEO of Industrial Minerals (Tarmac). David served as the Group's technical director between April and October 2009. He is also a non-executive director of Kumba Iron Ore Ltd. and of GDF SUEZ Energy International (formerly International Power plc).

Ruben Fernandes

Paulo Castellari-Porchia

Walter De Simoni

David Weston

Chris Griffi th

Peter Whitcutt

BCom (Hons), CA (SA), MBA 47, is Group director, strategy and business development. He joined Anglo American in 1990 within the corporate fi nance division. He worked on the merger of Minorco with Anglo American, the listing of Anglo American in 1999 and the subsequent unwinding of the crossholding with De Beers. Peter was appointed Group head of fi nance in 2003, CFO of Base Metals in August 2008 and to his present position in October 2009.

EXCO MEMBERS

Paulo Castellari-Porchia BCom, MBA

42, is CEO of Iron Ore Brazil. He was previously CEO of Anglo American's Phosphates and Niobium businesses in Brazil and served in Anglo American's former Base Metals division. Paulo's career with the Group started in 1993 and has included positions at AngloGold Ashanti and Minorco in a number of corporate fi nance and capital project roles.

Walter De Simoni BSc (Mining Eng)

57, is CEO of Nickel. Walter joined Anglo American in 1978. He was appointed president of Anglo Base Metals Brazil in 2005. Walter became CEO of Anglo American Brazil in 2006, a position he held until becoming CEO of Nickel in October 2009.

Ruben Fernandes

MSc (Metallurgical Engineering), MBA 47, was appointed CEO of Niobium and

Phosphates in July 2012. Ruben was head of mining at Votorantim Metals in Brazil from 2011, in charge of projects, exploration activities around the world and operations in Peru and Colombia. He was COO at Vale Fertilizers from 2009, responsible for the fertiliser operations, sales and marketing. Ruben was CEO of Kaolin Companies – Pará Pigments and Cadam – two subsidiaries of Vale, from 2007, held various analysis and marketing roles in Vale's Base Metals department from 1999 and, prior to this, worked in Votorantim's zinc business and at Eletrometal Special Metals in Brazil.

Seamus French

BEng (Chemical)

50, is CEO of Metallurgical Coal. He joined WMC Resources in Australia in 1994, initially in a strategic planning and business development role and progressed to various operational management roles, gaining extensive experience in the gold and nickel businesses before advancing to the position of executive general manager Copper-Uranium division. Seamus joined BHP Billiton as global vice president, business excellence following its takeover of WMC in 2005. He was appointed regional CEO of Anglo Coal Australia in 2007, bringing strong skills in operations, safety and business improvement to the role.

Godfrey Gomwe BAcc, CA (Z), MBL

57, was appointed CEO of Thermal Coal with effect from 1 September 2012. Godfrey is also responsible for Anglo American's manganese interests. He is a non-executive director of Thebe Investment Corporation (Pty) Ltd. Until his appointment as CEO of Thermal Coal, he was a non-executive director of Anglo American Platinum and Kumba Iron Ore. Godfrey was previously fi nance director and COO of Anglo American South Africa and chairman and CEO of Anglo American Zimbabwe.

Chris Griffi th

BEng (Mining) Hons, Pr Eng 47, was appointed CEO of Anglo American Platinum Limited with effect from 1 September 2012. He was previously CEO of Kumba Iron Ore from 2008. Prior to this he was Anglo American Platinum's head of operations for joint ventures. Chris has been with Anglo American for more than two decades.

Khanyisile Kweyama BS Administration (USA), PDM,

MM Human Resources 47, was appointed executive director, Anglo American South Africa Limited with effect from 1 September 2012. Khanyisile formerly served on the executive committee of Platinum, during which time she enhanced HR programmes and signifi cantly improved relations with unions and brought wage negotiations to a successful conclusion. She gained corporate experience in a number of international companies, including BMW, Altech and Barloworld Ltd, holding executive roles incorporating human resources, industrial relations, corporate affairs, stakeholder relations and transformation.

John MacKenzie

MSc Eng, MBL 44, is CEO of Copper. He joined the Anglo American Gold and Uranium Division in 1990 and was promoted to vice president of Anglo Coal, South American Operations in 1999. In 2004, he became general manager of the Minera Loma de Níquel operation in Venezuela. John was appointed CEO of Base Metals' zinc operations in 2006, and was appointed to his current position in 2009.

Norman Mbazima FCCA, FZICA

54, was appointed CEO of Kumba Iron Ore with effect from 1 September 2012. He joined Anglo American in 2001 at Konkola Copper Mines plc. He was subsequently appointed global CFO for Anglo Coal. He became executive director of fi nance at Anglo American Platinum in June 2006 and later stepped in as joint acting CEO. Prior to this, Norman was CEO of Scaw Metals from May 2008 and later CEO of Thermal Coal from October 2009, a position he held until 2012.

Philippe Mellier Msc Eng, MBA

57, was appointed CEO of De Beers Group in July 2011. He began his career in 1980 with the Ford Motor Company, where he occupied various senior management positions over 19 years. In 1999 Philippe joined Renault as a senior vice president in charge of European sales, and was a member of the management board. In 2001 he moved to Volvo AB to become chairman and CEO of Renault Trucks, and a member of the Volvo Group executive committee. In 2003, Philippe became president of Alstom Transport and was appointed executive vice president of Alstom Group a year later.

Duncan Wanblad

BSc (Eng) Mech, GDE (Eng Management)

46, is Group director, Other Mining and Industrial businesses. He began his career at Johannesburg Consolidated Investment Company Limited in 1990. He was appointed to the board of Anglo American Platinum in 2004. Duncan was appointed joint interim CEO of Anglo American Platinum in 2007, before taking over as CEO of Anglo American's copper operations in 2008. He was appointed to his current position in October 2009.

THE ROLE OF THE BOARD

The Board of directors has a duty to promote the long term success of the Company for its shareholders. Its role includes the establishment, review and monitoring of strategic objectives, approval of major acquisitions, disposals and capital expenditure and overseeing the Group's systems of internal control, governance and risk management.

A schedule of matters reserved for the Board's decision details key aspects of the Company's affairs that the Board does not delegate (including, among other things, approval of business plans, budgets and material expenditure). For the full list, please see the Company's website.

Every year the Board holds a two-day strategy meeting at which the non-executive directors (NEDs) contribute their expertise and independent perspective in developing the strategy of the Company.

Role of the chairman

The Board is chaired by Sir John Parker. The chairman is responsible for leading the Board and for its effectiveness.

Role of the chief executive

The CEO is responsible for the execution of strategy and the day-to-day management of the Group, supported by the GMC and the ExCo, both of which are currently chaired by Cynthia Carroll. The functions and membership of GMC and ExCo are set out on pages 94–95.

The Company has adopted the Institute of Chartered Secretaries and Administrators' Statement of Division of Responsibilities between the Chairman and the CEO.

Role of the senior independent director

David Challen is the senior independent non-executive director (SID). He is available to shareholders, acts as a sounding board and confi dant for the chairman and is available as an intermediary for the other directors if necessary.

Independence of directors

The Board has a strong independent element and currently comprises, in addition to the chairman, two executive directors and eight NEDs, all of whom are independent according to the defi nition contained in the Code. Full biographical details for each director are given on pages 92–93. The letters of appointment of the NEDs (as well as the executive directors' service contracts) are available for inspection at the registered offi ce of the Company.

None of the NEDs has served concurrently with an executive director for more than nine years. As David Challen has been on the Board for over six years his re-appointment is subject to particularly rigorous review. The Board believes that through his challenging and questioning of management he continues to display all of the qualities of independence pursuant to the criteria set out in the Code.

Board evaluation

An evaluation of the Board by an external facilitator, with no prior relationship with Anglo American, was completed in February 2012. This involved a series of one- to-one interviews with board members to gather views, and attendance at a Board meeting by the facilitator.

Overall, directors felt that the Board was functioning well. The composition and balance of the Board is good, and continues to develop. The frequency of meetings is appropriate, and they are well organised and well chaired, with an inclusive style encouraging open, healthy debate. It was agreed that fi nance and risk management, in particular, were well covered and that the chairman was very effective at communicating with external stakeholders – for example, investors and media.

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There is always room for improvement of course, and the evaluation identifi ed a number of areas where we could do even better. As ever, directors would like to have more time for strategic discussions, and for those discussions to be informed by more detail on strategic alternatives to the relevant investment/project under review. As part of the evaluation, directors raised a number of strategic questions to be addressed. It has been agreed that these will be scheduled into the Board's agenda for discussion over the coming 12 to 18 months – in addition to the annual two-day strategy meeting. Directors also suggested a number of areas that might be programmed into the Board's agenda to allow a deeper discussion, including: business unit (BU) presentations; competitor benchmarking; succession planning; retrospective review of major project decisions to establish key learnings; and external political and market updates.

In order to facilitate openness and constructive debate between our executive directors and NEDs, dinners are arranged for the day before each Board meeting. At these, directors are encouraged to raise issues in an informal setting. These dinners provide an opportunity, inter alia, to discuss the performance of management and to air subjects outside the confi nes of the boardroom in an informal and constructive manner. At every Board meeting, time is set aside for a NEDs only discussion. The Board receives regular governance updates from the company secretary highlighting developments in company law, corporate governance and best practice. Board papers are circulated one week before meetings – both electronically, via iPads, and in paper form. Members of the GMC attend all Board meetings.

Director training

Anglo American's directors have a wide range of expertise as well as signifi cant experience in strategic, fi nancial, commercial and mining activities.

Upon appointment, directors are provided with recent Board materials and a reference manual containing information on legal obligations and other matters of which they should be aware. Guidance is provided on Market Conduct under the Financial Services Authority (FSA), the Company's Articles, the Code and the Model Code. The manual also includes items such as Board and committee terms of reference, relevant company information and guidance on where to obtain independent advice. The manual was signifi cantly updated during 2012 and will continue to be updated periodically when appropriate.

As part of the directors' formal induction process, meetings are arranged with senior executives in order to develop a full understanding of the Anglo American Group. Training and briefi ngs are also available to directors on appointment and throughout their tenure, as necessary, taking into account existing qualifi cations and experience. Directors also have access to management, and to the advice of the company secretary.

Furthermore, all directors are entitled to seek independent professional advice concerning the affairs of Anglo American at the Company's expense, although no such advice was sought during 2012. Regular presentations are made to the Board by BU management on the activities of operations.

The company secretary facilitates board training and during the year directors attended courses on, inter alia, corporate governance, strategy, compliance, current audit and remuneration committee issues and general director duties and responsibilities. The directors are given the opportunity to discuss their development needs with the chairman during individual feedback meetings.

Dealing with confl icts of interest

If directors become aware that they have a direct or indirect interest in an existing or proposed transaction with Anglo American, they notify the Board at the next Board meeting or by a written declaration. Directors have a continuing duty to update any changes in these interests. During 2012 Mr Nhleko recused himself from a discussion on an item of business where there was a potential confl ict of interest. In accordance with the Company's Articles and relevant legislation, a quorum of the Board, which does not include the director with the potential confl ict of interest, can authorise potential confl icts of interest and such authorisations can be limited in scope and are reviewed on an annual basis. During the year under review, the confl icts register was updated and the confl ict management procedures were adhered to and operated effectively.

BOARD VISIT TO BRAZIL: OCTOBER 2012 BOARD IN ACTION

Directors and executives during the course of the visit to the Minas-Rio Project in October 2012.

Directors undertake regular visits to operations and projects and, in 2012, operations and projects in Brazil and Alaska were visited.

BOARD VISIT TO BRAZIL

In October 2012 the Board met in Brazil. Directors took the opportunity to meet with the Governor of the State of Minas Gerais and other state politicians.

Directors then visited the project, touring the benefi ciation plant and the pipeline as well as the local SENAI training centre funded by Anglo American.

During the course of the visit, the Board received detailed presentations from the management of the Minas-Rio Project.

NEDs' fact fi nding trips

Some of the NEDs attended meetings in Alaska with Anglo American employees, the Alaskan government and local communities involved in the Pebble Project. Some also visited the Niobium and Phosphate operations in Brazil following the Board meeting that was held there.

COMMUNICATING WITH OUR INVESTORS

The Company maintains an active engagement with its key fi nancial audiences, including institutional shareholders and sell-side analysts, as well as potential shareholders. The Investor Relations department manages the interaction with these audiences and regular presentations take place at the time of interim and fi nal results as well as during the rest of the year. An active programme of communication with potential shareholders is also maintained. A schedule of investor relations activities carried out during 2012 is shown on the following page.

January Chairman shareholder meeting 23 January February 17 February Financial results webcast and analyst roundtable 17 February Preliminary financial results w/c 20 February Roadshow: CFO – London & Edinburgh w/c 20 February Roadshow: CEO & BU Heads – London, videoconference to Cape Town, Johannesburg & Boston 27–28 February Broker conference: Investor relations – Florida March 01 March Roadshow: CFO – Johannesburg 08 March Broker conference: Investor relations – London Chairman shareholder meeting 14 March 14 & 20 March Roadshow: Chairman – London 20 March Chairman shareholder meeting Broker conference: Investor relations – London 21 March Sales briefing: CFO – London 22 March Broker reverse roadshow: Investor relations – London 23 March 26 March Broker reverse roadshow: Investor relations – London April 04 April Sales briefing: Investor relations – London AGM: – London 19 April 20 April Roadshow: Investor relations – Frankfurt 30 April Broker reverse roadshow: Investor relations – London May 10 May Broker conference: Investor relations – Milan Broker conference: CEO – Miami 15–17 May 16 May Sales briefing: CFO – London 25 May Roadshow: CFO – Paris June 06 June Chairman shareholder meeting Roadshow: BU Head – Boston 08 June Informal gathering: Board & ExCo – London 12 June 14 June Investor day webcast (Coal) 19 June Chairman shareholder meeting 19 June Roadshow: Chairman – Johannesburg 21–26 June Roadshow: CFO – East & West Coast US Chairman shareholder meeting 27 June July 02–04 July Roadshow: CFO – Singapore Interim financial results 27 July 27 July Interim financial results webcast and roundtable August September 06–18 September Roadshow: CEO – London, Edinburgh, Boston, Cape Town, Johannesburg 14 September Roadshow: CFO – London 17 September Sales briefing: CFO – London Broker conference: Investor relations – London 19 September Sales briefing: CFO – London 20 September Roadshow meetings: Investor relations – VCs to Japan 21 September 24 September Roadshow: CEO – New York October Roadshow: Investor relations – Chicago & Canada 01–03 October 09 October Sales briefing: CEO – London 29–30 October Roadshow: Investor relations – Benelux November 07 November Broker conference: Investor relations – London 09 November Chairman shareholder meeting 14 November Broker conference: CFO – London 15 November Broker reverse roadshow: Investor relations – London 16 November Roadshow: CFO – Paris Investor Day webcast (Diamonds) 30 November	Investor relations activities timeline 2012

Board oversight

Any signifi cant concerns raised by a shareholder in relation to the Company and its affairs are communicated to the Board. The Board is briefed on a regular basis by the Investor Relations department and analysts' reports are circulated to the directors. Feedback from meetings held between executive management, or the Investor Relations department, and institutional shareholders is also communicated to the Board.

Institutional investors

During the year there were regular presentations to, and meetings with, institutional investors in the UK, South Africa, continental Europe, the US and Asia Pacifi c to communicate the strategy and performance of Anglo American. Executive directors as well as key executives, including business unit heads, host such presentations, which include seminars for investors and analysts and one-on-one meetings. Throughout the year, executive management also presents at industry conferences that are mainly organised by investment banks for their institutional investor base. During 2012, the chairman attended investor roadshows in London and Cape Town. David Challen, in his capacity as the SID, works closely with the chairman to maintain his understanding of the issues and concerns of major shareholders. The chairman, SID and other NEDs are also available to shareholders to discuss any matter they wish to raise. The Company's website provides the latest news and historical fi nancial information, details about forthcoming events for shareholders and analysts, and other information regarding Anglo American.

BOARD COMMITTEES

Subject to those matters reserved for its decision, the Board delegates certain responsibilities to a number of standing committees – the Safety and Sustainable Development, Remuneration, Nomination and Audit Committees. The terms of reference for each of these committees and a schedule of matters reserved for the Board's decision are published on the Company's website.

SAFETY AND SUSTAINABLE DEVELOPMENT (S&SD) COMMITTEE

Peter Woicke Chairman, S&SD Committee

Composition

Peter Woicke chairman
Brian Beamish
Cynthia Carroll
Ray O'Rourke
Sir John Parker • Jack Thompson
David Weston

In addition to the members, Committee meetings are attended by business unit CEOs, S&SD and corporate affairs functional specialists from across the Group, all of whom participate actively in the Committee's discussions.

"Since joining the S&SD Committee in 2007, I have witnessed a step change in the attitude to safety and sustainable development throughout the Group."

Peter Woicke Chairman, S&SD Committee

Role and responsibilities

•Reviewing the development of framework policies and guidelines for the management of sustainable development and socio-political risks, including safety, health and environment
•Reviewing the performance of the Company and the progressive implementation of its S&SD and corporate affairs policies
•Receiving reports covering matters relating to material S&SD risks and liabilities
•Monitoring key indicators and learning from incidents and, where appropriate, ensuring they are communicated throughout the Group
•Considering material national and international regulatory and technical developments in the fi eld of S&SD management.

Committee discussions in 2012

•At each meeting, the Committee reviewed and discussed a quarterly report covering the Group's performance across a range of S&SD areas, including safety, occupational health, HIV/AIDS, energy and water usage and social performance
•Sadly, 13 colleagues lost their lives in workrelated incidents during the year. The Committee received a detailed account of each fatal incident from the relevant BU CEO, together with the related management response
•BU CEOs present to the Committee on all aspects of their units' S&SD performance on a rotational basis. During 2012, the Committee received reports from Kumba Iron Ore, Thermal Coal, Phosphates and Niobium, Exploration, Iron Ore Brazil and Nickel
•The Committee discussed a range of topics related to its oversight of S&SD risks, including methane and explosive dust control, slope stability, tailings risk and shaft integrity
•In recent years, the Committee has invited its NGO partners, and other third parties with S&SD expertise, to give briefi ngs on areas of interest and to provide a valuable external perspective on the Group's performance and progress. In 2012 the Committee welcomed presentations from CARE International on its health and education work in partnership with Anglo American, and from PricewaterhouseCoopers on the results of their annual audit of the Group's sustainable development reporting.

REMUNERATION COMMITTEE

Sir Philip Hampton Chairman, Remuneration Committee

Composition

In compliance with the Code, the Committee comprises only independent non-executive directors:

Sir Philip Hampton – chairman
David Challen
Sir CK Chow
Jack Thompson
Peter Woicke

"It is the

role of the Remuneration Committee to ensure that the remuneration arrangements for executive directors offer every encouragement to enhance the Company's performance and deliver our strategy – responsibly."

Sir Philip Hampton

Chairman, Remuneration Committee

Role and responsibilities

•Establishing and developing the Group's general policy on executive and senior management remuneration
•Determining specifi c remuneration packages for the chairman and executive directors
•Designing the Company's share incentive schemes.

Committee discussions in 2012

In February 2012, the Committee: •Reviewed executive director personal key performance indicators for 2012 and Company fi nancial and safety targets to ensure alignment with Company strategy
•Discussed with the Company chairman and CEO respectively, the CEO's and fi nance director's performance in 2011 to adjudicate on bonus outcomes
•Approved a proposal that a dividend equivalent be paid on shares vesting under Long-Term Investment Plan (LTIP) awards from the 2012 award onwards
•Reviewed executive directors' shareholdings in the Company prior to 2012 share awards being made
•Discussed the Department of Business Innovation and Skills' (BIS) proposals that were announced on 23 January.
In April 2012, the Committee:
•Formally confi rmed the vesting of 2009 Bonus Share Plan (BSP) and LTIP awards and the granting of 2012 BSP and LTIP awards
•Reviewed the proposal for asset optimisation and supply chain targets for the 2012 LTIP award
•Discussed investor feedback on executive remuneration prior to the vote on the Directors' Remuneration Report
•Discussed the further consultation launched by BIS in March.

In June 2012, the Committee:

•Set the asset optimisation and supply chain targets for the 2012 LTIP award
•Reviewed corporate governance issues in the previous quarter and major issues arising from the main AGM voting season.

In December 2012, the Committee:

•Reviewed directors' salaries, taking into account the general salary review for the broader employee population
•Considered GMC and ExCo remuneration elements and performance contracts for 2013
•Discussed the early adoption of the BIS proposals and reviewed the impact of them on the Remuneration Report for 2012
•Reviewed its terms of reference
•Reviewed corporate governance issues that had arisen since the previous meeting.

NOMINATION COMMITTEE

Sir John Parker Chairman, Nomination Committee

Composition

Compliant with the Code:

Sir John Parker chairman
David Challen
Sir CK Chow
Peter Woicke

"The

Nomination Committee's aim is to enhance the current diversity of the Board by identifying and nominating suitably qualifi ed candidates."

Sir John Parker Chairman, Nomination Committee

Role and responsibilities

•Setting guidelines (with the approval of the Board) for the types of skills, experience and diversity being sought when making a search for new directors and with the assistance of external consultants, identifying and reviewing in detail each potential candidate available in the market. The Committee then agrees a 'long list' of candidates for each directorship and following further discussion and research decides upon a shortlist of candidates for interview. Shortlisted candidates are each interviewed by the Committee members who then convene to discuss their impressions and conclusions, culminating in a recommendation to the Board;

•Making recommendations as to the composition of the Board and its committees and the balance between executive directors and NEDs, with the aim of cultivating a board with the appropriate mix of skills, experience, independence and knowledge of the Company;
•Ensuring that the HR function of the Group regularly reviews and updates the succession plans of directors and senior managers.

Diversity policy

To increase the representation of women on the Board (excluding the chairman) from 20% to about 30% by 2013. In 2012 the representation of women on the Company's Board (excluding the chairman) reached 27%. With the resignation of Dr Ramphele in July 2012, this fell to 20%.

Committee discussions in 2012

•Following extensive research into potential candidates, Anne Stevens was appointed in May 2012;
•The Board received biannual presentations from the Group director, HR and corporate affairs. These presentations dealt with succession management at ExCo level and long term talent management across the Group;
•Following the October 2012 announcement that Cynthia Carroll would be standing down as CEO of the Company, the Committee immediately set in motion the process to identify a successor, resulting in the appointment of Mark Cutifani;
•The Committee initiated a search for a further non-executive director to join the Board and the Audit Committee with the intention that the appointee will succeed David Challen as chairman of the Audit Committee;
•Following an extensive search, Byron Grote was identifi ed by the Committee and has been nominated by the Board for election at the AGM on 19 April 2013.

AUDIT COMMITTEE

David Challen Chairman, Audit Committee

Composition

Compliant with the Code and comprises only independent non-executive directors:

David Challen chairman
Sir Philip Hampton
Phuthuma Nhleko
Ray O'Rourke
Anne Stevens

"The Audit Committee plays a pivotal role in ensuring high standards of corporate governance and provides assurance to the Board on its reports to shareholders."

David Challen

Chairman, Audit Committee

Role and responsibilities

•Monitoring the integrity of the annual and interim fi nancial statements, the accompanying reports to shareholders and corporate governance statements;
•Making recommendations to the Board concerning the adoption of the annual and interim fi nancial statements;
•Overseeing the Group's relations with the external auditors;
•Making recommendations to the Board on the appointment, retention and removal of the external auditors;
•Reviewing and monitoring the effectiveness of the Group's internal control and riskmanagement systems, including reviewing the process for identifying, assessing and reporting all key risks;
•Approving the terms of reference and plans of the internal audit function;
•Approving the internal audit plan and reviewing regular reports from the head of internal audit on effectiveness of the internal control system;
•Receiving reports from management on the key risks of the Group and management of those risks.

Committee discussions in 2012

At the February 2012 meeting the Committee:

•Reviewed and approved the 2011 year end results, accounting matters and press release subject to comments from the Committee to improve the disclosures;
•Reviewed the accounting treatment and disclosure in connection with the option for the Chilean state-owned entity, Codelco, to buy a stake up to 49% in Anglo American Sur. The Committee approved the accounting treatment and disclosure following the discussion with management and the external auditors;
•Discussed the external auditors' report that included comments on internal control fi ndings, a statement on their independence and objectivity and compliance with the Audit Practices Board ethical standards and the letter of representation. The Committee noted the report;
•Reviewed a report on the Group's ore reserves and mineral resources. Signifi cant changes in the statements from prior years were highlighted and discussed along with the three-year audit plan conducted by independent third-party auditors;
•Noted and approved the register of non-audit assignments conducted by the external auditors in 2011;
•Received a report regarding internal audit, including the results of internal audit work and whistleblowing activity in 2011;
•Reviewed and approved a paper on the Group's insurance arrangements and approach for 2012.

At the July 2012 meeting the Committee:

•Received a report from management on signifi cant accounting issues for the six-month period ending 30 June 2012, including the accounting treatment of the Codelco option;
•Reviewed and discussed the 2012 interim results and disclosures. The Committee provided various comments on the disclosures;
•Reviewed a report from the external auditors, their management letter highlighting internal control fi ndings from the 2011 audit and the draft letter of representation;
•Reviewed and approved the register of nonaudit assignments undertaken by the external auditors in the period to 30 June 2012. The committee also approved changes to the policy covering the provision of non-audit services by the external auditors;
•Received a report on the work of the internal auditors to 30 June 2012;
•Received and discussed a report covering the key risks facing the Group and each of its business units based on the output of risk management work undertaken by management. The Committee noted and approved the report;
•Received an update on the review of the Group's insurance arrangements and noted the new structure in place for insurance of the Group's assets and business interruption exposures;
•Reviewed the process undertaken by management to assess the external auditors' independence, objectivity and effectiveness during the 2011 audit. The Committee noted that Deloitte LLP had conducted the audit effectively in an independent and objective manner.

At the December 2012 meeting the Committee:

•Reviewed the signifi cant audit and accounting items for the 2012 year end. This included the process for reviewing the valuation of the Minas-Rio project, the accounting implications of the Platinum structure review and the accounting treatment for De Beers;
•Approved the external auditors' terms of engagement, scope of work, the process for the annual audit, the applicable levels of materiality and the audit fee for 2012. The Committee noted the key audit risks highlighted by the external auditors;
•Approved the internal audit plan for 2013 having reviewed the plan and the process of how it is generated. The Committee satisfi ed itself that the plan was risk-based in its design;
•Discussed and reviewed signifi cant changes to the Group's risk profi le and approved the 2013 integrated risk management plan;
•Discussed the responsibilities of the Committee arising from the changes to the Code following a review and consultation process undertaken by the FRC in 2012. The Committee reviewed its terms of reference considering changes to the Code that relate to the role of audit committees and concluded the current terms of reference were broad enough to cover the changes. No amendments were therefore made.

AUDIT COMMITTEE REPORT

ENSURING INDEPENDENCE OF THE EXTERNAL AUDITORS

Anglo American's policy on auditors' independence is consistent with the ethical standards published by the Audit Practices Board.

A key factor that may impair auditors' independence is a lack of control over non-audit services provided by the external auditors. In essence, the external auditors' independence is deemed to be impaired if the auditors provide a service that:

•Results in the auditors acting as a manager or employee of the Group
•Puts the auditors in the role of advocate for the Group or
•Creates a mutuality of interest between the auditors and the Group.

Anglo American addresses this issue through three primary measures, namely:

•Disclosure of the extent and nature of non-audit services
•The prohibition of selected services this includes the undertaking of internal audit services
•Prior approval by the Audit Committee chairman of non-audit services where the cost of the proposed assignment is likely to exceed \$50,000.

Anglo American's policy on the provision of non-audit services is regularly reviewed and was updated during 2012. The defi nition of prohibited non-audit services corresponds with the European Commission's recommendations on auditors' independence and with the Ethical Standards issued by the Audit Practices Board in the UK.

Other safeguards

•The external auditors are required to adhere to a rotation policy based on best practice and professional standards in the United Kingdom. The standard period for rotation of the audit engagement partner is fi ve years and, for any key audit partner, seven years. The audit engagement partner was appointed in 2010 in accordance with this requirement.
•Any partner designated as a key audit partner of Anglo American shall not be employed by Anglo American in a key management position unless a period of at least two years has elapsed since the conclusion of the last relevant audit.
•The external auditors are required to assess periodically, whether in their professional judgement, they are independent of the Group.
•The Audit Committee ensures that the scope of the auditors' work is suffi cient and that the auditors are fairly remunerated.
•The Audit Committee has primary responsibility for making recommendations to the Board on the appointment, re-appointment and removal of the external auditors.
•The Audit Committee has the authority to engage independent counsel and other advisers as they determine necessary in order to resolve issues on auditors' independence.
•An annual assessment is undertaken of the auditors' effectiveness, independence and objectivity. The effectiveness assessment involves a review, with the senior fi nance managers in each of the business units and relevant corporate functions, of the audit process, including the planning, execution and reporting activities along with an assessment of the quality, quantity and leadership of each of the external audit teams involved in the audit. Any improvement opportunities identifi ed are discussed with the external auditors. The independence and objectivity assessment is conducted by a review of compliance with the policies in place in the Group and within the external auditors to maintain independence and objectivity. The results of the review are shared with the Audit Committee.

Conclusions of the Audit Committee for 2012

The Audit Committee has satisfi ed itself that the UK professional and regulatory requirements for audit partner rotation and employment of former employees of the external auditors have been complied with.

The Audit Committee considered information pertaining to the balance between fees for audit and non-audit work for the Group in 2012 and concluded that the nature and extent of the non-audit fees do not present a threat to the external auditors' independence. Details of fees paid are provided on page 152.

Furthermore, after reviewing a report from the external auditors on all their relationships with Anglo American that might reasonably have a bearing on the external auditors' independence and a review conducted by management, the Committee has concluded that the external auditors' independence was not impaired.

The Audit Committee held meetings with the external auditors without the presence of management on two occasions and the chairman of the Audit Committee held regular meetings with the audit engagement partner during the year.

Audit Committee actions in 2013

During 2013 the Audit Committee will continue its role in monitoring the integrity of the fi nancial statements and reviewing the effectiveness of the Company's internal control and risk-management systems. An item of key interest to the Audit Committee will be to satisfy itself that the risk and audit processes within De Beers are fully integrated into Anglo American as appropriate.

Consideration given to the appointment of the external auditors

The appointment of Deloitte LLP as the Group's external auditors (incumbents since the listing of Anglo American in 1999) is kept under annual review and, if satisfactory, the Committee will recommend the re-appointment of the audit fi rm. The appointment of Deloitte LLP followed a detailed evaluation, at the time of the listing, of the predecessor audit fi rms and, rather than adopting a policy on tendering frequency, an annual review of the effectiveness of the external audit is supplemented by a periodic, comprehensive reassessment by the Committee. The Committee's assessment of the external auditors' performance and independence underpins its recommendation to the Board to propose to shareholders the re-appointment of Deloitte LLP as auditors until the conclusion of the AGM in 2014. Resolutions to authorise the Board to re-appoint and determine the remuneration of Deloitte LLP will be proposed at the AGM on 19 April 2013.

The role of internal audit

The Group has an internal audit department that reports centrally with responsibility for reviewing and providing assurance on the adequacy of the internal control environment across all of Anglo American's operations.

The head of internal audit is responsible for reporting and following up on the fi ndings of this internal audit work with local management and the Audit Committee on a regular basis. Internal audit teams operated in all the Group's principal divisions in the period under review, reporting fi ndings to local senior management. The internal audit function's mandate and annual audit coverage plans have been approved by the Audit Committee.

The internal audit activities are performed by teams of appropriate, qualifi ed and experienced employees, supplemented if necessary through the engagement of external practitioners upon specifi ed and agreed terms. A summary of audit results and risk management information was presented to the Committee and Group senior management at regular intervals throughout the year. The Group's head of internal audit reports to the Audit Committee on the internal audit function's performance against the agreed internal audit plan.

During 2012, 440 audit projects were completed covering a variety of fi nancial, operational, strategic and compliance-related business processes across all business units and functions. In addition, the internal audit department responded to a number of management requests to investigate alleged breaches of our business principles. During 2013 the internal audit resources in De Beers will be integrated into the Anglo American team and will adopt a consistent approach to internal audit work.

Assessment of the effectiveness of internal control and risk management

The GMC, as mandated by the Board, maintains a Group-wide system of internal control to manage signifi cant Group risks.

This system, which has been operating throughout the year and to the date of this report, supports the Board in discharging its responsibility for ensuring that the wide range of risks associated with the Group's diverse international operations is effectively managed in support of the creation and preservation of shareholder wealth. Please see pages 48–53 for further information on the key risk factors Anglo American is exposed to. Where appropriate, necessary action has been or is being taken to remedy any failings or weakness identifi ed as a result of the review of the effectiveness of the internal control system.

Obtaining assurance on the internal control environment

The system of internal control, which is embedded in all key operations, provides reasonable rather than absolute assurance that the Group's business objectives will be achieved within the risk tolerance levels defi ned by the Board. Regular management reporting, which provides a balanced assessment of key risks and controls, is an important component of board assurance. In addition, certain Board committees focus on specifi c risks such as safety and capital investment and provide assurance to the Board. The chief fi nancial offi cers of the Group's business units provide confi rmation, on a six-monthly basis, that fi nancial and accounting control frameworks have operated satisfactorily. The Board also receives assurance from the Audit Committee, which derives its information, in part, from regular internal audit reports on risk and internal control throughout the Group and external audit reporting. The Group's internal audit function has a formal collaboration process in place with the external auditors to ensure effi cient coverage of internal controls. The Anglo American internal audit function is responsible for providing independent assurance to executive management and the Board on the effectiveness of the risk-management process throughout the Group.

Anglo American seeks to have a sound system of internal control, based on the Group's policies and guidelines, in all material associates and joint ventures. In those companies that are independently managed, as well as joint ventures, the directors who are represented on these organisations' boards seek assurance that signifi cant risks are being managed.

Assurance regarding the accuracy and reliability of Mineral Resources and Ore Reserves disclosure is provided through a combination of internal technically profi cient staff and independent third parties.

Whistle-blowing programme

The Group has had a whistle-blowing programme in place for a number of years in all its managed operations. This facility operates in addition to a standardised Group-wide stakeholder complaints and grievance procedure that is operated at all managed operations (see the 2012 Sustainable Development Report for more details). The whistle-blowing programme, which is monitored by the Audit Committee, is designed to enable employees, customers, suppliers, managers or other stakeholders on a confi dential basis to raise concerns in cases where conduct is deemed to be contrary to our values. It may include:

•Actions that may result in danger to the health and/or safety of people or damage to the environment
•Unethical practice in accounting, internal accounting controls, fi nancial reporting and auditing matters
•Criminal offences, including money laundering, fraud, bribery and corruption
•Failure to comply with any legal obligation
•Miscarriage of justice
•Any conduct contrary to the ethical principles embraced in our business principles or any similar policy
•Any other legal or ethical concern
•Concealment of any of the above.

The programme makes available a selection of telephonic, email, web-based and surface mail communication channels to any person in the world who has information about unethical practice in Anglo American and its managed operations. The multilingual communication facilities are operated by independent service providers who remove all indications from information received as to the identity of the callers before submission to designated persons in the Group.

During 2012, 332 reports were received via the global 'Speakup' facility, covering a broad spectrum of concerns, including:

•Ethical
•Criminal
•Supplier relationships
•Health and safety
•HR issues.

Reports received were kept strictly confi dential and were referred to appropriate line managers within the Group for resolution. Where appropriate, action was taken to address the issues raised. The reports are analysed and monitored to ensure the process is effective.

Risk management at Anglo American

The Board's policy on risk management encompasses all signifi cant business risks to the Group, including:

•Financial risk
•Operational, including safety, technical, fraud and corruption risk
•Compliance risk

that could undermine the achievement of business objectives. This system of risk management is designed so that the different businesses are able to tailor and adapt their risk-management processes to suit their specifi c circumstances. This fl exible approach has the commitment of the Group's senior management. There is clear accountability for risk management, which is a key performance area of line managers through the Group. The requisite risk and control capability is assured through Board challenge and appropriate management selection and skills development. Managers are supported in giving effect to their risk responsibilities through policies and guidelines on risk and control management. Support through facilitated risk assessments is provided by a central team responsible for ensuring a robust process is implemented for risk-management. During 2012, more than 135 separate risk assessment workshops were conducted reviewing:

•Risk in business unit strategies
•Risks to achieving mine or business plans
•Risks in capital projects
•Risks to key change programmes, including the integration of De Beers.

The results of these risk assessments were reported to senior management and the Audit Committee. The process of risk management is designed to identify internal and external threats to the business and to assist management in prioritising their response to those risks. Continuous monitoring of risk and control processes, across headline risk areas and other business-specifi c risk areas, provides the basis for regular and

exception reporting to business management, ExCo, the Audit Committee and the Board.

Some of the headline risk areas, which have been elaborated upon in the fi nancial review set out on pages 48–53, are:

•Commodity price risk
•Political risk
•Counterparty risk
•Infrastructure and operational performance risks.

The risk assessment and reporting criteria are designed to provide the Board with a consistent, Group-wide perspective of the key risks. The reports to the Audit Committee, which are submitted at least every six months, include an assessment of the likelihood and impact of risks materialising, as well as risk-mitigation initiatives and their effectiveness.

In conducting its annual review of the effectiveness of risk management, the Board considers the key fi ndings from the ongoing monitoring and reporting processes, management assertions and independent assurance reports. The Board also takes account of material changes and trends in the risk profi le and considers whether the control system, including reporting, adequately supports the Board in achieving its risk management objectives.

During the course of the year the Board considered the Group's responsiveness to changes within its business environment. The Board is satisfi ed that there is an ongoing process, which has been operational during the year, and up to the date of approval of the Annual Report, for identifying, evaluating and managing the signifi cant risks faced by the Group. This includes social, environmental and ethical risks as highlighted in the Disclosure Guidelines on Socially Responsible Investment issued by the Association of British Insurers. A detailed report on social, environmental and ethical issues is included in the Company's Sustainable Development Report 2012.

Accountability and audit

The Board is required to present a balanced and understandable assessment of Anglo American's fi nancial position and prospects. Such assessment is provided in the chairman's and CEO's statements and the operating and fi nancial review of this Annual Report. The respective responsibilities of the directors and external auditors are set out on pages 134, 136 and 137. As referred to in the directors' report, the directors have expressed their view that Anglo American's business is a going concern.

Business integrity

During 2012 we continued to implement the necessary procedures to ensure that our Business Integrity policy operates effectively across the Group and minimises the risk of bribery as far as possible. We have now trained more than 3,500 managers through workshops in the business units and developed supplementary online training. During the year we developed enhanced guidelines regarding acceptance and provision of gifts and entertainment and provided specifi c guidance on due diligence procedures for transactions where risks are considered higher. We updated our assessment of the risks of bribery and corruption in each of our businesses, taking into consideration external and internal factors and identifi ed action plans for implementation based on those risk assessments. We applied a due diligence process in individual transactions to identify necessary actions that mitigate risk of bribery in those transactions.

During 2013 we will continue to develop our procedures and obtain assurance that they are being implemented as we expect across the Group.

REMUNERATION REPORT OF THE DIRECTORS

Sir Philip Hampton Chairman of the Remuneration Committee

IN THIS SECTION

108 Introductory letter

109 Policy on director remuneration

116

Director remuneration in 2012

120 Outstanding share interests

125 Chief executive arrangements

126 Remuneration Committee in 2012

127 Other information required

"It is the role of the Company's Remuneration Committee to ensure that the remuneration arrangements for executive directors offer every encouragement to enhance the Company's performance and deliver our strategy – responsibly."

1. INTRODUCTORY LETTER

Dear Shareholder,

It is the role of the Company's Remuneration Committee to ensure that the remuneration arrangements for executive directors and other members of the Executive Committee offer every encouragement to enhance the Company's performance and deliver our strategy – responsibly. We also need to ensure that the actual rewards received by the executive directors are proportionate to the levels of performance achieved and the returns received by you as shareholders. As a Committee, we therefore give full consideration to the Company's priorities, its performance, your interests and the interests of the wider communities we touch.

To help us clearly explain what our executive remuneration arrangements are and what rewards have been received over the past year and why, we have decided to adopt many of the changes being proposed by the UK Government to the reporting of directors' remuneration a year earlier than required. The contents of our new form of report are set out on the left and the new 'Single Figure' is shown in Figure 13 on page 119.

As the chief executive reported in her introduction to this year's Annual Report, the current volatility in commodity prices is affecting the Company's short-term earnings but the Company continues to make progress towards sustainable growth over the mid to long-term. These challenges and successes are refl ected in the remuneration received by executive directors for 2012.

•The signifi cant drop in the Company's earnings in 2012 means that no bonus was payable to executive directors in respect of earnings performance. The bonus amount that was earned refl ects management action taken in weak market conditions and the successful delivery of key strategic operational priorities.

For more information go to section 3.2

•The drop in earnings also means that, of the Enhancement Shares initially awarded in 2010, none vested at the end of 2012, as the required three-year earnings growth was not achieved.

For more information go to section 3.3

•The success over the last three years of the Company's longer-term effi ciency programmes means that around half the LTIP awards initially granted to executive directors in 2010 are likely to vest. The other half will not vest as the full value of these savings have yet to be returned to you as shareholders in the form of superior TSR.

For more information go to section 3.4

•With respect to 2012 there are two aspects of our remuneration arrangements that I would like to highlight:
•The Committee decided to remove the opportunity for executive directors to defer future additional amounts of bonus into shares and to receive correspondingly higher awards of Enhancement Shares; and
•The Chairman voluntarily waived the increase in his fee level that was due to take effect from August 2012. There has, therefore, been no increase to his fees taken since joining the Company in 2009.

Investors will be aware from the announcement on 8 January that Cynthia Carroll will step down from the Board at the Company's Annual General Meeting in April 2013 and will leave Anglo American at the end of that month. She will be succeeded as chief executive by Mark Cutifani whose appointment will take effect from 3 April 2013. The details of Mr Cutifani's remuneration package and Mrs Carroll's termination arrangements can be found on page 125 of this report.

With the advent of a new chief executive, the Committee intends to review the performance measures for the Company's incentive plans during 2013, to ensure that they remain aligned with Company strategy and are suffi ciently stretching. We will of course consult with shareholders before making any changes.

We hope you fi nd the new form of report helpful and look forward to your feedback.

Sir Philip Hampton

Remuneration Committee Chairman

2. POLICY ON DIRECTOR REMUNERATION

2.1 Remuneration policy

Figures 1 and 2 summarise key aspects of the Company's remuneration policy for executive and non-executive directors from 1 January 2013. This policy remains unchanged from 2012, except as highlighted below. Further details on the Company's arrangements are contained in Parts 3 and 4 of this report.

	Purpose	Maximum opportunity	Operation
Overall To recruit and remuneration retain high-calibre executives and encourage them to enhance the Company's performance, responsibly, in line with the Company's strategy and shareholder interests	Levels for individual pay elements are set out below Section 2.3 sets out the total opportunity levels for executive directors under different scenarios of Company performance	The Committee reviews the structure of the executive directors' arrangements every few years and otherwise as required Remuneration levels are reviewed annually to ensure they remain competitive with reference to median levels in relevant FTSE 50 and global extractive companies
Basic salary	To recruit and retain high-calibre executives	There is no prescribed maximum annual increase. The Committee is guided by the general increase for the broader UK employee population but on occasions may need to recognise, for example, development in role, change in responsibility, and/or specifi c retention issues	Basic salary levels are reviewed annually by the Committee, taking account of Company performance, individual performance, changes in responsibility and levels of increase for the broader UK population Reference is also made to median levels within relevant FTSE 50 and global extractive companies, as mentioned above The Committee considers the impact of any basic salary increase on the total remuneration package
Bonus Share Plan (BSP)	To encourage and reward delivery of the Company's strategic priorities To help ensure, through the share-based elements, that any resulting performance is sustained over the longer-term in line with shareholder interests	Cash award Maximum award: 87.5% of salary Performance measures: 50% – earnings per share (EPS) 50% – individual objectives linked to the Company's strategic priorities Safety (loss of life and Lost Time Injury Frequency Rate) Performance period: 1 year Bonus Shares Maximum award: 87.5% of salary Annual performance measures and period: as for the cash award Further holding period: 3 years Enhancement Shares Maximum award: 75% of Bonus Shares (65.6% of salary) Performance measure: Real EPS growth Performance period: 3 years	There are three elements to the BSP: •A performance-related cash element, payable after the end of the relevant fi nancial year •A performance-related share element, in the form of a conditional award of Bonus Shares made after the end of the relevant fi nancial year with a value equal to the cash element and vesting subject to a further three-year holding period •An additional performance-related element, in the form of Enhancement Shares granted after the end of the fi nancial year to a face value of 75% of the Bonus Shares The Committee reviews the BSP measures annually to ensure they remain appropriate BSP targets are reviewed at the same time to ensure they are demanding yet realistic, given latest company strategy, prior performance, and external expectations Dividends are payable on the Bonus Shares during the holding period The Committee is able to claw back any unvested Bonus and Enhancement Shares in the event of a material misstatement in the Company's results Change for 2013: In response to investor views, the Committee has decided to remove the opportunity for executives to voluntarily elect to defer up to 50% of the cash element into Bonus Shares
Long-Term Incentive Plan (LTIP)	To encourage and reward signifi cant and sustained operating effi ciencies and the delivery of superior shareholder returns, in line with shareholder interests	Maximum award 350% of salary (received by the chief executive only) Performance measures 50%: Total shareholder returns (TSR) 50%: Asset Optimisation and Supply Chain (AOSC) Performance period 3 years	The Committee makes an annual conditional award of shares to each executive director Prior to grant the Committee reviews the performance targets for each measure to ensure they remain suffi ciently stretching Dividend equivalents are paid on any shares that vest The Committee is able to claw back any unvested grant (or future grants) in the event of a material misstatement in the Company's results The LTIP performance measures will be reviewed once the new chief executive has assumed his duties. On the basis that

the review is completed before the end of the fi nancial year the Committee reserves the right to apply any new measures

retrospectively to the 2013 award

Figure 1: Key aspects of the remuneration policy for executive directors

	Purpose	Maximum opportunity	Operation
Pension	To offer market competitive levels of benefi t	Company contribution: 30% of basic salary	Executive directors participate in defi ned contribution pension arrangements
			Prior to 6 April 2011, executive directors had the option of all or part of their employer-funded defi ned contribution arrangements to be paid into an unregistered retirement benefi ts scheme (an EFRBS). Since 6 April 2011, executive directors have the option for all or part of these contributions to be treated as if paid to an unregistered unfunded retirement benefi t scheme (an UURBS)
			The Committee is prepared to consider requests from executive directors for a pension allowance to be paid in place of defi ned contribution arrangements
Other benefi ts	To provide market competitive benefi ts	Not pre-determined	The Company provides:
			•Car allowance •Medical insurance •Death and disability insurance •Limited personal taxation and fi nancial advice •One club membership •Access to company car and driver, as required •Other ancillary benefi ts, including attendance at relevant public events
			Executive directors are entitled to 28 days' leave per annum and may only carry over 8 days from one leave year to the next (up to a maximum balance of 20 days). The Company buys out any accumulated leave in excess of 20 days
All-employee share plans	To offer all UK-based employees the opportunity to build a shareholding in a tax-effi cient way	Maximum SAYE saving: £3,000 pa, with which all employees have the option to buy Company shares at a 20% discount	UK-based executive directors are eligible to participate in the Company's Save As You Earn (SAYE) scheme and Share Incentive Plan (SIP)
		Maximum SIP investment: £1,500 pa to purchase Company shares, with the potential for a 1:1 matching award from the Company and, from time to time, a limited number of free shares
Recruitment and promotion arrangements	To secure the appointment and promotion of high-calibre executives	Not pre-determined	For external appointments the Committee may offer additional cash and/or share-based elements when it considers these to be in the best interests of the Company (and therefore shareholders). Such payments would take account of remuneration relinquished when leaving the former employer and would refl ect the nature, time horizons and performance requirements attaching to that remuneration. Shareholders will be informed of any such payments at the time of appointment. The Company has retained its Discretionary Option Plan to use in such circumstances, if appropriate
			For an internal appointment, any variable pay element awarded in respect of the prior role may be allowed to pay out according to its terms, adjusted as relevant to take into account the appointment. In addition, any other ongoing remuneration obligations existing prior to appointment may continue, provided that they are put to shareholders for approval at the earliest opportunity
			For external and internal appointments, the Committee may agree that the Company will meet certain relocation expenses as appropriate

Figure 1: Key aspects of the remuneration policy for executive directors continued

	Purpose	Maximum opportunity	Operation
Retention arrangements	To allow the Company to retain top executive talent	Not pre-determined	The Committee may make one-off share based awards to executive directors in exceptional circumstances (such as where an acute retention risk is present)
			The Committee will only make such an award if it is considered to be the most effective mitigation against such a risk and if it is deemed to be in the long-term interests of the Company (and shareholders) to do so
			Any such awards would vest subject to continuing employment and could have performance conditions attaching to them should the Committee consider these to be appropriate
			The Committee has no plans to make any such awards at this time

Figure 2: Key aspects of the remuneration policy for non-executive directors

	Purpose	Maximum opportunity	Operation
Chairman – Fees	To attract and retain a high-calibre chairman by offering a market competitive fee level	Current fee of chairman: £650,000	The chairman is paid a single fee for all his responsibilities
			The level of these fees is reviewed every two to three years by the Committee and chief executive, with reference to UK market levels (FTSE 30 companies) and a recommendation is then made to the Board (in the absence of the Chairman). The Chairman voluntarily waived the increase to his fee level that was due to take effect in August 2012
			Fees are paid in cash with the fl exibility to forgo all or part of the net fees in exchange for shares in the Company
			In 2009 (on appointment) and in 2011 the Chairman was granted shares in the Company which he committed to match with his personal funds. These shares will be released after three years subject to continued chairmanship
Chairman – Other	To provide		Reasonable use of a car and driver
benefi ts	market competitive benefi ts		Medical insurance
Non-executive directors – Fees	To attract and retain high-calibre non-executive directors by offering market competitive fees	Basic fee: £80,000 pa	The non-executives are paid a basic fee. The chairmen of the main board committees and the senior independent director
		Additional fees: Senior Independent Director: £25,000 pa Committee chairman: £25,000 pa (except Nomination Committee chairman: £12,500)	are paid an additional fee to refl ect their extra responsibilities These fee levels are reviewed every few years by the Chairman and executive directors, with reference to UK market levels, and a recommendation is then made to the Board
			Fees are paid in cash with the fl exibility to forgo all or part of the net fees to acquire shares in the Company
		These fees will next be reviewed in December 2013

2.2 Supplementary information

The Company has additional guidance for executive directors on shareholding targets and external and internal directorships.

Shareholding targets

Within fi ve years of appointment, executive directors are expected to hold Company shares with a value of two times basic salary for the chief executive and one and a half times basic salary for other executive directors. The Committee takes into consideration achievement against these targets when making grants under the Company's various long-term incentive plans.

External directorships

Executive directors are not permitted to hold external directorships or offi ces without the prior approval of the Board. If approved, they may each retain the fees payable from only one such appointment.

Internal directorships

Any fees earned through internal directorships must be ceded to the Company.

In addition:

•The remuneration provisions within the service contracts for Cynthia Carroll and René Médori are consistent with the policy outlined in Figure 1 above and in Figure 4 (termination provisions).
•The remuneration arrangements for the executive directors outlined in Figure 1 are consistent with those for other executives serving on the Group Management Committee and the Executive Committee, although opportunity levels vary.
•The performance conditions attaching to the longer-term incentive arrangements for executive directors were chosen to ensure alignment with the Company's strategic objective of operating effi ciency (AOSC – LTIP) and with the returns being delivered to shareholders (TSR – LTIP) or the funding of those returns (real EPS growth – BSP Enhancement Shares).

Figure 3: Executive director total remuneration at different levels of performance

(1) Charts have not been included for the non-executive directors as their fees are fi xed and do not vary with performance.

(2) Share price movement and dividend accrual have been excluded from all fi gures.
(3) Participation in the SAYE and SIP has been excluded given the relative size of the opportunity levels. (4) Total pay for above target performance comprises basic salary, benefi ts, pension, 100% of maximum bonus opportunity (50% of which is deferred into Bonus Shares), a 0.75 for 1 match of Enhancement Shares (100% of maximum) and 100% of maximum LTIP opportunity. For this level of pay, three-year EPS growth would need to be RPI+15% or higher and the Company's three-year TSR would need to out-perform sector peers by 5% pa and be ranked 20th or higher against the FTSE 100.
(5) Total pay for target performance comprises basic salary, benefi ts, pension, 65% of maximum bonus opportunity (50% of which is deferred into Bonus Shares), a 0.5 for 1 match of Enhancement Shares (i.e. 67% of maximum) and 65% of maximum LTIP opportunity. For this level of pay, three-year EPS growth would need to be RPI+11.4%, the Company's three-year TSR would need to out-perform sector peers by 2.5% pa and be ranked 35th against the FTSE 100.
(6) Total pay for below threshold performance comprises basic salary, benefi ts and pension only.

2.3 Indicative total remuneration levels

The Company's policy results in a signifi cant portion of remuneration received by executive directors being dependent on Company performance. Figure 3 illustrates how the total pay opportunities for the current chief executive and the fi nance director vary

under three different performance scenarios: above, target and below. These charts are indicative as share price movement and dividend accrual have been excluded. All assumptions made are noted below the charts.

2.4 Service agreements and termination

2.4.1 Executive directors Cynthia Carroll and René Médori are employed by Anglo American Services (UK) Ltd. The service agreements for both can be terminated at 12 months' notice by either party, in line with the Company's policy that the period of notice for executive directors should not exceed 12 months, except on appointment, when the Committee may agree an extended Company notice period only for the fi rst year following appointment.

Figure 4 sets out key provisions relating to termination of employment from the executive directors' service agreements and from the incentive plan rules. It also sets out key provisions relating to change of control, where there is no termination. There are no provisions for enhanced payments in the event of a change of control of the Company.

2.4.2 Non-executive directors

All non-executive directors have letters of appointment with the Company for an initial period of three years, subject to annual re-appointment at the AGM. The Chairman's appointment may be terminated by the Company with six months' notice. The appointment letters for the Chairman and non-executive directors provide that no compensation is payable on termination, other than accrued fees and expenses.

Figure 4: Executive director contractual provisions relating to termination of employment and change of control

Service	Salary and benefi ts
agreement provisions relating to termination	The period of notice for both executive directors is 12 months. Should Cynthia Carroll not be required to work her full notice, Anglo American Services is able to discharge its liability for the unexpired portion of her notice period by making a payment in lieu of her salary and other contractual benefi ts; in the case of René Médori, whose contract dates from 2005, the payment would also include a pro-rated bonus
	The contracts of executive directors do not provide for liquidated damages
Incentive plan	Annual bonus
provisions relating to termination	For the BSP, if an executive director ceases to be employed before the end of the year in respect of which the annual performance targets apply, then no award will be made unless the Committee determines otherwise (taking into account the proportion of the year for which the director was an employee of the Group and of performance to date against the annual performance targets at the date of cessation)
	Bonus Shares and Enhancement Shares
	If an executive director resigns voluntarily before the end of the three-year vesting period:
	•Bonus Shares lapse •Enhancement Share awards are foregone
	If an executive director retires with the consent of the Committee, is made redundant or is considered by the Committee to be a Good Leaver:
	•Bonus Shares already awarded will be transferred as soon as practicable after the date of leaving •Enhancement Shares will vest only to the extent that the performance condition has been met and will be pro-rated for the proportion of the performance period for which the director served
	LTIP awards
	For outstanding LTIP awards, the Committee would normally exercise its discretion when an executive director's employment ceases as follows:
	•If the director resigns voluntarily, then his/her interests lapse •If he/she retires with the consent of the Committee, is made redundant or is considered by the Committee to be a Good Leaver, vesting is based on the normal performance criteria at the end of the normal performance period and then pro-rated for the proportion of the performance period for which the director has served •The Committee retains fl exibility to accelerate the vesting of outstanding
	awards on termination. In such circumstances vesting is based on the normal performance criteria at the time of leaving and then pro-rated for the proportion of the performance period served
Incentive plan	Bonus Shares and Enhancement Shares
provisions relating to change of control (without termination)	The Bonus Shares awarded under the BSP will be released
	The Enhancement Shares awarded under the BSP will only vest to the extent that the performance condition has been met at the time of the change of control
	LTIP awards
	The number of shares that vest under the LTIP will be calculated by reference to the extent to which the applicable performance conditions have been met at the time of the change of control

2.5 Development of director remuneration policy

In developing and reviewing the Company's remuneration policy for executive directors and other senior executives, the Committee is receptive to the views of shareholders and sensitive to the relationship between the arrangements for executive directors and those for other employee groups.

Specifi cally:

•Whenever any signifi cant changes are made to remuneration, the Committee seeks feedback from investors. The Committee also listens to and takes into consideration investor views throughout the year. For example, following investor feedback, the Committee has decided, with effect from 2013, to withdraw the ability of executive directors and other executives to defer additional amounts of bonus into shares and receive correspondingly higher awards of Enhancement Shares;
•The Committee considers the general basic salary increase for the broader UK employee population when determining the annual salary increases for the executive directors. For 2012 and 2013, the rate of basic salary increase for the chief executive and the fi nance director has been the same as or lower than the general increase for the UK employee population (at 4% and 0% respectively);
•Each year the Committee also reviews in detail how the arrangements for the executive directors compare to those for other members of the Group Management Committee and Executive Committee to ensure an appropriate relationship and to support career development and succession.

Figure 5: Terms of service – Executive directors

		Date of initial appointment	Next AGM re-election or election
Cynthia Carroll	Chief Executive	15 January 2007	n/a
René Médori	Finance Director	01 June 2005	April 2013

Figure 6: Terms of service – Non-executive directors

		Date of initial appointment	Next AGM re-election or election
Sir John Parker	Chairman and Chairman, Nomination Committee	09 July 2009	April 2013
David Challen	SID and Chairman, Audit Committee	09 September 2002	April 2013
Sir CK Chow		15 April 2008	April 2013
Sir Philip Hampton	Chairman, Remuneration Committee	09 November 2009	April 2013
Phuthuma Nhleko		09 March 2011	April 2013
Ray O'Rourke		11 December 2009	April 2013
Mamphela Ramphele	(resigned 2012)	25 April 2006	n/a
Anne Stevens		14 May 2012	April 2013
Jack Thompson		16 November 2009	April 2013
Peter Woicke	Chairman, S&SD Committee (retiring 2013)	01 January 2006	n/a

Given the geographic spread of the Company's workforce, the Committee does not consider that consulting with employees on the remuneration policy for directors is a viable use of resources. Many of the Company's UK-based employees are shareholders, through the SAYE and SIP schemes and they, like other shareholders, are able to express their views on director remuneration at each general meeting.

3. DIRECTOR REMUNERATION IN 2012

The information set out in this section has been subject to external audit.

3.1 Basic salary for 2012

In 2012 basic salary increases for the executive directors were limited to an infl ation adjustment in line with the increase for the broader UK employee population.

Figure 7: Basic salaries for 2012 (all amounts in '000)

CYNTHIA CARROLL (2011: £1,170 – increase of 4% in 2012)

£1,217

RENÉ MÉDORI (2011: £736 – increase of 4% in 2012)

£765

3.2 Annual BSP outcomes for 2012

Figures 8a and 8b outline the key annual fi nancial and strategic performance measures for the 2012 Bonus Share Plan for Cynthia Carroll and René Médori, the level of performance achieved and resulting award levels. Key aspects of their performance are also set out below Figures 8a and 8b.

Figure 9: BSP outcomes for 2012 (cash bonus and Bonus Shares) (all amounts in '000)

CYNTHIA CARROLL (2011: £1,925 – decrease of 61% in 2012)

£745

RENÉ MÉDORI (2011: £1,198 – decrease of 61% in 2012)

Figure 8a: BSP performance assessment for 2012 – Chief Executive

Chief Executive BSP measures	Below	Threshold	Target	Above
Cynthia Carroll
Corporate Financial (50%)
Earnings per Share
Personal/Strategic (50%)
Asset Optimisation
Operating Performance
Project Execution
Corporate Strategy and Portfolio Management
Organisation and De Beers Integration
Corporate Citizenship
Group safety performance (deductor)
Overall performance

Resulting BSP award

35% of maximum bonus (50% payable in cash, 50% as Bonus Shares)

BSP KEY PERFORMANCE ASPECTS

•The weaker prices for the Company's main commodities impacted the executive directors' ability to deliver the target earnings; EPS performance was below the required threshold level.
•Cynthia Carroll oversaw strong group action to meet weak market conditions.
•Two major projects Kolomela and Los Bronces – are due to reach full production on or ahead of schedule; Minas-Rio experienced a timetable delay and an increase in budget.
•Strong progress was achieved in the Asset Optimisation and Supply Chain programmes which encourage business improvements.
•Cynthia Carroll led key strategic acquisitions (De Beers and Revuboè).
•Implemented changes in senior management in the businesses in South Africa to continue improvements in performance and safety.
•Continued progress achieved in the drive for safety improvement.

Figure 8b: BSP performance assessment for 2012 – Finance Director
Finance Director BSP measures	Below	Threshold	Target	Above
René Médori
Corporate Financial (50%)
Earnings per Share
Personal/Strategic (50%)
Treasury and Tax
Strategy and Portfolio Restructuring
Procurement
Information Management
Finance Function operational targets
Teamwork
Project Support
Group safety performance (deductor)
Overall performance

Resulting BSP award

35% of maximum bonus (50% payable in cash, 50% as Bonus Shares)

BSP KEY PERFORMANCE ASPECTS

•The weaker prices for the Company's main commodities impacted the executive directors' ability to deliver the target earnings; EPS performance was below the required threshold level.
•René Médori oversaw the issuance of corporate bonds with a US\$ equivalent value of \$5.1 billion in the US, European and South African markets increasing debt headroom and extending maturity. In addition, 99% of the Group's \$1.7 billion convertible bonds were converted into equity, reducing net debt and interest.
•Anglo American's divestment programme, as set out in October 2009, was successfully completed raising \$4.0 billion of cumulative proceeds on a debt and cash free basis.
•Strong progress was achieved in the Supply Chain programme which drives sustained business improvement.
•Two major projects Kolomela and Los Bronces – are due to reach full production on or ahead of schedule. Minas-Rio experienced a timetable delay and an increase in budget.
•Continued progress achieved in the drive for safety improvement.

3.3 BSP Enhancement Share outcomes for 2012

In 2010 Cynthia Carroll and René Médori were awarded Enhancement Shares under the BSP. Vesting was subject to the Company's real EPS growth over the three-year period to 31 December 2012. The fall in commodity prices in 2012 – the fi nal year of the performance period – impacted the Company's EPS growth and as a consequence no shares will vest.

Figure 10: Enhancement Share vesting outcomes for 2012 (all amounts in '000)

CYNTHIA CARROLL (2011: £1,570 )

£0 RENÉ MÉDORI (2011: £1,023)

£0

Governance

Figure 11: LTIP assessment for 2012 3.4 Long term incentive plan outcomes for 2012

In 2010 Cynthia Carroll and René Médori received LTIP grants with vesting subject to (a) the Company's TSR performance relative to (i) a weighted group of international mining companies and (ii) FTSE 100 companies over the three-year period to announcement of the 2012 results, and (b) the level of savings delivered by the Asset Optimisation and Supply Chain programmes to 31 December 2012.

Figure 11 sets out further details of the measures, the Company's performance against each and the assumed outcomes for each executive director. As the performance period for the TSR measures ends immediately after the date of this report on the announcement of the 2012 results, performance and vesting in respect of the TSR measures is based on the latest available information as at 31 December 2012.

Figure 12: LTIP vesting outcomes for 2012 (all amounts in 000)

CYNTHIA CARROLL (2011: £3,056 – decrease of 74% in 2012)

£802

RENÉ MÉDORI

(2011: £1,921 – decrease of 74% in 2012)

For more details on the measures go to section 4.3

SECTOR INDEX COMPARISON (25% OF TOTAL AWARD)

•The Sector Index measure compares the Company's three-year TSR performance with the weighted median of six international mining companies (94%) and four industrial mineral companies (6%).
•Vesting required the Company's TSR performance to be at least equal to the weighted median.
•As at 31 December 2012 the Company's TSR performance was below the weighted median (at -13%); it is therefore not expected that any shares will vest for this part of the award.

FTSE 100 COMPARISON (25% OF TOTAL AWARD)

•The FTSE 100 measure compares the Company's three-year TSR performance with the constituents of the FTSE 100.
•Vesting required the Company's TSR to be at least equal to the median TSR of the FTSE 100.
•As at 31 December 2012 the Company's TSR performance was ranked below the 50th percentile of the FTSE 100; it is therefore expected that no shares for this part of the award will vest.

AOSC (50% OF TOTAL AWARD)

•The AOSC measure rewards the delivery of additional operating profi t and capital expenditure savings delivered through the Company's Asset Optimisation and Supply Chain programmes.
•Minimum vesting required cumulative savings to 31 December 2012 of \$5.13bn and maximum vesting required savings of \$6.27bn.
•Actual performance was above the maximum target, leading to full vesting of this part of the award.

3-year TSR performance against weighted sector median

3-year TSR ranking vs FTSE 100 index

Anglo American's AOSC efficiency (\$bn)

LTIP KEY PERFORMANCE ASPECTS

•During 2012, the Company has continued to focus on infl uencing behaviours necessary for delivering AOSC benefi ts across businesses.

Operation reviews were performed at sites across Copper, Platinum, De Beers and Phosphates businesses to build on work done since 2010 to identify and prioritise business improvement opportunities.

Improved relationships with suppliers have resulted in minimised lead times for major equipment delivery and supply risk to our business.

Framework agreements are now in place with 38 of our key suppliers representing a formal alignment in our commercial relationship.

•As at 31 December 2012, the Company achieved a TSR over the 2010 LTIP performance period of -13% which would generate a nil vesting in terms of the Sector Index (against a median target of 7%) and a nil vesting against the FTSE 100 (being lower than the 50th percentile).

The actual performance period for both TSR measures ends immediately after the date of this report.

•If the 2010 LTIP awards vest at 50%, 43,791 shares are receivable by Cynthia Carroll and 27,520 by René Médori. At a share price of £18.32 (the average for the last quarter of 2012), this results in values of £802,251 and £504,166 respectively.

3.5 Total remuneration outcomes for 2012

Figure 13 sets out the total remuneration received or receivable by the directors in respect of 2012 (or the three-year performance period ending in 2012 for each of the BSP Enhancement Shares and LTIP awards from 2010).

Figure 13: Total remuneration outcomes for 2012

	Total basic salary(1) £'000	Benefi ts in kind(2) £'000	Pension(3) £'000	Annual performance bonus – cash & Bonus Shares £'000	2010 Enhancement Share Award(4) £'000	2010 LTIP Award(5) £'000	Total 2012(6) £'000	Total 2011(6) £'000
Executive Directors	Section 3.1			Section 3.2	Section 3.3	Section 3.4
Cynthia Carroll	1,217	65	365	745	0	802	3,194
Cynthia Carroll (2011)	1,170	42	351	1,925	1,570	3,056		8,114
René Médori	765	50	230	469	0	504	2,018
René Médori (2011)	736	33	221	1,198	1,023	1,921		5,132
	Total fees	Benefi ts in kind	Pension	Annual performance bonus – cash & Bonus Shares	2010 Enhancement Share Award	Other(8)	Total 2012	Total 2011
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Non-Executive Directors
Sir John Parker(7)	650	2	–	–	–	589	1,241	650
David Challen	130	–	–	–	–	–	130	115
Sir CK Chow	80	–	–	–	–	–	80	80
Sir Philip Hampton	105	–	–	–	–	–	105	95
Phuthuma Nhleko	80	–	–	–	–	–	80	65
Ray O'Rourke(7)	80	–	–	–	–	–	80	80
Mamphela Ramphele	46	–	–	–	–	–	46	80
Anne Stevens	51	–	–	–	–	–	51	–
Jack Thompson	80	–	–	–	–	–	80	80
Peter Woicke	105	–	–	–	–	–	105	95

(1) In addition to the basic salaries above, Cynthia Carroll and René Médori each retained fees amounting to £98,000 and £92,000 respectively in respect of external directorships (see 2.2).

(2) Each executive director receives a car allowance, a limited amount of personal taxation or fi nancial advice and one club subscription; they also receive death and disability benefi ts and medical insurance, access to a company car and driver as required and other ancillary benefi ts. 2012 benefi ts also include attendance at relevant public events.

(3) The pension contribution amounts should be read in conjunction with the following information:
- (a) The amount stated for Cynthia Carroll for 2011 includes a cash allowance of £8,000.
- (b) The total amount of pension contributions treated as having been paid into the UURBS for 2012 was £315,000 for Cynthia Carroll (2011: £308,000) and £190,000 for René Médori (2011: £537,000).

(c) Contributions treated as being paid into the UURBS earn a return equivalent to the Company's pre-tax sterling nominal cost of debt. The total return earned in 2012 was £24,000 for Cynthia Carroll (2011: £4,000) and £33,000 for René Médori (2011: £8,000). (d) As at 31 December 2012, the total balances due to the executive directors in relation to the UURBS were £651,000 for Cynthia Carroll

(2011: £312,000) and £768,000 for René Médori (2011: £545,000). (4) The performance condition attached to the 2010 Enhancement Share award was not met and no shares will vest.
(5) As vesting of the LTIP awards granted in 2010 is due to take place after publication of this report, vesting levels are on an 'expected' basis and a share price of £18.32 has been used to calculate the values shown.
(6) The total emoluments for 2012 (that is basic salary, cash bonuses and benefi ts (excluding pension)) were £1,655,000 for Cynthia Carroll (2011: £2,174,000) and £1,050,000 for René Médori (2011: £1,369,000).
(7) Sir John Parker has waived his Nomination Committee Chairman fees. Ray O'Rourke has instructed the Company that his net fees be donated to charity.
(8) Following his appointment as chairman of the Company on 1 August 2009, Sir John Parker was awarded 31,000 shares which were released in full on 2 August 2012, three years after appointment, with a share price of £19.00. The award was matched by Sir John before the release date.
(9) No person who served as a director of the Company during or before 2012 has been paid or received retirement benefi ts in excess of the retirement benefi ts to which he/she was entitled on the date on which benefi ts fi rst became payable (or 31 March 1997, whichever is later).

(10) No consideration was paid to or became receivable by third parties for making available the services of any person as a director of the Company, or while a director of the Company, as a director of any of the Company's subsidiary undertakings, or as a director of any other undertaking of which he/she was (while a director of the Company) a director by virtue of the Company's nomination, or otherwise in connection with the management of the Company or any undertaking during the year to 31 December 2012.

3.6 Distribution statement for 2012

Figure 14 sets out the total spend on employee reward over 2012 compared to profi t generated by the Company and the dividends received by investors.

Figure 14: Distribution statement for 2012

Distribution statement		2012	2011
Underlying Earnings	\$m	2,839	6,120
(Total Group)	% change	(54)%	23%
Dividends payable for year (Total)	\$m	1,087	898
	% change	21%	13%
Payroll costs for all employees	\$m	5,387	4,946
	% change	9%	9%
Employee numbers	'000	106	100
	% change	6%	0%

4. OUTSTANDING SHARE INTERESTS

The information in this section has been subject to external audit.

4.1 Conditional share awards granted in 2012

Figure 15 summarises the longer-term, share-based awards granted to directors during 2012. Receipt of these awards is dependent on the Company's performance over 2012–2014, as detailed below.

4.2 Details of BSP Enhancement Shares granted in 2012

•Vesting of the BSP Enhancement Shares granted in 2012 is subject to real EPS growth, ie growth in the Company's earnings per share compared to growth in the UK Retail Price Index, over three years to 31 December 2014.

•The performance targets and vesting outcomes are illustrated in Figure 16.
•The performance targets were approved by the Committee after reviewing external expectations and performance over a number of years and have been set at a level that provides stretching performance levels for management.

Figure 16: 2012 BSP Enhancement Shares

		Figure 15: Summary of conditional share awards granted in 2012
Type of award	Performance measure	Vesting schedule	Performance period end(2)	Director	Basis of award	Number of shares awarded	Face value at grant(3)
BSP Enhancement Shares(1)	EPS growth	44% for RPI+9% 100% for RPI+15%	31/12/2014	Cynthia Carroll	75% of 2011 Bonus Shares	26,573	£721,723
	Section 4.2			René Médori	75% of 2011 Bonus Shares	16,538	£449,172
LTIP share awards	TSR vs. sector index (25%) Section 4.3.1	30% for TSR equal to median 100% for median +5% pa or above	31/12/2014	Cynthia Carroll	350% of salary	157,733	£4,258,791
	TSR vs. FTSE 100 index (25%) Section 4.3.2	30% for TSR equal to median 100% for 80th centile or above		René Médori	300% of salary	85,048	£2,296,296
	AOSC (50%) Section 4.3.3	0% for \$4.6bn 100% for \$5.6bn

(1) The BSP Enhancement Shares were awarded in March 2012. The number of shares granted was 75% of the number of deferred Bonus Shares awarded to each executive director in respect of 2011 annual performance (Cynthia Carroll: 35,431 Bonus Shares; René Médori: 22,051 Bonus Shares). The value of each Bonus Share award was 50% of the total bonus earned for 2011.

(2) The performance period for the LTIP TSR measures is three years ending on the day of the announcement of the 2014 fi nancial results in 2015.

(3) The face value of each award has been calculated using the share price at time of grant (£27.16 for the Enhancement Share awards and £27.00 for the LTIP awards). As receipt of these awards is conditional on performance, the actual value of these awards may be £0. Vesting outcomes will be disclosed in the 2014 report.

4.3 Details of LTIP awards granted in 2012

4.3.1 TSR – Sector Index comparison

•One quarter of the LTIP awards granted in 2012 vests according to the Company's three-year TSR performance relative to a weighted basket of international mining companies (the Sector Index).
•The constituent companies of the Sector Index for the 2012 awards are shown in Figure 17a.
•The Committee may amend the list of comparator companies in the Sector Index, and relative weightings, if circumstances make this necessary (for example, as a result of takeovers or mergers of comparator companies or signifi cant changes in the composition of the Group).
•The Sector Index performance targets and the vesting schedule for the 2012 LTIP awards are summarised in Figure 17b.
•Target performance for the Company requires the Company's three-year TSR to equal the weighted median TSR performance of the Sector Index.
•Maximum vesting occurs when the Company's TSR outperforms the weighted median TSR of the Sector Index by 5% pa.

Figure 17a: 2012 TSR Sector Index

	Mining
Comparator companies	BHP Billiton plc
	Rio Tinto plc
	Teck Cominco Limited
	Vale
	Vedanta Resources plc
	Xstrata plc

Figure 17b: 2012 LTIP Sector Index comparison

4.3.2 TSR – FTSE 100 comparison

•One quarter of the LTIP awards granted in 2012 vests according to the Company's three-year TSR performance compared with the TSR performance of the constituents of the FTSE 100 Index.
•The FTSE 100 performance targets and vesting schedule for the 2012 LTIP awards are outlined in Figure 18.

The performance targets for both TSR measures were calculated so that there is approximately a 15% chance of achieving full vesting and a 25% chance of three-quarters vesting. These probabilities were assessed by PwC using a Monte Carlo model.

Total shareholder return for both the TSR measures is calculated based on average returns over the fi ve working days immediately following announcement of the Company's annual results. It is assumed that all dividends are reinvested.

Governance

4.3.3 Asset Optimisation and Supply Chain

•Vesting of one half of LTIP awards granted in 2012 depends on the performance of the Company's strategic Asset Optimisation and Supply Chain (AOSC) programmes over the three-year period to 31 December 2014.
•These programmes strive to unlock value from the Company's assets in a sustainable way through structured Group-wide programmes aimed at reducing costs, increasing volumes and improving overall operational effi ciencies.
•The AOSC performance targets represent the operating and capital expenditure savings that the programme is yielding, compared with the savings made if the programme had not been implemented. These savings are realised cumulatively over the three-year performance period.
•For 2011 LTIP awards onwards, the effect of changes in both commodity prices and exchange rates have been stripped out of the AOSC targets and results so that only directly attributable management actions are recognised.
•The AOSC targets and vesting schedule for the 2012 LTIP awards are shown in Figure 19.
•The Committee reviews the AOSC targets prior to each LTIP award to ensure they remain appropriately stretching and the benefi ts delivered are signifi cant to the Company.
•At the end of each performance period, the assessment of performance against targets is reviewed by internal audit and reported to shareholders.
•Figure 20 shows an example of AOSC improvements at Metallurgical Coal.

Figure 20: Asset Optimisation and Supply Chain

At our Metallurgical Coal Business Unit, we set out to focus on improving equipment performance which is driven by rate, availability and utilisation of our fl eet at open cut mines. Effective work area setup was the key to rate improvements, whilst utilisation improvements increase the productive time that equipment operates through reducing non-value adding activities.

Benchmarking best practice equipment performance has supported identifi cation of the gaps and valuing the improvement.

which defi nes the practices and processes by which our Metallurgical Coal sites operate, both from a mine planning perspective as well as an operational perspective.

Improvements are 'locked in' to the Operational Management System

This approach was rolled out in Metallurgical Coal in 2008 and is delivering benefi ts.

Open cut saleable AO benefits Mt – Anglo share 2010 AO 0.5 2011AO 0.3 2012 AO 1.1 2012 with AO benefit (2010–2012) 17.5 2012 without AO (2010–2012) 15.6

(Figures are not subject to external audit)

By improving the rate, availability and utilisation of our equipment,more tonnes are moved for processing and ultimately available for sale to our customers. Our equipment performance benefi t is calculated on the improvement in controllable variables (which could be availability and/or utilisation and/or rate) against actual performance in the previous year, whilst all other variables are

treated as uncontrollable and thus excluded from the benefi t calculation. The additional material moved is multiplied by the strip ratio to provide additional run of mine tonnes. The run of mine tonnes are multiplied by the yield achieved in the processing plant to deliver additional saleable production. Any incremental costs are deducted from the additional revenue generated.

4.4 Total interests in shares

Figure 21 summarises the total interests of the directors in shares of Anglo American plc as 14 February 2013 (and at the end of the 2012 fi nancial year). These include benefi cial and conditional interests. As already disclosed, Cynthia Carroll is required to hold interests in shares to a value of two times basic salary and René Médori to a value of one and a half times salary. These requirements have been exceeded.

Figure 21: Shares in Anglo American plc

		Benefi cial					Conditional
Directors			BSP Bonus Shares	BSP Enhancement Shares(5)	LTIP(6)	SAYE/SIP(7)	Other
	at 14 February 2013	200,511	101,524	90,565	373,323	494	–
Cynthia Carroll	(at 31 December 2012)	200,488	101,524	90,565	373,323	491	–
	at 14 February 2013	86,684	63,094	56,385	209,109	494	–
René Médori(1)	(at 31 December 2012)	86,662	63,094	56,385	209,109	492	–
	at 14 February 2013	50,303	–	–	–	–	7,552
Sir John Parker(2)	(at 31 December 2012)	50,303	–	–	–	–	7,552
	at 14 February 2013	1,820	–	–	–	–	–
David Challen	(at 31 December 2012)	1,820	–	–	–	–	–
	at 14 February 2013	5,500	–	–	–	–	–
Sir CK Chow	(at 31 December 2012)	5,500	–	–	–	–	–
	at 14 February 2013	3,462	–	–	–	–	–
Sir Philip Hampton	(at 31 December 2012)	3,127	–	–	–	–	–
	at 14 February 2013	3,151	–	–	–	–	–
Phuthuma Nhleko	(at 31 December 2012)	2,412	–	–	–	–	–
	at 14 February 2013	76,965	–	–	–	–	–
Ray O'Rourke(3)	(at 31 December 2012)	76,965	–	–	–	–	–
	at 14 February 2013	7,100	–	–	–	–	–
Jack Thompson(3)	(at 31 December 2012)	7,100	–	–	–	–	–
Anne Stevens(4)	at 14 February 2013	1,332	–	–	–	–	–
	(at 31 December 2012)	621	–	–	–	–	–
	at 14 February 2013	20,806	–	–	–	–	–
Peter Woicke(3)	(at 31 December 2012)	19,898	–	–	–	–	–

(1) René Médori's benefi cial interests in 85,613 shares held at the date of this report arise as a result of his wife's interests in shares. (2) As previously reported, Sir John Parker was awarded 7,552 shares in the Company on 28 February 2011, which will be released in full on the third anniversary of the award date, subject to his continued chairmanship. The award will be matched by Sir John progressively over the three-year period.

(3) Included in the interests of Messrs O'Rourke, Thompson and Woicke are unsponsored ADR representing 0.5 ordinary shares of \$0.54945 each.

(4) Anne Stevens was appointed to the Board on 14 May 2012.

Footnotes continue overleaf

(5) Figure 22 records in more detail the changes in conditional interests in BSP Bonus Shares and Enhancement Shares over 2012. The Enhancement Share awards that vested in 2012 related to the performance period 2009–2011. They were awarded on 18 March 2009 at a share price of £11.62. They vested on 6 March 2012 at a price of £25.42.

Figure 22: Bonus Share Plan interests

		Number of Bonus Shares	Number of Enhancement Shares	Number of Bonus	Number of Enhancement	Number of Enhancement			Date	End date of performance period for
	Total	conditionally	conditionally	Shares	Shares	Shares	Total	Market price	of vesting of	Enhancement
	interest at	awarded	awarded	vested	vested	lapsed	interest at	at date of	Bonus Shares	Shares
	1 January	in March	in March	in March	in March	in March	31 December	2012 award	awarded	awarded
BSP interests	2012	2012	2012	2012	2012	2012	2012	£	during 2012	during 2012
Cynthia Carroll	240,420	35,431	26,573	(48,580)	(61,755)	–	192,089	27.16	01/01/2015	31/12/2014
René Médori	152,812	22,051	16,538	(31,667)	(40,255)	–	119,479	27.16	01/01/2015	31/12/2014

(6) Figure 23 records in more detail the changes in conditional interests in LTIP awards during 2012. The LTIP awards that vested in 2012 related to the performance period 2009–2011. They were awarded on 30 March 2009 at a share price of £12.61. They vested on 12 March 2012 at a price of £26.00.

Figure 23: Long Term Incentive Plan interests

LTIP interests	Total benefi cial interest in LTIP at 1 January 2012	Number of shares conditionally awarded in March 2012	Number of shares vested in March 2012	Number of shares lapsed in March 2012	Total benefi cial interest in LTIP at 31 December 2012	Market price at date of 2012 award £	Date of vesting of LTIP awarded during 2012
Cynthia Carroll	337,992	157,733	(117,505)	(4,897)	373,323	27.00	31/12/2014
René Médori	200,999	85,048	(73,860)	(3,078)	209,109	27.00	31/12/2014

(7) Figure 24 records in more detail the changes in conditional interests in Share Incentive Plan (SIP) interests during 2012.

Figure 24: Share Incentive Plan interests

SIP interests	Total interest at 1 January 2012	Number of Matching Shares conditionally awarded during 2012	Number of Free Shares conditionally awarded during 2012	Number of Matching Shares vested during 2012	Number of Free Shares vested during 2012	Total interest at 31 December 2012
Cynthia Carroll	696	70	116	(90)	(301)	491
René Médori	695	71	116	(89)	(301)	492

During the year, Cynthia Carroll and René Médori purchased 70 and 71 shares under the SIP respectively, in addition to the shares held by them at 1 January 2012. If these shares are held for three years, they will be matched by the Company on a one-for-one basis, conditional upon the director's continued employment. In addition, Cynthia Carroll and René Médori were each awarded 116 free shares under the SIP in March 2012. Participants in the SIP are entitled to receive dividends on their shares.

Figure 25 records in more detail the changes in conditional interests in SAYE awards during 2012.

Figure 25: Directors' share options (SAYE)

Anglo American options	Benefi cial holding at 1 January 2012	Granted	Exercised	Lapsed	Benefi cial holding at 31 December 2012	Weighted average option price £	Earliest date from which exercisable	Latest expiry date
René Médori	1,587	–	–	–	1,587	20.98	01/09/2013	28/02/2019

5. CHIEF EXECUTIVE ARRANGEMENTS

5.1 Appointment of new chief executive

Mark Cutifani's remuneration package will comprise a basic salary and variable incentive arrangements which are entirely in line with Anglo American's current remuneration policy and practice.

The key elements of the package are as follows:

•Basic salary £1.2m per annum.
•Bonus Share Plan (BSP) Mr Cutifani will have the opportunity to participate in Anglo American's annual incentive arrangements (the BSP) for 2013 in line with the policy set out on page 110.
•Long Term Incentive Plan (LTIP) Mr Cutifani will be eligible for an annual award under the LTIP in line with the policy set out on page 110.
•Compensation for incentives forfeited – Mr Cutifani will receive an award of restricted shares to compensate him for the loss of incentives from his previous employer AngloGold Ashanti (AGA). The Committee has decided that, so far as possible, the compensatory awards should be on a comparable basis to the foregone awards. As such, the Company commissioned a third-party valuation to determine the extent to which the performance conditions were, at the date of assessment, likely to be achieved.

Based on the AGA share price and exchange rates at the date of this report, the total value of the compensatory award is c. £2.29m; this fi gure will be updated at the time of Mr Cutifani's joining Anglo American, once the value of the shares foregone under the 2013 AGA Bonus Share Plan award (based on performance during 2012) is known, using the average share price and exchange rates over the week prior to that event.

In order to enhance alignment with the interests of Anglo American shareholders, the Committee has taken the decision to utilise Anglo American shares, rather than cash, as the medium for compensation. These restricted shares will vest over the next three years, in line with the vesting schedule of the incentives foregone. They will be subject to clawback in the event of Mr Cutifani's leaving the Company (except as a Good Leaver) or in the circumstances in which the Company's standard clawback provisions are triggered.

•Shareholding requirements Mr Cutifani will be required to accumulate a shareholding in Anglo American to the value of two times basic salary within fi ve years of his appointment.
•Pension Anglo American will make an annual contribution of 30% of basic salary in respect of Mr Cutifani's pension provision which may be invested into the Company's pension arrangements or taken as a cash allowance.
•Notice Period The notice period in Mr Cutifani's service contract will be 12 months for either party save that, should the Company serve notice before the fi rst anniversary of his appointment, it will be 18 months.

5.2 Termination arrangements for outgoing chief executive

In terms of her leaving arrangements, Cynthia Carroll will receive phased monthly payments, comprising basic salary and benefi ts, for the outstanding nine months of her notice period, in line with her contractual provisions. These payments will be subject to mitigation.

The Committee has determined that Cynthia Carroll will be eligible for consideration for a BSP award for 2013 in respect of the period she will have served. However, there will be no award of Enhancement Shares or any award under the LTIP in 2013.

The Bonus Shares held by Cynthia Carroll will be released to her on termination.

With respect to the Enhancement Share and LTIP awards made in 2011 and 2012, the Committee has determined that these awards will vest on the normal vesting dates, to the extent that the performance conditions have been satisfi ed, and will be pro-rated for the proportion of each performance period served.

Full details of any amounts paid to Cynthia Carroll will be disclosed in the 2013 Directors' Remuneration Report.

COMMITTEE MEMBERS DURING 2012

Sir Philip Hampton

David Challen

Sir CK Chow

Jack Thompson

6. REMUNERATION COMMITTEE IN 2012

Membership

The Committee comprised the non-executive directors shown on the left during the year ended 31 December 2012.

Committee members during 2012

The Company's chief executive attends the Committee meetings by invitation and assists the Committee in its deliberations, except when issues relating to her own compensation are discussed. No directors are involved in deciding their own remuneration. In 2012, the Committee was advised by the Company's Human Resources and Finance functions and, specifi cally, by Mervyn Walker and Chris Corrin. It also took external advice as shown in the table below.

Figure 25: External advisers and fees

Advisers		Other services provided to the Company	Fees for Committee assistance
Pricewaterhouse Coopers LLP (PwC)	Appointed by the Company, with the agreement of the Committee, to provide specialist valuation services and market remuneration data	Investment advisers, actuaries and auditors for various pension schemes; advisers on internal audit projects; taxation, payroll and executive compensation advice	£9,000
Linklaters LLP (Linklaters)	Appointed by the Company, with the agreement of the Committee, to provide legal advice on long-term incentives and directors' service contracts	Legal advice on certain corporate matters	£5,000
Mercer Limited (Mercer)	Engaged by the Committee to review the Committee's processes on an annual basis, in order to provide shareholders with assurance that the remuneration processes the Committee has followed are in line with stated policy and that the Committee has operated within its Terms of Reference	Investment advisers and actuaries for various pension schemes	£11,000
	This review was carried out on the 2011 report although will not be done going forward
Towers Watson (TW)	The Human Resources function engaged Towers Watson to assist with the preparation of the 2012 remuneration report	Human resources advisers on various reward and other matters	£25,000
Deloitte LLP (Deloitte)	In their capacity as Group auditors, Deloitte undertake an audit of sections 3 and 4 of the remuneration report annually. However, they provide no advice to the Committee		n/a

Note: Certain overseas operations within the Group are also provided with audit related services from Deloitte's and PwC's worldwide member fi rms and non-audit related services from Mercer's worldwide member fi rms and TW.

Figure 26: Response to 2012 AGM shareholder voting

Vote	For	Against	Abstain	Any issues raised and Company response
Advisory vote on 2011 remuneration report	716,506,271 (87%)	110,627,621 (13%)	14,065,303	Comments from investors at the time of the 2012 AGM have led to enhanced disclosure relating to bonuses

7. OTHER INFORMATION REQUIRED

The information included in this section has been included to ensure compliance with the Company's current disclosure obligations under the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008 (the Regulations). This information is not expected to be required under the revised version of the Regulations which will apply to the 2013 Directors' Remuneration Report.

7.1 Five-year relative TSR graphs

The top chart in Figure 27 shows the Company's TSR performance against the performance of the FTSE 100 Index from 1 December 2008 to 31 December 2012. The FTSE 100 Index was chosen as being a broad equity market index which includes companies of a comparable size and complexity to Anglo American.

The bottom chart in Figure 27 shows the Company's performance against a weighted Sector Index comparator group over the same fi ve-year period. The Sector Index comparator group is the same as used to measure the Company's performance for the purposes of the vesting of LTIP interests conditionally awarded in 2010. This graph gives an indication of how the Company is performing against the targets in place for LTIP interests already granted, although the specifi cs of the comparator companies for each year's interests may vary to refl ect changes such as mergers and acquisitions among the Company's competitors or changes to the Company's business mix.

TSR is calculated in US dollars, and assumes all dividends are reinvested. The TSR level shown as at 31 December each year is the average of the closing daily TSR levels for the fi ve-day period up to and including that date.

APPROVAL

This directors' remuneration report has been approved by the Board of directors of Anglo American plc. Signed on behalf of the Board of directors.

Sir Philip Hampton

Chairman, Remuneration Committee 14 February 2013

FIGURE 27: HISTORICAL COMPARATIVE TSR PERFORMANCE GRAPHS

140

DIRECTORS' REPORT

The directors have pleasure in submitting the statutory fi nancial statements of the Group for the year ended 31 December 2012.

The Board considers that the Annual Report, taken as a whole, is fair, balanced and understandable and that it provides all information necessary for shareholders to assess the Company's strategy and performance.

PRINCIPAL ACTIVITIES

Anglo American is one of the world's largest mining companies, is headquartered in the UK and listed on the London and Johannesburg stock exchanges. Anglo American's portfolio of mining businesses spans bulk commodities – iron ore and manganese, metallurgical coal and thermal coal; base metals – copper and nickel; and precious metals and minerals – in which it is a global leader in both platinum and diamonds. Anglo American is committed to the highest standards of safety and responsibility across all its businesses and geographies and to making a sustainable difference in the development of the communities around its operations. The Company's mining operations, extensive pipeline of growth projects and exploration activities span southern Africa, South America, Australia, North America, Asia and Europe.

More detailed information about the Group's businesses, activities and fi nancial performance is incorporated in this report by reference and can be found in the chairman's and CEO's statements on pages 2–3 and 10–11 respectively and the operating and fi nancial review on pages 12–89. The Corporate Governance statement is on pages 90–127 and is incorporated in this Directors' report by reference.

GOING CONCERN

The fi nancial position of the Group, its cash fl ows, liquidity position and borrowing facilities are set out in the Group Financial Performance Review on pages 42–47. In addition, detail is given on the Group's policy on managing credit and liquidity risk in the Principal Risks and Uncertainties section on pages 48–53, with details of our policy on capital risk management being set out in note 25 to the fi nancial statements. The Group's net debt at 31 December 2012 was \$8.6 billion (2011: \$1.4 billion), representing a gearing level of 16.4% (2011: 3.1%). Details of borrowings and facilities are set out in notes 24 and 25 and net debt is set out in note 31.

The directors have considered the Group's cash fl ow forecasts for the period to the end of March 2014. The Board is satisfi ed that the Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group will be able to operate within the level of its current facilities for the foreseeable future. For this reason the Group continues to adopt the going concern basis in preparing its fi nancial statements.

DIVIDENDS

An interim dividend of 32 US cents per ordinary share was paid on 13 September 2012. The directors are recommending that a fi nal dividend of 53 US cents per ordinary share be paid on 25 April 2013 to ordinary shareholders on the register on 22 March 2013, subject to shareholder approval at the AGM to be held on 19 April 2013. This would bring the total dividend in respect of 2012 to 85 US cents per ordinary share. In accordance with International Financial Reporting Standards (IFRS), the fi nal dividend will be accounted for in the fi nancial statements for the year ended 31 December 2013.

SHARE CAPITAL

The Company's issued share capital as at 31 December 2012, together with details of share allotments and issue of treasury shares during the year, is set out in note 29 on pages 177–180.

The Company was authorised by shareholders at the AGM held on 19 April 2012 to purchase its own shares in the market up to a maximum of 14.99% of the issued share capital. No shares were purchased under this authority during 2012. This authority will expire at the 2013 AGM and, in accordance with usual practice, a resolution to renew it for another year will be proposed.

MATERIAL SHAREHOLDINGS

As at 31 December 2012, the Company was aware of the following interests in 3% or more of the Company's ordinary share capital:

Company	Number of shares	Percentage of voting rights
Blackrock, Inc.	63,971,090	4.60
Epoch Two Investment Holdings Limited(1)	42,166,686	3.03
Public Investment Corporation (PIC)	81,235,375	5.84
Tarl Investment Holdings Limited(1)	47,275,613	3.39

(1) Epoch Two Investment Holdings Ltd (Epoch 2) and Tarl Investment Holdings Limited (Tarl) are two of the independent companies that have purchased shares as part of Anglo American's share buy back programme. Epoch 2 and Tarl have waived their right to vote all the shares they hold or will hold in Anglo American plc.

As at the date hereof the Company has been notifi ed of the following change to the above holdings of voting rights in the ordinary share capital of the Company: Blackrock, Inc. 64,138,546 (4.61%).

DIRECTORS

Directors' biographical details are given on pages 92–93. Details of directors' interests in shares and share options of the Company can be found in the remuneration report on pages 108–127.

Anne Stevens joined the Board on 15 May 2012. Mamphela Ramphele resigned from the Board with effect from 25 July 2012. Cynthia Carroll has resigned as CEO of the Company with effect from 3 April 2013 and as a director with effect from the closing of the AGM to be held on 19 April 2013. Mark Cutifani has been appointed CEO and a director with effect from 3 April 2013.

On 12 February 2013, the Board proposed the appointment of Dr Byron Grote as a non-executive director at the forthcoming AGM on 19 April 2013. It is intended that Dr Grote will join the Audit Committee of the Board on appointment and he will, after a period of induction, assume the role of Chairman of that committee from David Challen, who has held this position since 2003.

In addition, Peter Woicke informed the Board of his intention to retire as a non-executive director, also with effect from the AGM. Mr Woicke will be succeeded as Chairman of the Safety and Sustainable Development Committee by Jack Thompson.

In accordance with the Code, Anglo American will continue to propose the re-election of all directors on an annual basis.

SUSTAINABLE DEVELOPMENT

The Sustainable Development Report 2012 will be available in April 2013. This report focuses on the safety, sustainable development, health and environmental performance of the Group's managed operations, its performance with regard to the Company's Good Citizenship Business Principles, and the operational dimensions of its social programmes.

PAYMENT OF SUPPLIERS

Anglo American plc is a holding company and, as such, has no material trade creditors. Businesses across the Group are responsible for agreeing the terms under which transactions with their suppliers are conducted, refl ecting local and industry norms and Group purchasing arrangements that may have been made with a supplier. The Group values its suppliers and recognises the benefi ts to be derived from maintaining good relationships with them. Anglo American acknowledges the importance of paying invoices, especially those of small businesses, promptly.

VALUE OF LAND

Land is mainly carried in the fi nancial statements at cost. It is not practicable to estimate the market value of land and mineral rights, since these depend on product prices over the next 20 years or more, which will vary with market conditions.

POST-BALANCE SHEET EVENTS

Post-balance sheet events are set out in note 39 to the fi nancial statements on page 187.

AUDIT INFORMATION

The directors confi rm that, so far as they are aware, there is no relevant audit information of which the auditors are unaware and that all directors have taken all reasonable steps to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

Governance

EMPLOYMENT AND OTHER POLICIES

The Group's key operating businesses are empowered to manage within the context of the different legislative and social demands of the diverse countries in which those businesses operate, subject to the standards embodied in Anglo American's Good Citizenship Business Principles. Within all the Group's businesses, the safe and effective performance of employees and the maintenance of positive employee relations are of fundamental importance. Managers are charged with ensuring that the following key principles are upheld:

•Adherence to national legal standards on employment and workplace rights at all times
•In addition, adherence to the International Labour Organization's core labour rights, including: prohibition of child labour; prohibition of inhumane treatment of employees and any form of forced labour, physical punishment or other abuse; recognition of the right of our employees to freedom of association and the promotion of workplace equality; and the elimination of all forms of unfair discrimination
•Continual promotion of safe and healthy working practices
•Provision of opportunities for employees to enhance their work related skills and capabilities
•Adoption of fair and appropriate procedures for determining terms and conditions of employment.

It is our policy that people with disabilities should have full and fair consideration for all vacancies. Employment of disabled people is considered on merit and with regard only to the ability of any applicant to carry out the role. We endeavour to retain the employment of, and arrange suitable retraining for, any employees in the workforce who become disabled during their employment. Where possible we will adjust a person's working environment to enable them to stay in our employment.

Further, the Group is committed to treating employees at all levels with respect and consideration, to investing in their development and to ensuring that their careers are not constrained by discrimination or arbitrary barriers.

The Good Citizenship Business Principles are supplemented by four Anglo American 'Way' documents, covering the safety, environmental, occupational health and social aspects of responsible operation and sustainable development. These set out specifi c standards for each of these subject areas, in line with international best practice.

Copies of the Good Citizenship Business Principles and the Anglo American 'Way' documents are available from the Company and may be accessed on the Company's website.

The Business Integrity Policy and Performance Standards set out how Group employees, business partners and major suppliers must act to ensure that our zero tolerance of corruption is upheld. All senior employees, and employees in high-risk functions such as procurement, are trained to embed knowledge of the policy as well as the UK Bribery Act and how to behave in corruption-risk situations. This training is ongoing and mandatory for all senior levels and others where it is deemed appropriate.

The Group has a well-used enterprise information portal, theSource, which seeks to ensure that employees are regularly updated on developments within the Group, and feedback is encouraged. In addition, the Company regularly publishes Optima (available on the Company's website) and Our World, which contain items of news, current affairs and information relevant to Group employees.

CHARITABLE DONATIONS

During the year, Anglo American, its subsidiaries and the Anglo American Group Foundation made donations for charitable purposes or wider social investments amounting to \$154 million (3% of operating profi t from subsidiaries and joint ventures before special items and remeasurements). Charitable donations of \$1.8 million were made in the UK, of which the main categories were: education and training (5.7%) and health and welfare (22.6%). These fi gures were compiled with reference to the London Benchmarking Group model for defi ning and measuring social investment spending. A fuller analysis of the Group's social investment activities can be found in the Sustainable Development Report 2012.

POLITICAL DONATIONS

No political donations were made during 2012. Anglo American has an established policy of not making donations to, or incurring expenses for the benefi t of, any political party in any part of the world, including any political party or political organisation as defi ned in the Political Parties, Elections and Referendums Act 2000.

ANNUAL GENERAL MEETING

The AGM will be held on 19 April 2013, when shareholders will have the opportunity to put questions to the Board, including the chairmen of the various committees. A separate booklet enclosed with this report contains the notice convening the meeting together with a description of the business to be conducted.

Facilities have been put in place to enable shareholders on the UK register to receive communications electronically rather than by mail and, for those unable to attend the meeting, to cast their votes by electronic means, including those shareholders whose shares are held in the CREST system.

In accordance with best practice, voting on each resolution to be proposed at the AGM will be conducted on a poll rather than by a show of hands. The results of the poll will be announced to the press and on the Company's website.

ELECTRONIC COMMUNICATIONS

Since the implementation of the electronic communications provisions in the Companies Act 2006, the Company has substantially reduced the cost of annual report production and distribution. Shareholders may elect to receive notifi cation by email of the availability of the annual report on the Company's website instead of receiving paper copies.

ADDITIONAL INFORMATION FOR SHAREHOLDERS

Set out below is a summary of certain provisions of the Company's current Articles and applicable English law concerning companies (the Companies Act 2006 (the Companies Act)) required as a result of the implementation of the Takeovers Directive in English law. This is a summary only and the relevant provisions of the Articles or the Companies Act should be consulted if further information is required.

Dividends and distributions

Subject to the provisions of the Companies Act, the Company may by ordinary resolution from time to time declare dividends not exceeding the amount recommended by the Board. The Board may pay interim dividends whenever the fi nancial position of the Company, in the opinion of the Board, justifi es such payment.

The Board may withhold payment of all or any part of any dividends or other monies payable in respect of the Company's shares from a person with a 0.25% interest or more (as defi ned in the Articles) if such a person has been served with a notice after failing to provide the Company with information concerning interests in those shares required to be provided under the Companies Act.

Rights and obligations attaching to shares

The rights and obligations attaching to the ordinary and preference shares are set out in the Articles. The Articles may only be changed by a special resolution passed by the shareholders.

Voting

Subject to the Articles generally and to any special rights or restrictions as to voting attached by or in accordance with the Articles to any class of shares, on a show of hands every member who is present in person at a general meeting shall have one vote and, on a poll, every member who is present in person or by proxy shall have one vote for every share of which he/she is the holder. It is, and has been for some years, the Company's practice to hold a poll on every resolution at shareholder meetings.

Where shares are held by trustees/ nominees in respect of the Group's employee share plans and the voting rights attached to such shares are not directly exercisable by the employees, it is the Company's practice that such rights are not exercised by the relevant trustee/nominee.

Under the Companies Act, members are entitled to appoint a proxy, who need not be a member of the Company, to exercise all or any of their rights to attend and to speak and vote on their behalf at a general meeting or class meeting. A member may appoint more than one proxy in relation to a general meeting or class meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that member. A member that is a corporation may appoint one or more individuals to act on its behalf at a general meeting or class meeting as a corporate representative. The debate around s323 of the Companies Act has been resolved so that where a shareholder appoints more than one corporate representative in respect of its shareholding, but in respect of different shares, those corporate representatives can act independently of each other, and validly vote in different ways.

Restrictions on voting

No member shall, unless the directors otherwise determine, be entitled in respect of any share held by him/her to vote either personally or by proxy at a shareholders' meeting, or to exercise any other right conferred by membership in relation to shareholders' meetings, if any call or other sum presently payable by him/ her to the Company in respect of that share remains unpaid. In addition, no member shall be entitled to vote if he/ she has been served with a notice after failing to provide the Company with information concerning interests in those shares required to be provided under the Companies Act.

Issue of shares

Subject to the provisions of the Companies Act relating to authority and pre-emption rights and of any resolution of the Company in a UK general meeting, all unissued shares of the Company shall be at the disposal of the directors and they may allot (with or without conferring a right of renunciation), grant options over, or otherwise dispose of them to such persons at such times, and on such terms, as they think proper.

Shares in uncertifi cated form

Directors may determine that any class of shares may be held in uncertifi cated form and title to such shares may be transferred by means of a relevant system, or that shares of any class should cease to be so held and transferred. Subject to the provisions of the Companies Act, the CREST regulations and every other statute, statutory instrument, regulation or order for the time being in force concerning companies and affecting the Company (together, the Statutes), the directors may determine that any class of shares held on the branch register of members of the Company resident in South Africa, or any other overseas branch register of the members of the Company, may be held in uncertifi cated form in accordance with any system outside the UK that enables title to such shares to be evidenced and transferred without a written instrument and which is a relevant system. The provisions of the Articles shall not apply to shares of any class that are in uncertifi cated form to the extent that the Articles are inconsistent with the holding of shares of that class in uncertifi cated form, the transfer of title to shares of that class by means of a relevant system or any provision of the CREST regulations.

Deadlines for exercising voting rights

Votes are exercisable at a general meeting of the Company in respect of which the business being voted upon is being heard. Votes may be exercised in person, by proxy, or in relation to corporate members, by corporate representative. The Articles provide a deadline for submission of proxy forms of not less than 48 hours before the time appointed for the holding of the meeting or adjourned meeting.

Variation of rights

Subject to statute, the Articles specify that rights attached to any class of shares may be varied with the written consent of the holders of not less than three quarters in nominal value of the issued shares of that class, or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of those shares. At every such separate general meeting the quorum shall be two persons holding, or representing by proxy, at least one third in nominal value of the issued shares of the class (calculated excluding any shares held as treasury shares). The rights conferred upon the holders of any shares shall not, unless otherwise expressly provided in the rights attaching to those shares, be deemed to be varied by the creation or issue of further shares ranking pari passu with them.

Transfer of shares

All transfers of shares that are in certifi cated form may be effected by transfer in writing in any usual or common form or in any other form acceptable to the directors and may be under hand only. The instrument of transfer shall be signed by or on behalf of the transferor and (except in the case of fully paid shares) by or on behalf of the transferee. The transferor shall remain the holder of the shares concerned until the name of the transferee is entered in the register of shareholders. All transfers of shares that are in uncertifi cated form may be effected by means of the CREST system.

The directors may decline to recognise any instrument of transfer relating to shares in certifi cated form unless it:

(a) is in respect of only one class of share; and
(b) is lodged at the transfer offi ce (duly stamped if required) accompanied by the relevant share certifi cate(s) and such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer (and, if the instrument of transfer is executed by some other person on his/her behalf, the authority of that person so to do).

The directors may, in the case of shares in certifi cated form, in their absolute discretion and without assigning any reason therefor, refuse to register any transfer of shares (not being fully paid shares) provided that, where any such shares are admitted to the Offi cial List of the London Stock Exchange, such discretion may not be exercised in such a way as to prevent dealings in the shares of that class from taking place on an open and proper basis. The directors may also refuse to register an allotment or transfer of shares (whether fully paid or not) in favour of more than four persons jointly.

If the directors refuse to register an allotment or transfer, they shall send the refusal to the allottee or the transferee within two months after the date on which the letter of allotment or transfer was lodged with the Company.

A shareholder does not need to obtain the approval of the Company, or of other shareholders of shares in the Company, for a transfer of shares to take place.

Directors

Directors shall not be less than ten nor more than 18 in number. A director is not required to hold any shares of the Company by way of qualifi cation. The Company may by ordinary resolution increase or reduce the maximum or minimum number of directors.

Powers of directors

Subject to the Articles, the Companies Act and any directions given by special resolution, the business of the Company will be managed by the Board who may exercise all the powers of the Company.

The Board may exercise all the powers of the Company to borrow money and to mortgage or charge any of its undertaking, property and uncalled capital and to issue debentures and other securities, whether outright or as collateral security, for any debt, liability or obligation of the Company or of any third party.

The Company may by ordinary resolution declare dividends but no dividend shall be payable in excess of the amount recommended by the directors. Subject to the provisions of the Articles and to the rights attaching to any shares, any dividends or other monies payable on or in respect of a share may be paid in such currency as the directors may determine. The directors may deduct from any dividend payable to any member all sums of money (if any) presently payable by him/her to the Company on account of calls or otherwise in relation to shares of the Company. The directors may retain any dividends payable on shares on which the Company has a lien, and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists.

Appointment and replacement of directors

The directors may from time to time appoint one or more directors.

The Board may appoint any person to be a director (so long as the total number of directors does not exceed the limit prescribed in the Articles). Any such director shall hold offi ce only until the next AGM and shall then be eligible for election.

The Articles provide that at each AGM all those directors who have been in offi ce for three years or more since their election, or last re-election, shall retire from offi ce. In addition, a director may at any AGM retire from offi ce and stand for re-election. However, in accordance with the Code, all directors will be subject to annual re-election.

Signifi cant agreements: Change of control

At 31 December 2012, Anglo American had committed bilateral and syndicated borrowing facilities totalling \$12.2 billion with a number of relationship banks that contain change of control clauses. \$7.4 billion of the Group's bond issues also contain change of control provisions. In aggregate, this fi nancing is considered signifi cant to the Group and, in the event of a takeover (change of control) of the Company, these contracts may be cancelled, become immediately payable or be subject to acceleration.

Purchases of own shares

At the AGM held on 19 April 2012, authority was given for the Company to purchase, in the market, up to 198.4 million Ordinary Shares of 5486⁄91 US cents each. The Company did not purchase any of its own shares during 2012.

Indemnities

To the extent permitted by law and the Articles, the Company has made qualifying third party indemnity provisions for the benefi t of its directors during the year, which remain in force at the date of this report. Copies of these indemnities are open for inspection at the Company's registered offi ce.

By order of the Board

Nicholas Jordan Company Secretary

14 February 2013

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Annual Report and the fi nancial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare fi nancial statements for each fi nancial year. The directors are required to prepare the Group fi nancial statements in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union and Article 4 of the IAS regulation, and have elected to prepare the parent company fi nancial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The directors must not approve the accounts unless they are satisfi ed that they give a true and fair view of the state of affairs of the Company and of the profi t or loss of the Company for that period.

In preparing the parent company fi nancial statements, the directors are required to:

•Select suitable accounting policies and then apply them consistently
•Make judgements and accounting estimates that are reasonable and prudent
•State whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the fi nancial statements
•Prepare the fi nancial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

In preparing the Group fi nancial statements, International Accounting Standard 1 requires that directors:

•Properly select and apply accounting policies
•Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information
•Provide additional disclosures when compliance with the specifi c requirements in IFRS is insuffi cient to enable users to understand the impact of particular transactions, other events and conditions on the entity's fi nancial position and fi nancial performance
•Make an assessment of the Company's ability to continue as a going concern.

The directors are responsible for keeping adequate accounting records that are suffi cient to show and explain the Company's transactions, disclose with reasonable accuracy at any time the fi nancial position of the Company and enable them to ensure that the fi nancial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and fi nancial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of fi nancial statements may differ from legislation in other jurisdictions.

	Responsibility statement	136
	Independent auditor's report to the members of Anglo American plc	137
	Principal statements
	Consolidated income statement	138
	Consolidated statement of comprehensive income	138
	Consolidated balance sheet	139
	Consolidated cash fl ow statement Consolidated statement of changes in equity	140 141

	Notes to the fi nancial statements
1	Accounting policies	142
2	Segmental information	148
3	Operating (loss)/profi t from subsidiaries and joint ventures	152
4	Operating profi t and underlying earnings by segment	153
5	Special items and remeasurements	153
6	Underlying EBITDA	155
7	Exploration expenditure	156
8	Employee numbers and costs	156
9	Net fi nance (costs)/income	157
10	Financial instrument gains and losses	157
11	Income tax expense	158
12	Dividends	159
13	Earnings per share	159
14	Intangible assets	160
15	Property, plant and equipment	162
16	Environmental rehabilitation trusts	162
17	Investments in associates	163
18	Joint ventures	164
19	Financial asset investments	164
20	Inventories	164
21	Trade and other receivables	165
22	Trade and other payables	165
23	Financial assets	165
24	Financial liabilities	166
25	Financial risk management and derivatives	168
26	Provisions for liabilities and charges	173
27	Deferred tax	173
28	Retirement benefi ts	174
29	Called-up share capital and share-based payments	177
30	Consolidated equity analysis	180
31	Consolidated cash fl ow analysis	181
32	Acquisitions	182
33	Disposals of subsidiaries and joint ventures	183
34	Assets and liabilities held for sale	183
35	Contingent liabilities	184
36	Commitments	185
37	Related party transactions	185
38	Group companies	186
39	Events occurring after end of year	187
40	Financial statements of the parent company	188

RESPONSIBILITY STATEMENT

for the year ended 31 December 2012

We confi rm that to the best of our knowledge:

(a) the fi nancial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, fi nancial position and loss of Anglo American plc and the undertakings included in the consolidation taken as a whole; and
(b) the Operating and fi nancial review includes a fair review of the development and performance of the business and the position of Anglo American plc and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

By order of the Board

Cynthia Carroll René Médori

Chief Executive Finance Director

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ANGLO AMERICAN PLC

We have audited the fi nancial statements of Anglo American plc for the year ended 31 December 2012 which comprise the Consolidated income statement, the Consolidated statement of comprehensive income, the Consolidated balance sheet, the Consolidated cash fl ow statement, the Consolidated statement of changes in equity, the accounting policies, the related notes 2 to 39 and the balance sheet of the Company and related information in note 40. The fi nancial reporting framework that has been applied in the preparation of the Group fi nancial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The fi nancial reporting framework that has been applied in the preparation of the Company fi nancial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Statement of directors' responsibilities, the directors are responsible for the preparation of the fi nancial statements and for being satisfi ed that they give a true and fair view. Our responsibility is to audit and express an opinion on the fi nancial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the audit of the fi nancial statements

An audit involves obtaining evidence about the amounts and disclosures in the fi nancial statements suffi cient to give reasonable assurance that the fi nancial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of signifi cant accounting estimates made by the directors; and the overall presentation of the fi nancial statements. In addition, we read all the fi nancial and non-fi nancial information in the annual report to identify material inconsistencies with the audited fi nancial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on fi nancial statements

In our opinion:
the fi nancial statements give a true and fair view of the state of the Group's and of the Company's affairs as at 31 December 2012 and of the Group's loss and the Company's profi t for the year then ended;
the Group fi nancial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the Company fi nancial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
the fi nancial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the Group fi nancial statements, Article 4 of the IAS Regulation.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

the part of the Remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006; and
the information given in the Directors' report for the fi nancial year for which the fi nancial statements are prepared is consistent with the fi nancial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or
the Company fi nancial statements and the part of the Remuneration report to be audited are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specifi ed by law are not made; or
we have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review:

the directors' statement contained within the Directors' report in relation to going concern;
the part of the Corporate governance section relating to the Company's compliance with the nine provisions of the UK Corporate Governance Code specifi ed for our review; and
certain elements of the report to shareholders by the Board on directors' remuneration.

Carl D. Hughes (Senior Statutory Auditor) for and on behalf of Deloitte LLP

Chartered Accountants and Statutory Auditor London, United Kingdom

14 February 2013

CONSOLIDATED INCOME STATEMENT

for the year ended 31 December 2012

				2012			2011
		Before special	Special items and		Before special	Special items and
		items and	remeasurements		items and	remeasurements
US\$ million	Note	remeasurements	(note 5)	Total	remeasurements	(note 5)	Total
Group revenue	2	28,761	–	28,761	30,580	–	30,580
Total operating costs		(23,356)	(7,093)	(30,449)	(20,912)	(229)	(21,141)
Operating (loss)/profi t from subsidiaries and joint
ventures	2, 3	5,405	(7,093)	(1,688)	9,668	(229)	9,439
Non-operating special items and remeasurements	5	–	1,394	1,394	–	183	183
Share of net income from associates	2, 17	493	(61)	432	978	(1)	977
Total profi t from operations and associates		5,898	(5,760)	138	10,646	(47)	10,599
Investment income		597	–	597	668	–	668
Interest expense		(798)	–	(798)	(695)	–	(695)
Other fi nancing (losses)/gains		(87)	(89)	(176)	7	203	210
Net fi nance (costs)/income	9	(288)	(89)	(377)	(20)	203	183
(Loss)/profi t before tax		5,610	(5,849)	(239)	10,626	156	10,782
Income tax expense	11a	(1,488)	1,113	(375)	(2,741)	(119)	(2,860)
(Loss)/profi t for the fi nancial year		4,122	(4,736)	(614)	7,885	37	7,922
Attributable to:
Non-controlling interests		1,283	(404)	879	1,765	(12)	1,753
Equity shareholders of the Company		2,839	(4,332)	(1,493)	6,120	49	6,169
(Loss)/earnings per share (US\$)
Basic	13	2.26	(3.45)	(1.19)	5.06	0.04	5.10
Diluted	13	2.24	(3.43)	(1.19)	4.85	0.04	4.89

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2012

US\$ million	Note	2012	2011
(Loss)/profi t for the fi nancial year		(614)	7,922
Net gain on revaluation of available for sale investments		173	115
Net loss on cash fl ow hedges		–	(94)
Net exchange difference on translation of foreign operations (including associates)		(747)	(4,060)
Actuarial net gain/(loss) on post employment benefi t schemes		165	(214)
Share of associates' expense recognised directly in equity, net of tax		(6)	(32)
Tax on items recognised directly in equity	11c	(115)	24
Net expense recognised directly in equity		(530)	(4,261)
Transferred to income statement: disposal of available for sale investments		(57)	(10)
Transferred to income statement: impairment of available for sale investments		84	–
Transferred to income statement: cash fl ow hedges		4	5
Transferred to initial carrying amount of hedged items: cash fl ow hedges		5	54
Transferred to income statement: net exchange difference on disposal of foreign operations		24	45
Share of associate's net expense transferred from equity		(10)	–
Tax on items transferred from equity	11c	29	(14)
Total transferred from equity		79	80
Total comprehensive (expense)/income for the fi nancial year		(1,065)	3,741
Attributable to:
Non-controlling interests		842	1,142
Equity shareholders of the Company		(1,907)	2,599

CONSOLIDATED BALANCE SHEET

as at 31 December 2012

US\$ million	Note	2012	2011
ASSETS
Non-current assets
Intangible assets	14	4,571	2,322
Property, plant and equipment	15	45,089	40,549
Environmental rehabilitation trusts	16	393	360
Investments in associates	17	3,063	5,240
Financial asset investments	19	2,278	2,896
Trade and other receivables	21	572	437
Deferred tax assets	27	1,223	530
Derivative fi nancial assets	25	747	668
Other non-current assets		236	138
Total non-current assets		58,172	53,140

Current assets
Inventories	20	5,005	3,517
Financial asset investments	19	102	–
Trade and other receivables	21	3,275	3,674
Current tax assets		470	207
Derivative fi nancial assets	25	101	172
Cash and cash equivalents	31b	9,094	11,732
Total current assets		18,047	19,302
Assets classifi ed as held for sale	34	3,150	–
Total assets		79,369	72,442
LIABILITIES
Current liabilities
Trade and other payables	22	(4,536)	(5,098)
Short term borrowings	24, 31b	(2,604)	(1,018)
Provisions for liabilities and charges	26	(564)	(372)
Current tax liabilities		(819)	(1,528)
Derivative fi nancial liabilities	25	(280)	(162)
Total current liabilities		(8,803)	(8,178)
Non-current liabilities
Trade and other payables	22	(18)	–
Medium and long term borrowings	24, 31b	(15,150)	(11,855)
Retirement benefi t obligations	28	(1,409)	(639)
Deferred tax liabilities	27	(6,069)	(5,730)
Derivative fi nancial liabilities	25	(801)	(950)
Provisions for liabilities and charges	26	(2,384)	(1,830)
Other non-current liabilities		(29)	(71)
Total non-current liabilities		(25,860)	(21,075)
Liabilities directly associated with assets classifi ed as held for sale	34	(919)	–
Total liabilities		(35,582)	(29,253)
Net assets		43,787	43,189

EQUITY
Called-up share capital	29	772	738
Share premium account		4,357	2,714
Own shares		(6,659)	(6,985)
Other reserves		(1,201)	283
Retained earnings		40,388	42,342
Equity attributable to equity shareholders of the Company		37,657	39,092
Non-controlling interests		6,130	4,097
Total equity		43,787	43,189

The fi nancial statements of Anglo American plc, registered number 03564138, were approved by the Board of directors on 14 February 2013 and signed on its behalf by:

Cynthia Carroll René Médori

Chief Executive Finance Director

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 December 2012

US\$ million	Note	2012	2011
Cash fl ows from operations	31a	7,021	11,498
Dividends from associates		286	344
Dividends from fi nancial asset investments		54	59
Income tax paid		(1,799)	(2,539)
Net cash infl ows from operating activities		5,562	9,362
Cash fl ows from investing activities
Acquisition of subsidiaries, net of cash and cash equivalents acquired	32	(4,816)	–
Purchase of property, plant and equipment	2	(5,607)	(6,203)
Cash fl ows from derivatives related to capital expenditure	2	(71)	439
Investments in associates		(114)	(47)
Purchase of fi nancial asset investments		(16)	(16)
Net repayment of loans granted		81	22
Interest received and other investment income		279	350
Disposal of subsidiaries, net of cash and cash equivalents disposed	33	100	514
Sale of interests in joint ventures	33	–	19
Repayment of capitalised loans by associates		36	4
Proceeds from disposal of property, plant and equipment		66	77
Net proceeds from disposal of interests in available for sale investments		273	–
Other investing activities		(32)	(12)
Net cash used in investing activities		(9,821)	(4,853)

Cash fl ows from fi nancing activities
Interest paid		(775)	(807)
Cash fl ows from derivatives related to fi nancing activities		149	226
Dividends paid to Company shareholders		(970)	(818)
Dividends paid to non-controlling interests		(1,267)	(1,404)
Repayment of short term borrowings		(747)	(1,261)
Net receipt of medium and long term borrowings		5,633	964
Movements in non-controlling interests		1,220	4,964
Tax on sale of non-controlling interest in Anglo American Sur		(1,015)	–
Sale of shares under employee share schemes		24	20
Purchase of shares by subsidiaries for employee share schemes(1)		(253)	(367)
Other fi nancing activities		(49)	(43)
Net cash infl ows from fi nancing activities		1,950	1,474
Net (decrease)/increase in cash and cash equivalents		(2,309)	5,983
Cash and cash equivalents at start of year	31c	11,732	6,460
Cash movements in the year		(2,309)	5,983
Effects of changes in foreign exchange rates		(111)	(711)
Cash and cash equivalents at end of year	31c	9,312	11,732

(1) Includes purchase of Kumba Iron Ore Limited and Anglo American Platinum Limited shares for their respective employee share schemes.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2012

US\$ million	Total share capital(1)	Own shares(2)	Retained earnings	Share-based payment reserve	Cumulative translation adjustment reserve	Fair value and other reserves (note 30)	Total equity attributable to equity shareholders of the Company	Non controlling interests	Total equity
Balance at 1 January 2011	3,451	(7,159)	34,305	476	1,474	1,692	34,239	3,732	37,971
Total comprehensive income/
(expense)	–	–	5,928	–	(3,404)	75	2,599	1,142	3,741
Dividends payable to Company
shareholders	–	–	(834)	–	–	–	(834)	–	(834)
Dividends payable to
non-controlling interests	–	–	–	–	–	–	–	(1,401)	(1,401)
Changes in ownership interest
in subsidiaries	–	–	3,027	–	–	–	3,027	788	3,815
Issue of shares to
non-controlling interests	–	–	–	–	–	–	–	16	16
Equity settled share-based
payment schemes	–	174	(193)	(18)	–	–	(37)	(167)	(204)
IFRS 2 charges on black economic
empowerment transactions	–	–	102	–	–	–	102	29	131
Other	1	–	7	(5)	–	(7)	(4)	(42)	(46)
Balance at 1 January 2012	3,452	(6,985)	42,342	453	(1,930)	1,760	39,092	4,097	43,189
Total comprehensive (expense)/
income	–	–	(1,349)	–	(686)	128	(1,907)	842	(1,065)
Dividends payable to Company
shareholders	–	–	(970)	–	–	–	(970)	–	(970)
Dividends payable to
non-controlling interests	–	–	–	–	–	–	–	(1,259)	(1,259)
Conversion of convertible bond	1,677	–	185	–	–	(355)	1,507	–	1,507
Changes in ownership interest
in subsidiaries	–	–	(231)	–	–	–	(231)	982	751
Acquired through business
combinations	–	–	–	–	–	–	–	1,423	1,423
Issue of shares to
non-controlling interests	–	–	–	–	–	–	–	17	17
Equity settled share-based
payment schemes	–	326	(256)	96	–	–	166	28	194
Other	–	–	667	–	–	(667)	–	–	–
Balance at 31 December 2012	5,129	(6,659)	40,388	549	(2,616)	866	37,657	6,130	43,787

(1) Includes share capital and share premium.

(2) Own shares comprise shares of Anglo American plc held by the Company (treasury shares), its subsidiaries and employee benefi t trusts. Own shares have previously been aggregated with retained earnings. Comparatives have been reclassifi ed to align with current presentation.

Dividends

	Note	2012	2011
Proposed ordinary dividend per share (US cents)	12	53	46
Proposed ordinary dividend (US\$ million)	12	676	557
Ordinary dividends payable during the year per share (US cents)	12	78	68
Ordinary dividends payable during the year (US\$ million)	12	970	834

NOTES TO THE FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

Basis of preparation

The fi nancial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRIC) interpretations as adopted for use by the European Union, with those parts of the Companies Act 2006 applicable to companies reporting under IFRS and with the requirements of the Disclosure and Transparency rules of the Financial Services Authority in the United Kingdom as applicable to periodic fi nancial reporting. The fi nancial statements have been prepared under the historical cost convention as modifi ed by the revaluation of pension assets and liabilities and certain fi nancial instruments. A summary of the principal Group accounting policies is set out below.

The preparation of fi nancial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the fi nancial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

Going concern

The directors have, at the time of approving the fi nancial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus the going concern basis of accounting in preparing the fi nancial statements continues to be adopted. Further details are contained in the Directors' report on page 128.

Changes in accounting policies and disclosures

A number of amendments to accounting standards issued by the International Accounting Standards Board (IASB) were applicable from 1 January 2012. They have not had a material impact on the accounting policies, methods of computation or presentation applied by the Group.

Changes in estimates

Due to the nature of Platinum in-process inventories being contained in weirs, pipes and other vessels, physical counts only take place annually, except in the Precious Metal Refi nery which take place once every three years (the latest being in 2010). Consequently, the Platinum business runs a theoretical metal inventory system based on inputs, the results of previous physical counts and outputs. Once the results of the physical count are fi nalised, the variance between the theoretical count and actual count is investigated and recorded as a change in estimate.

During the year ended 31 December 2012, the change in estimate following the annual physical count has had the effect of increasing the value of inventory by \$172 million (2011: \$61 million), resulting in the recognition of a gain in the income statement.

Basis of consolidation

The fi nancial statements incorporate a consolidation of the fi nancial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the fi nancial and operating policies of an investee entity so as to obtain benefi ts from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the results of subsidiaries, joint ventures and associates to bring their accounting policies into line with those used by the Group. Intra-group transactions, balances, income and expenses are eliminated on consolidation, where appropriate.

For non-wholly owned subsidiaries, a share of the profi t or loss for the fi nancial year and net assets or liabilities is attributed to the non-controlling interests as shown in the income statement and balance sheet.

Associates

Associates are investments over which the Group is in a position to exercise signifi cant infl uence, but not control or joint control, through participation in the fi nancial and operating policy decisions of the investee. Typically the Group owns between 20% and 50% of the voting equity of its associates.

Investments in associates are accounted for using the equity method of accounting except when classifi ed as held for sale. The Group's share of associates' net income is based on their most recent audited fi nancial statements or unaudited interim statements drawn up to the Group's balance sheet date.

The total carrying values of investments in associates represent the cost of each investment including the carrying value of goodwill, the share of post acquisition retained earnings, any other movements in reserves and any long term debt interests which in substance form part of the Group's net investment. The carrying values of associates are reviewed on a regular basis and if an impairment in value has occurred, the carrying value is impaired in the period in which the relevant circumstances are identifi ed. The Group's share of an associate's losses in excess of its interest in that associate is not recognised unless the Group has an obligation to fund such losses.

Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way, but only to the extent that there is no evidence of impairment.

Jointly controlled entities

A jointly controlled entity is an entity in which the Group holds a long term interest and shares joint control over strategic, fi nancial and operating decisions with one or more other venturers under a contractual arrangement.

The Group's share of the assets, liabilities, income, expenditure and cash fl ows of such jointly controlled entities are accounted for using proportionate consolidation. Proportionate consolidation combines the Group's share of the results of the joint venture entity on a line by line basis with similar items in the Group's fi nancial statements.

Jointly controlled operations

The Group has contractual arrangements with other participants to engage in joint activities other than through a separate entity. The Group includes its assets, liabilities, expenditure and its share of revenue in such joint venture operations with similar items in the Group's fi nancial statements.

Revenue recognition

Revenue is derived principally from the sale of goods and is measured at the fair value of consideration received or receivable, after deducting discounts, volume rebates, value added tax and other sales taxes. Sales of concentrate are stated at their invoiced amount which is net of treatment and refi ning charges. A sale is recognised when the signifi cant risks and rewards of ownership have passed. This is usually when title and insurance risk have passed to the customer and the goods have been delivered to a contractually agreed location.

Revenue from metal mining activities is based on the payable metal sold.

Sales of certain commodities are provisionally priced such that the price is not settled until a predetermined future date based on the market price at that time. Revenue on these sales is initially recognised (when the above criteria are met) at the current market price. Provisionally priced sales are marked to market at each reporting date using the forward price for the period equivalent to that outlined in the contract. This mark to market adjustment is recognised in revenue.

Revenues from the sale of material by-products are included within revenue. Where a by-product is not regarded as signifi cant, revenue may be credited against the cost of sales.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

Dividend income from investments is recognised when the shareholders' rights to receive payment have been established.

Business combinations and goodwill arising thereon

The identifi able assets, liabilities and contingent liabilities of a subsidiary, a joint venture entity or an associate, which can be measured reliably, are recorded at their provisional fair values at the date of acquisition. Goodwill is the fair value of the consideration transferred (including contingent consideration and previously held non-controlling interests) less the fair value of the Group's share of identifi able net assets on acquisition.

Where a business combination is achieved in stages, the Group's previously held interests in the acquired entity are remeasured to fair value at the acquisition date and the resulting gain or loss is recognised in the income statement.

Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassifi ed to the income statement, where such treatment would be appropriate if that interest were disposed of.

Transaction costs incurred in connection with the business combination are expensed. Provisional fair values are fi nalised within 12 months of the acquisition date.

Goodwill in respect of subsidiaries and joint ventures is included within intangible assets. Goodwill relating to associates is included within the carrying value of the associate.

Where the fair value of the identifi able net assets acquired exceeds the cost of the acquisition, the surplus, which represents the discount on the acquisition, is recognised directly in the income statement in the period of acquisition.

For non-wholly owned subsidiaries, non-controlling interests are initially recorded at the non-controlling interest's proportion of the fair values of net assets recognised at acquisition.

Property, plant and equipment

Mining properties and leases include the cost of acquiring and developing mining properties and mineral rights.

Mining properties are depreciated to their residual values using the unit of production method based on proven and probable ore reserves and, in certain limited circumstances, other mineral resources. Mineral resources are included in depreciation calculations where there is a high degree of confi dence that they will be extracted in an economic manner. For diamond operations, depreciation calculations are based on mineral reserves and resources included in the Life of Mine Plan. Depreciation is charged on new mining ventures from the date that the mining property is capable of commercial production. When there is little likelihood of a mineral right being exploited, or the value of the exploitable mineral right has diminished below cost, an impairment loss is recognised in the income statement.

For open pit operations the removal of overburden or waste ore is required to obtain access to the orebody. To the extent that the actual waste material removed per tonne of ore mined (known as the stripping ratio) is higher than the average stripping ratio, costs associated with this process are deferred and charged to operating costs using the expected average stripping ratio over the life of the area being mined. This refl ects the fact that waste removal is necessary to gain access to the orebody and therefore realise future economic benefi t. The average stripping ratio is calculated as the number of tonnes of waste material expected to be removed during the Mine Life, per tonne of ore expected to be mined. The cost of stripping in any period will therefore be refl ective of the average stripping ratio for the orebody as a whole applied to the actual stripping costs incurred. However, where the pit profi le is such that the actual stripping ratio is cumulatively below the average, no deferral takes place as this would result in the recognition of a liability for which there is no obligation. Instead, this position is monitored and when the cumulative calculation refl ects a debit balance, deferral commences. The average Mine Life stripping ratio is recalculated annually in light of additional knowledge and changes in estimates. Changes in the Mine Life stripping ratio are accounted for prospectively as a change in estimate.

Properties in the course of construction are measured at cost less any recognised impairment. Depreciation commences when the assets are ready for their intended use. Buildings and plant and equipment are depreciated to their residual values at varying rates on a straight line basis over their estimated useful lives or the Mine Life, whichever is shorter. Estimated useful lives normally vary from up to 20 years for items of plant and equipment to a maximum of 50 years for buildings. Land is not depreciated.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components).

Depreciation methods, residual values and estimated useful lives are reviewed at least annually.

Assets held under fi nance leases are depreciated over the shorter of the lease term and the estimated useful lives of the assets.

Gains or losses on disposal of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount. The gain or loss is recognised in the income statement.

Non-mining licences and other intangibles

Non-mining licences and other intangibles are measured at cost less accumulated amortisation and accumulated impairment losses. Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if the asset is separable or arises from contractual or legal rights and the fair value can be measured reliably on initial recognition. Intangible assets are amortised over their estimated useful lives, usually between 3 and 20 years, except goodwill and those intangible assets that are considered to have indefi nite lives. For intangible assets with a fi nite life, the amortisation period is determined as the period over which the Group expects to obtain benefi ts from the asset, taking account of all relevant facts and circumstances including contractual lives and expectations about the renewal of contractual arrangements without signifi cant incremental costs. An intangible asset is deemed to have an indefi nite life when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate cash fl ows for the Group. Amortisation methods, residual values and estimated useful lives are reviewed at least annually.

Impairment of property, plant and equipment and intangible assets excluding goodwill

At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to determine whether there is any indication that those assets are impaired. If such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment. Where the asset does not generate cash fl ows that are independent from other assets, the Group estimates the recoverable amount of the cash generating unit (CGU) to which the asset belongs. An intangible asset with an indefi nite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value (less costs to sell) and value in use. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset for which estimates of future cash fl ows have not been adjusted.

If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the asset or CGU is reduced to its recoverable amount. An impairment loss is recognised in the income statement as a special item.

Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment been recognised for the asset or CGU. A reversal of an impairment loss is recognised in the income statement as a special item.

Impairment of goodwill

Goodwill arising on business combinations is allocated to the group of CGUs that is expected to benefi t from synergies of the combination, and represents the lowest level at which goodwill is monitored by the Group's board of directors for internal management purposes. The recoverable amount of the CGU or group of CGUs to which goodwill has been allocated, is tested for impairment annually, or when events or changes in circumstances indicate that it may be impaired.

Any impairment loss is recognised immediately in the income statement as a special item. Impairment of goodwill is not subsequently reversed.

Exploration, evaluation and development expenditure

Exploration and evaluation expenditure is expensed in the year in which it is incurred. When a decision is taken that a mining property is economically feasible, all subsequent evaluation expenditure is capitalised within property, plant and equipment including, where applicable, directly attributable pre-production development expenditure. Capitalisation of such expenditure ceases when the mining property is capable of commercial production.

Exploration properties acquired are recognised in the balance sheet at cost less any accumulated impairment losses. Such properties and capitalised evaluation and pre-production development expenditure prior to commercial production are assessed for impairment in accordance with the Group's accounting policy stated above.

Inventory

Inventory and work in progress are measured at the lower of cost and net realisable value. The production cost of inventory includes an appropriate proportion of depreciation and production overheads. Cost is determined on the following bases:

Raw materials and consumables are measured at cost on a fi rst in, fi rst out (FIFO) basis or a weighted average cost basis.
Finished products are measured at raw material cost, labour cost and a proportion of manufacturing overhead expenses.
Metal and coal stocks are included within fi nished products and are measured at average cost.

At precious metals operations that produce 'joint products', cost is allocated amongst products according to the ratio of contribution of these metals to gross sales revenues.

Retirement benefi ts

The Group operates both defi ned benefi t and defi ned contribution pension plans for its employees as well as post employment medical plans. For defi ned contribution plans the amount recognised in the income statement is the contributions paid or payable during the year.

For defi ned benefi t pension and post employment medical plans, full actuarial valuations are carried out every three years using the projected unit credit method and updates are performed for each fi nancial year end. The average discount rate for the plans' liabilities is based on AA rated corporate bonds of a suitable duration and currency or, where there is no deep market for such bonds, is based on government bonds. Pension plan assets are measured using year end market values.

Actuarial gains and losses, which can arise from differences between expected and actual outcomes or changes in actuarial assumptions, are recognised immediately in the statement of comprehensive income. Any increase in the present value of plan liabilities expected to arise from employee service during the year is charged to operating profi t. The expected return on plan assets and the expected increase during the year in the present value of plan liabilities are included in investment income and interest expense respectively.

Past service cost is recognised immediately to the extent that the benefi ts are already vested and otherwise is amortised on a straight line basis over the average period until the benefi ts vest.

The retirement benefi t obligation recognised in the balance sheet represents the present value of the defi ned benefi t obligation as adjusted for unrecognised past service costs and as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the plan.

Tax

The tax expense includes the current tax and deferred tax charge recognised in the income statement.

Current tax payable is based on taxable profi t for the year. Taxable profi t differs from net profi t as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for fi nancial reporting purposes and the amounts used for taxation purposes. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profi ts will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise from the initial recognition of goodwill or of an asset or liability in a transaction (other than in a business combination) that affects neither taxable profi t nor accounting profi t.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, joint ventures and associates except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that suffi cient taxable profi t will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also taken directly to equity.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis in that taxation authority.

Leases

In addition to lease contracts, other signifi cant contracts are assessed to determine whether, in substance, they are or contain a lease. This includes assessment of whether the arrangement is dependent on use of a specifi c asset and the right to use that asset is conveyed through the contract.

Rental costs under operating leases are recognised in the income statement in equal annual amounts over the lease term. Finance lease assets are recognised as assets of the Group on inception of the lease at the lower of fair value or the present value of the minimum lease payments discounted at the interest rate implicit in the lease.

Non-current assets and disposal groups held for sale

Non-current assets and disposal groups are classifi ed as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when a sale is highly probable within one year from the date of classifi cation, management is committed to the sale and the asset or disposal group is available for immediate sale in its present condition.

Non-current assets and disposal groups are classifi ed as held for sale from the date these conditions are met and are measured at the lower of carrying amount and fair value (less costs to sell). Any resulting impairment loss is recognised in the income statement as a special item. On classifi cation as held for sale the assets are no longer depreciated. Comparative amounts are not adjusted.

Environmental restoration and decommissioning obligations

An obligation to incur environmental restoration, rehabilitation and decommissioning costs arises when disturbance is caused by the development or ongoing production of a mining property. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalised at the start of each project, as soon as the obligation to incur such costs arises. These costs are recognised in the income statement over the life of the operation, through the depreciation of the asset and the unwinding of the discount on the provision. Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their net present values and recognised in the income statement as extraction progresses.

Changes in the measurement of a liability relating to the decommissioning of plant or other site preparation work (that result from changes in the estimated timing or amount of the cash fl ow or a change in the discount rate), are added to or deducted from the cost of the related asset in the current period. If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognised immediately in the income statement. If the asset value is increased and there is an indication that the revised carrying value is not recoverable, an impairment test is performed in accordance with the accounting policy set out above.

For some South African operations annual contributions are made to dedicated environmental rehabilitation trusts to fund the estimated cost of rehabilitation during and at the end of the life of the relevant mine. The Group exercises full control of these trusts and therefore the trusts are consolidated.

The trusts' assets are disclosed separately on the balance sheet as noncurrent assets. The trusts' assets are measured based on the nature of the underlying assets in accordance with accounting policies for similar assets.

Foreign currency transactions and translation

Foreign currency transactions by Group companies are recognised in the functional currencies of the companies at the exchange rate ruling on the date of the transaction. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Gains and losses arising on retranslation are included in the income statement for the period and are classifi ed as either operating or fi nancing depending on the nature of the monetary item giving rise to them.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

On consolidation, the assets and liabilities of the Group's foreign operations are translated into the presentation currency of the Group at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the period where these approximate the rates at the dates of the transactions. Any exchange differences arising are classifi ed within the statement of comprehensive income and transferred to the Group's cumulative translation adjustment reserve. Exchange differences on foreign currency balances with foreign operations for which settlement is neither planned nor likely to occur in the foreseeable future and therefore form part of the Group's net investment in these foreign operations are offset in the cumulative translation adjustment reserve.

Cumulative translation differences are recycled from equity and recognised as income or expense on disposal of the operation to which they relate.

Goodwill and fair value adjustments arising on the acquisition of foreign entities are treated as assets of the foreign entity and translated at the closing rate.

Presentation currency

As permitted by UK company law, the Group's results are presented in US dollars, the currency in which its business is primarily conducted.

Borrowing costs

Interest on borrowings directly relating to the fi nancing of qualifying capital projects under construction is added to the capitalised cost of those projects during the construction phase, until such time as the assets are substantially ready for their intended use or sale which, in the case of mining properties, is when they are capable of commercial production. Where funds have been borrowed specifi cally to fi nance a project, the amount capitalised represents the actual borrowing costs incurred. Where the funds used to fi nance a project form part of general borrowings, the amount capitalised is calculated using a weighted average of rates applicable to relevant general borrowings of the Group during the period. All other borrowing costs are recognised in the income statement in the period in which they are incurred.

Share-based payments

The Group has applied the requirements of IFRS 2 Share-based Payment. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that had not vested as at 1 January 2005.

The Group makes equity settled share-based payments to certain employees, which are measured at fair value at the date of grant and expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. For those share schemes with market related vesting conditions, the fair value is determined using the Monte Carlo method at the grant date. The fair value of share options issued with non-market vesting conditions has been calculated using the Black Scholes model. For all other share awards, the fair value is determined by reference to the market value of the shares at the grant date. For all share schemes with non-market vesting conditions, the likelihood of vesting has been taken into account when determining the relevant charge. Vesting assumptions are reviewed during each reporting period to ensure they refl ect current expectations.

Black economic empowerment (BEE) transactions

Where the Group disposes of a portion of a South African based subsidiary or operation to a BEE company at a discount to fair value, the transaction is considered to be a share-based payment (in line with the principle contained in South Africa interpretation AC 503 Accounting for Black Economic Empowerment (BEE) Transactions).

The discount provided or value given is calculated in accordance with IFRS 2 and included in the determination of the profi t or loss on disposal.

Employee benefi t trust

Shares held by the employee benefi t trust are recorded as own shares, and the carrying value is shown as a reduction within shareholders' equity.

Financial instruments Financial assets

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and on demand deposits, together with short term, highly liquid investments that are readily convertible to a known amount of cash and that are subject to an insignifi cant risk of changes in value. Bank overdrafts are shown within short term borrowings in current liabilities on the balance sheet. Cash and cash equivalents in the cash fl ow statement are shown net of overdrafts. Cash and cash equivalents are measured at amortised cost.

Trade receivables

Trade receivables do not incur any interest, are principally short term in nature and are measured at their nominal value (with the exception of receivables relating to provisionally priced sales, as set out in the revenue recognition accounting policy), net of appropriate allowance for estimated irrecoverable amounts. Such allowances are raised based on an assessment of debtor ageing, past experience or known customer circumstances.

Investments

Investments, other than investments in subsidiaries, joint ventures and associates, are fi nancial asset investments and are initially recognised at fair value. At subsequent reporting dates, fi nancial assets that the Group has the expressed intention and ability to hold to maturity (held to maturity) as well as loans and receivables are measured at amortised cost, less any impairment losses. The amortisation of any discount or premium on the acquisition of a held to maturity investment is recognised in the income statement in each period using the effective interest method.

Investments other than those classifi ed as held to maturity or loans and receivables are classifi ed as either at fair value through profi t or loss (which includes investments held for trading) or available for sale fi nancial assets. Both categories are subsequently measured at fair value. Where investments are held for trading purposes, unrealised gains and losses for the period are included in the income statement within other gains and losses. For available for sale investments, unrealised gains and losses are recognised in equity until the investment is disposed of or impaired, at which time the cumulative gain or loss previously recognised in equity is included in the income statement.

Current fi nancial asset investments consist mainly of bank term deposits and fi xed and fl oating rate debt securities. Debt securities that are intended to be held to maturity are measured at amortised cost, using the effective interest method. Debt securities that are not intended to be held to maturity are recorded at the lower of cost and market value.

Impairment of fi nancial assets (including receivables)

A fi nancial asset not measured at fair value through profi t or loss is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A fi nancial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset.

An impairment loss in respect of a fi nancial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated cash fl ows discounted at the asset's original effective interest rate. Losses are recognised in the income statement. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the income statement.

Impairment losses relating to available for sale investments are recognised when the decline in fair value is considered signifi cant or prolonged.

These impairment losses are recognised by transferring the cumulative loss that has been recognised in the statement of comprehensive income to the income statement. The loss recognised in the income statement is the difference between the acquisition cost and the current fair value.

Financial liabilities and equity instruments

Financial liabilities and equity instruments are classifi ed and accounted for as debt or equity according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Trade payables

Trade payables are not interest bearing and are measured at their nominal value with the exception of amounts relating to purchases of provisionally priced concentrate which are marked to market (using the appropriate forward price) until settled.

Convertible debt

Convertible bonds are classifi ed as compound instruments, consisting of a liability and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt and is recognised within borrowings and carried at amortised cost. The difference between the proceeds of issue of the convertible bond and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in equity.

Issue costs are apportioned between the liability and equity components of the convertible bonds where appropriate based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.

The interest expense on the liability component is calculated by applying the effective interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the liability.

Bank borrowings

Interest bearing bank loans and overdrafts are initially recognised at fair value, net of directly attributable transaction costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs are recognised in the income statement using the effective interest method. They are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Derivative fi nancial instruments and hedge accounting

In order to hedge its exposure to foreign exchange, interest rate and commodity price risk, the Group enters into forward, option and swap contracts. The Group does not use derivative fi nancial instruments for speculative purposes. Commodity based (normal purchase or normal sale) contracts that meet the scope exemption in IAS 39 Financial Instruments: Recognition and Measurement are recognised in earnings when they are settled by physical delivery.

All derivatives are held at fair value in the balance sheet within 'Derivative fi nancial assets' or 'Derivative fi nancial liabilities' except if they are linked to settlement and delivery of an unquoted equity instrument and the fair value cannot be measured reliably, in which case they are carried at cost. A derivative cannot be measured reliably where the range of reasonable fair value estimates is signifi cant and the probabilities of various estimates cannot be reasonably assessed.

Changes in the fair value of derivative fi nancial instruments that are designated and effective as hedges of future cash fl ows (cash fl ow hedges) are recognised directly in equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement. If the cash fl ow hedge of a fi rm commitment or forecast transaction results in the recognition of a non-fi nancial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability.

For hedges that do not result in the recognition of a non-fi nancial asset or liability, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects profi t or loss. For an effective hedge of an exposure to changes in fair value, the hedged item is adjusted for changes in fair value attributable to the risk being hedged.

The corresponding entry, along with gains or losses from remeasuring the associated derivative, are recognised in the income statement.

The gain or loss on hedging instruments relating to the effective portion of a net investment hedge is recognised in equity (part of the cumulative translation adjustment reserve). The ineffective portion is recognised immediately in the income statement. Gains or losses accumulated in the cumulative translation adjustment reserve are included in the income statement on disposal of the foreign operations to which they relate.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised, revoked, or no longer qualifi es for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained until the forecast transaction occurs. If a hedge transaction is no longer expected to occur, the net cumulative gain or loss previously recognised in equity is included in the income statement for the period.

Changes in the fair value of any derivative instruments that are not designated in a hedge relationship are recognised immediately in the income statement and are classifi ed within other gains and losses or net fi nance costs depending on the type of risk to which the derivative relates.

Derivatives embedded in other fi nancial instruments or non-fi nancial host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of their host contracts and the host contracts themselves are not carried at fair value with unrealised gains or losses reported in the income statement.

Derecognition of fi nancial assets and fi nancial liabilities

Financial assets are derecognised when the right to receive cash fl ows from the asset has expired, the right to receive cash fl ows has been retained but an obligation to on-pay them in full without material delay has been assumed or the right to receive cash fl ows has been transferred together with substantially all the risks and rewards of ownership.

Financial liabilities are derecognised when the associated obligation has been discharged, cancelled or has expired.

New IFRS accounting standards and interpretations not yet adopted

The following new or amended IFRS accounting standards and interpretations not yet adopted are expected to have a signifi cant impact on the Group:

IFRS 9 Financial Instruments – Classifi cation and Measurement refl ects the fi rst phase of the IASB's three stage project to replace IAS 39. The fi rst phase deals with the classifi cation and measurement of fi nancial assets and fi nancial liabilities. The standard applies to annual periods beginning on or after 1 January 2015.

IFRS 11 Joint Arrangements replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities – Non-monetary Contributions by Venturers. Under IFRS 11 a joint arrangement is classifi ed as either a joint operation or a joint venture, and the option to proportionately consolidate joint ventures has been removed. Interests in joint ventures must be equity accounted. This standard is effective for annual periods beginning on or after 1 January 2014 although early adoption is permitted.

IFRS 12 Disclosures of Interests in Other Entities will accompany IFRS 10 Consolidated Financial Statements and IFRS 11. This standard combines the disclosure requirements previously covered by IAS 27 Consolidated and Separate Financial Statements, related to consolidated fi nancial statements, IAS 31 and IAS 28 Investments in Associates, as well as including additional disclosure requirements. This standard is effective for annual periods beginning on or after 1 January 2014 although early adoption is permitted.

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine provides a model for accounting for costs associated with the removal of waste during the production phase of a surface mine, including guidance on the apportionment of the costs incurred for obtaining a current and future benefi t and how capitalised costs are depreciated. This interpretation applies to annual periods beginning on or after 1 January 2013.

As explained above, the Group currently defers costs associated with the removal of overburden or waste material such that the cost of stripping in any period is refl ective of the average stripping ratio for the orebody as a whole applied to the actual stripping costs incurred. Amounts deferred on this basis will only be carried forward under IFRIC 20 where they relate to existing components of the orebody.

Amounts deferred to date which do not relate to existing components of the orebody will be written off to reserves.

The following new or amended IFRS accounting standards not yet adopted are not expected to have a signifi cant impact on the Group:

IFRS 10 replaces the portion of IAS 27 that addresses accounting for consolidated fi nancial statements and SIC-12 Consolidation – Special Purpose Entities. IFRS 10 provides a single basis for consolidation with a new defi nition of control. The standard is effective for annual periods beginning on or after 1 January 2014 although early adoption is permitted.

IFRS 13 Fair Value Measurement provides a single framework for all fair value measurements and applies to annual periods beginning on or after 1 January 2013.

The amendment to IAS 1 Presentation of Financial Statements requires items to be grouped in other comprehensive income based on whether those items are subsequently reclassifi ed to profi t or loss. The amendment is to be applied for annual periods beginning on or after 1 July 2012.

The amendment to IAS 19 Employee Benefi ts is to be applied retrospectively for annual periods beginning on or after 1 January 2013.

Amendments have been made to IAS 27 Consolidated and Separate Financial Statements and it has been reissued as IAS 27 Separate Financial Statements. The revised standard prescribes the accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate fi nancial statements. The accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates in consolidated fi nancial statements are prescribed by IFRS 10, IFRS 11 and IFRS 12. The revised standard is to be applied for annual periods beginning on or after 1 January 2014 although early adoption is permitted.

Amendments have been made to IAS 28 Investments in Associates and it has been reissued as IAS 28 Investments in Associates and Joint Ventures. The revised standard prescribes the application of the equity method when accounting for investments in associates and joint ventures. The revised standard is to be applied for annual periods beginning on or after 1 January 2014 although early adoption is permitted.

Amendments to IFRS 1 Government loans and to IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities are effective for annual periods beginning on or after 1 January 2013.

The amendment to IAS 32 Financial Instruments – Presentation is effective for annual periods beginning on or after 1 January 2014.

Critical accounting judgements and key sources of estimation and uncertainty

In the course of preparing fi nancial statements, management necessarily makes judgements and estimates that can have a signifi cant impact on the fi nancial statements. The most critical of these relate to estimation of the ore reserves and useful economic lives of assets, impairment of assets, fair valuation of net assets on acquisition, restoration, rehabilitation and environmental costs, retirement benefi ts, fi nancial assets and liabilities at fair value through profi t and loss and contingent liabilities. These are detailed below. The use of inaccurate assumptions in calculations for any of these estimates could result in a signifi cant impact on fi nancial results.

Ore Reserve estimates and useful economic lives of assets

When determining Ore Reserves, which may be used to calculate depreciation on the Group's mining properties, assumptions that were valid at the time of estimation may change when new information becomes available. Any changes could affect prospective depreciation rates and asset carrying values.

The calculation of the unit of production rate of amortisation could be impacted to the extent that actual production in the future is different from current forecast production based on proven and probable mineral reserves. Factors which could impact useful economic lives of assets and Ore Reserve estimates include:

changes to Proved and Probable Reserves
the grade of Ore Reserves varying signifi cantly from time to time
differences between actual commodity prices and commodity price assumptions used in the estimation of mineral reserves
renewal of mining licences
unforeseen operational issues at mine sites

• adverse changes in capital, operating, mining, processing and reclamation costs, discount rates and foreign exchange rates used to determine mineral reserves

For property, plant and equipment depreciated on a straight line basis over its useful economic life, management reviews the appropriateness of useful economic life at least annually and any changes could affect prospective depreciation rates and asset carrying values.

Impairment of assets

In making assessments for impairment, management necessarily applies its judgement in allocating assets that do not generate independent cash fl ows to appropriate CGUs, and also in estimating the timing and value of underlying cash fl ows within the calculation of recoverable amount. Factors which could impact underlying cash fl ows include:

commodity prices and exchange rates
timelines of granting of licences and permits
capital and operating expenditure
available reserves and resources and future production profi le

Subsequent changes to the CGU allocation or to the timing of or assumptions used to determine cash fl ows could impact the carrying value of the respective assets, see note 14.

Fair valuation of net assets on acquisition

The Group applies the acquisition method of accounting for acquisitions. This requires all identifi able assets, liabilities and contingent liabilities of a subsidiary, joint venture entity or an associate acquired on the date control is obtained, which can be measured reliably, to be recognised at their provisional fair values at the date of acquisition.

The fair value of identifi able assets and liabilities is determined using discounted cash fl ows or other valuation techniques using assumptions considered to be reasonable and consistent with those that would be applied by a market participant. The assessment of assumptions used in determining the fair value of identifi able assets and liabilities is inherently subjective and the use of inaccurate valuation assumptions could result in a signifi cant impact on fi nancial results.

Restoration, rehabilitation and environmental costs

Costs for restoration of site damage, rehabilitation and environmental costs are estimated using either the work of external consultants or internal experts. Management uses its judgement and experience to provide for and amortise these estimated costs over the life of the mine.

Retirement benefi ts

The expected costs of providing pensions and post employment benefi ts under defi ned benefi t arrangements relating to employee service during the period are determined based on fi nancial and actuarial assumptions.

Assumptions in respect of the expected costs are set after consultation with qualifi ed actuaries. While management believes the assumptions used are appropriate, a change in the assumptions used would impact the Group's other comprehensive income going forward.

Financial assets and liabilities at fair value through profi t and loss

The fair value of the Group's fi nancial assets and liabilities held at fair value though profi t and loss represents the market value of quoted investments and other traded instruments where available. For fi nancial assets and liabilities held at fair value through profi t and loss for which market prices are not readily available, fair value is determined using discounted cash fl ows or other valuation techniques using assumptions considered to be reasonable and consistent with those that would be used by a market participant. The assessment of assumptions used in applying valuation techniques is inherently subjective and the use of inaccurate assumptions could result in a signifi cant impact on fi nancial results.

Contingent liabilities

On an ongoing basis the Group is a party to various legal disputes, the outcomes of which cannot be assessed with a high degree of certainty. A liability is recognised where, based on the Group's legal views and advice, it is considered probable that an outfl ow of resources will be required to settle a present obligation that can be measured reliably. Disclosure of other contingent liabilities is made in note 35 unless the possibility of a loss arising is considered remote.

2. SEGMENTAL INFORMATION

The Group's segments are aligned to the structure of business units based around core commodities. Each business unit has a management team that is accountable to the Chief Executive. The Kumba Iron Ore, Iron Ore Brazil and Samancor business units have been aggregated as the Iron Ore and Manganese segment on the basis of the ultimate product produced (ferrous metals).

Phosphates and Niobium (previously Copebrás and Catalão) are reported in the Other Mining and Industrial segment. Following a strategic review during the fi rst half of the year, Amapá was transferred to the Other Mining and Industrial business unit, and accordingly is presented as part of the Other Mining and Industrial segment. It was previously reported as part of the Iron Ore and Manganese segment. Comparatives have been reclassifi ed to align with current year presentation. Tarmac is not considered to be individually signifi cant to the Group and is therefore also presented in the Other Mining and Industrial segment. Until November 2012 this reporting segment also included Scaw South Africa.

On 16 August 2012 the Group acquired a controlling interest in De Beers (Diamonds segment). Until this date De Beers was accounted for as an associate of the Group. From 16 August 2012 De Beers ceased to be an associate and has been accounted for as a subsidiary of the Group. For details of this acquisition, see note 32.

The Group's Executive Committee evaluates the fi nancial performance of the Group and its segments principally with reference to underlying operating profi t. Underlying operating profi t is presented before special items and remeasurements and includes the Group's attributable share of associates' operating profi t before special items and remeasurements.

Segment revenue includes the Group's attributable share of associates' revenue. Segments predominantly derive revenue as follows – Iron Ore and Manganese: iron ore, manganese ore and alloys; Metallurgical Coal: metallurgical coal; Thermal Coal: thermal coal; Copper and Nickel: base metals; Platinum: platinum group metals; Diamonds: rough and polished diamonds and diamond jewellery; and Other Mining and Industrial: phosphates, niobium, heavy building materials, iron ore, and, until November 2012, steel products.

The Exploration segment includes the cost of the Group's exploration activities across all segments.

The segment results are stated after elimination of inter-segment transactions and include an allocation of corporate costs.

Analysis by segment

Revenue and operating (loss)/profi t by segment

				Underlying operating
		Revenue(1)		(loss)/profi t(2)
US\$ million	2012	2011	2012	2011
Iron Ore and Manganese	6,403	7,643	2,949	4,400
Metallurgical Coal	3,889	4,347	405	1,189
Thermal Coal	3,447	3,722	793	1,230
Copper	5,122	5,144	1,687	2,461
Nickel	336	488	26	57
Platinum	5,489	7,359	(120)	890
Diamonds	4,028	3,320	496	659
Other Mining and Industrial	4,066	4,520	337	315
Exploration	–	–	(206)	(121)
Corporate Activities and Unallocated Costs	5	5	(203)	15
Segment measure	32,785	36,548	6,164	11,095
Reconciliation:
Less: associates	(4,024)	(5,968)	(759)	(1,427)
Operating special items and remeasurements	–	–	(7,093)	(229)
Statutory measure	28,761	30,580	(1,688)	9,439

(1) Segment revenue includes the Group's attributable share of associates' revenue. This is reconciled to Group revenue from subsidiaries and joint ventures as presented in the Consolidated income statement.

(2) Segment underlying operating (loss)/profi t is revenue less operating costs before special items and remeasurements, and includes the Group's attributable share of associates' operating profi t before special items and remeasurements. This is reconciled to operating (loss)/profi t from subsidiaries and joint ventures after special items and remeasurements as presented in the Consolidated income statement.

Associates' revenue and underlying operating profi t

		Associates' revenue		Associates' underlying operating profi t/(loss)(1)
US\$ million	2012	2011	2012	2011
Iron Ore and Manganese	831	926	104	165
Metallurgical Coal	315	372	111	207
Thermal Coal	970	1,080	355	482
Platinum	231	269	(63)	(86)
Diamonds	1,675	3,320	252	659
Other Mining and Industrial	2	1	–	–
	4,024	5,968	759	1,427
Reconciliation:
Associates' net fi nance costs			(58)	(48)
Associates' income tax expense			(202)	(385)
Associates' non-controlling interests			(6)	(16)
Share of net income from associates (before special items and remeasurements)			493	978
Associates' special items and remeasurements			(57)	(5)
Associates' special items and remeasurements tax			(3)	1
Associates' non-controlling interests on special items and remeasurements			(1)	3
Share of net income from associates			432	977

(1) Associates' underlying operating profi t/(loss) is the Group's attributable share of associates' revenue less operating costs before special items and remeasurements.

2. SEGMENTAL INFORMATION continued

Non-cash items

Signifi cant non-cash items included within underlying operating profi t are as follows:

		Depreciation and amortisation(1)		Other non-cash expenses(2)
US\$ million	2012	2011	2012	2011
Iron Ore and Manganese	199	153	31	95
Metallurgical Coal	458	375	140	104
Thermal Coal	125	128	30	30
Copper	492	289	98	124
Nickel	24	27	25	10
Platinum	658	729	81	76
Diamonds	142	–	52	–
Other Mining and Industrial	148	225	(59)	83
Exploration	–	–	3	3
Corporate Activities and Unallocated Costs	43	41	70	54
	2,289 (3)	1,967 (3)	471	579

(1) In addition the Group's attributable share of associates' depreciation and amortisation is \$233 million (2011: \$286 million). This is split by segment as follows: Iron Ore and Manganese \$50 million (2011: \$33 million), Metallurgical Coal \$14 million (2011: \$13 million), Thermal Coal \$54 million (2011: \$52 million), Platinum \$42 million (2011: \$53 million) and Diamonds \$73 million (2011: \$135 million).

(2) Other non-cash expenses include equity settled share-based payment charges and amounts included in operating costs in respect of provisions, excluding amounts recorded within special items. (3) In addition \$70 million (2011: \$84 million) of accelerated depreciation and \$41 million (2011: nil) of depreciation and amortisation charges arising due to the fair value uplift of the pre-existing 45% shareholding of De Beers have been recorded within operating special items and remeasurements (see note 5), and \$81 million (2011: \$39 million) of pre-commercial production depreciation has been capitalised.

Capital expenditure and net debt

		Capital expenditure(1)		Net debt(2)
US\$ million	2012	2011	2012	2011
Iron Ore and Manganese	2,077	1,659	1,112	1,277
Metallurgical Coal	1,028	695	(510)	(211)
Thermal Coal	266	190	32	81
Copper	996	1,570	(775)	(781)
Nickel	100	398	477	603
Platinum	822	970	98	20
Diamonds	94	–	839	–
Other Mining and Industrial	260	225	(45)	272
Exploration	6	1	(8)	(6)
Corporate Activities and Unallocated Costs	29	56	7,608	119
	5,678	5,764	8,828	1,374
Net (cash) in disposal groups(3)			(213)	–
			8,615	1,374
Reconciliation:
Remove: cash fl ows from derivatives relating to capital expenditure	(71)	439
Purchase of property, plant and equipment	5,607	6,203
Interest capitalised	280	321
Non-cash movements(4)	120	27
Property, plant and equipment additions in disposal groups	(50)	(2)
Property, plant and equipment additions(5)	5,957	6,549

(1) Capital expenditure is segmented on a cash basis and is reconciled to balance sheet additions. Cash capital expenditure includes cash fl ows on related derivatives.

(2) Segment net debt includes related hedges and excludes net debt in disposal groups. For a reconciliation of net debt to the balance sheet, see note 31b.

(3) Previously reported within the Other Mining and Industrial segment, see note 34.

(4) Includes movements on capital expenditure accruals, movements relating to deferred stripping and the impact of realised cash fl ow hedges.

(5) Property, plant and equipment additions are split by segment as follows: Iron Ore and Manganese \$2,143 million (2011: \$2,052 million), Metallurgical Coal \$980 million (2011: \$681 million), Thermal Coal \$277 million (2011: \$231 million), Copper \$1,069 million (2011: \$1,877 million), Nickel \$207 million (2011: \$405 million), Platinum \$865 million (2011: \$1,014 million), Diamonds \$172 million (2011: nil), Other Mining and Industrial \$207 million (2011: \$232 million), Exploration \$6 million (2011: \$1 million) and Corporate Activities and Unallocated Costs \$31 million (2011: \$56 million).

2. SEGMENTAL INFORMATION continued

Segment assets and liabilities

The following balance sheet segment measures are provided for information:

	Segment assets(1)					Segment liabilities(2) Net segment assets/(liabilities)
US\$ million	2012	2011	2012	2011	2012	2011
Iron Ore and Manganese	9,837	12,909	(481)	(482)	9,356	12,427
Metallurgical Coal	6,078	5,660	(859)	(968)	5,219	4,692
Thermal Coal	2,726	2,650	(761)	(764)	1,965	1,886
Copper	9,662	8,767	(1,126)	(1,124)	8,536	7,643
Nickel	2,613	2,655	(104)	(120)	2,509	2,535
Platinum	11,490	12,288	(1,071)	(1,097)	10,419	11,191
Diamonds	14,412	–	(1,468)	–	12,944	–
Other Mining and Industrial	960	4,660	(174)	(817)	786	3,843
Exploration	8	2	(4)	(3)	4	(1)
Corporate Activities and Unallocated Costs	424	375	(709)	(584)	(285)	(209)
	58,210	49,966	(6,757)	(5,959)	51,453	44,007
Other assets and liabilities
Investments in associates(3)	3,063	5,240	–	–	3,063	5,240
Financial asset investments	2,380	2,896	–	–	2,380	2,896
Deferred tax assets/(liabilities)	1,223	530	(6,069)	(5,730)	(4,846)	(5,200)
Derivative fi nancial assets/(liabilities)	848	840	(1,081)	(1,112)	(233)	(272)
Cash and cash equivalents	9,094	11,732	–	–	9,094	11,732
Other non-operating assets/(liabilities)	1,401	1,238	(1,660)	(2,715)	(259)	(1,477)
Borrowings	–	–	(17,754)	(12,873)	(17,754)	(12,873)
Other provisions for liabilities and charges	–	–	(1,342)	(864)	(1,342)	(864)
Assets/(liabilities) classifi ed as held for sale(4)	3,150	–	(919)	–	2,231	–
Net assets	79,369	72,442	(35,582)	(29,253)	43,787	43,189

(1) Segment assets are operating assets and consist of intangible assets of \$4,571 million (2011: \$2,322 million), property, plant and equipment of \$45,089 million (2011: \$40,549 million), environmental rehabilitation trusts of \$393 million (2011: \$360 million), biological assets of \$19 million (2011: \$17 million), retirement benefi t assets of \$176 million (2011: \$70 million), inventories of \$5,005 million (2011: \$3,517 million) and operating receivables of \$2,957 million (2011: \$3,131 million).

(2) Segment liabilities are operating liabilities and consist of non-interest bearing current liabilities of \$3,742 million (2011: \$3,982 million), environmental restoration and decommissioning provisions of \$1,606 million (2011: \$1,338 million) and retirement benefi t obligations of \$1,409 million (2011: \$639 million).

(3) See note 17 for a split of investments in associates by segment.

(4) Previously reported in the Other Mining and Industrial segment, see note 34.

Revenue by product

The Group's analysis of segment revenue by product is as follows:

US\$ million	2012	2011
Iron ore	5,508	6,830
Manganese ore and alloys	831	926
Metallurgical coal	3,048	3,444
Thermal coal	4,287	4,621
Copper	5,038	5,023
Nickel	678	948
Platinum	3,441	4,578
Palladium	906	1,076
Rhodium	389	703
Diamonds	4,027	3,320
Phosphates	597	571
Heavy building materials	2,171	2,347
Steel products	798	931
Other	1,066	1,230
	32,785	36,548

2. SEGMENTAL INFORMATION continued

Geographical analysis

Revenue by destination and non-current segment assets by location

The Group's geographical analysis of segment revenue allocated based on the country in which the customer is located, and non-current segment assets, allocated based on the country in which the assets are located, is as follows:

		Revenue		Non-current segment assets(1)
US\$ million	2012	2011	2012	2011
South Africa	3,115	3,589	16,452	15,215
Other Africa	715	618	8,029	357
Brazil	1,093	1,177	8,700	12,622
Chile	1,241	2,030	7,470	7,001
Other South America	46	50	623	655
North America	1,274	1,861	2,205	685
Australia	340	312	4,673	4,170
China	5,927	6,446	–	–
India	2,544	2,343	–	–
Japan	4,049	4,925	–	–
Other Asia	3,595	3,487	31	47
United Kingdom (Anglo American plc's country of domicile)	3,781	3,962	1,325	2,117
Other Europe	5,065	5,748	152	2
	32,785	36,548	49,660	42,871

(1) Non-current segment assets are non-current operating assets and consist of intangible assets and property, plant and equipment.

Revenue and underlying operating profi t by origin

Segment revenue and underlying operating profi t by origin are provided for information:

		Underlying operating
		Revenue		profi t/(loss)
US\$ million	2012	2011	2012	2011
South Africa	14,592	17,855	3,335	6,059
Other Africa	3,256	2,763	437	501
Brazil	1,274	1,404	200	152
Chile	5,122	5,170	1,863	2,581
Other South America	1,131	1,364	304	512
North America	559	615	(138)	256
Australia and Asia	4,616	5,058	465	1,318
Europe	2,235	2,319	(302)	(284)
	32,785	36,548	6,164	11,095

Segment assets and liabilities by location

The Group's geographical analysis of segment assets and liabilities, allocated based on where assets and liabilities are located, are provided for information:

		Segment assets(1)	Segment liabilities		Net segment assets
US\$ million	2012	2011	2012	2011	2012	2011
South Africa	20,155	18,364	(2,922)	(2,620)	17,233	15,744
Other Africa	8,313	385	(202)	(20)	8,111	365
Brazil	9,124	13,188	(244)	(303)	8,880	12,885
Chile	8,695	7,950	(1,094)	(1,101)	7,601	6,849
Other South America	717	808	(55)	(48)	662	760
North America	2,500	782	(298)	(107)	2,202	675
Australia and Asia	5,900	5,450	(838)	(953)	5,062	4,497
Europe	2,806	3,039	(1,104)	(807)	1,702	2,232
	58,210	49,966	(6,757)	(5,959)	51,453	44,007

(1) Investments in associates of \$3,063 million (2011: \$5,240 million) are not included in segment assets. The geographical distribution of these investments, based on the location of the underlying assets, is disclosed in note 17.

3. OPERATING (LOSS)/PROFIT FROM SUBSIDIARIES AND JOINT VENTURES

US\$ million	2012	2011
Group revenue	28,761	30,580
Cost of sales(1)	(25,993)	(17,343)
Gross profi t	2,768	13,237
Selling and distribution costs	(2,031)	(1,788)
Administrative expenses	(2,127)	(2,034)
Other gains and losses (see below)	(92)	145
Exploration expenditure (see note 7)	(206)	(121)
Operating (loss)/profi t from subsidiaries and joint ventures	(1,688)	9,439

(1) Includes operating special item charges of \$6,977 million (2011: \$164 million), see note 5. Operating remeasurements are included in 'Other gains and losses', see below.

US\$ million	2012	2011
Operating (loss)/profi t is stated after charging/(crediting):
Depreciation of property, plant and equipment (see note 15)(1)	2,258	1,947
Amortisation of intangible assets (see note 14)(2)	31	20
Rentals under operating leases	182	128
Project evaluation expenditure	525	418
Research and development expenditure	80	38
Operating special items (see note 5)	6,977	164
Employee costs (see note 8)	5,033	4,707
Adjustment due to provisional pricing(3)	(14)	286
Royalties(4)	554	742
Other gains and losses comprise:
Operating remeasurements (see note 5)	(116)	(65)
Other fair value gains/(losses) on derivatives – realised	9	(57)
Foreign exchange gains on other monetary items	12	256
Fair value gains on biological assets	3	11
Total other gains and losses	(92)	145

(1) In addition \$70 million (2011: \$84 million) of accelerated depreciation and \$35 million (2011: nil) of depreciation arising due to the fair value uplift of the Group's pre-existing 45% shareholding in De Beers have been recorded within operating special items and remeasurements (see note 5) and \$81 million (2011: \$39 million) of pre-commercial production depreciation has been capitalised.

(2) In addition \$6 million of amortisation arising due to the fair value uplift of the Group's pre-existing 45% shareholding in De Beers has been included within operating remeasurements. (3) Provisionally priced contracts resulted in a total (realised and unrealised) gain in revenue of \$37 million (2011: loss of \$283 million) and total (realised and unrealised) loss in operating costs of \$23 million (2011: \$3 million).

(4) Excludes those royalties which meet the defi nition of income tax on profi t and accordingly have been accounted for as taxes.

Auditor remuneration

				2012				2011
		Paid/payable to Deloitte		Paid/payable to auditor (if not Deloitte)		Paid/payable to Deloitte		Paid/payable to auditor (if not Deloitte)
US\$ million	United Kingdom	Overseas	Total	Overseas	United Kingdom	Overseas	Total	Overseas
Paid to the Company's auditor for audit
of the Anglo American plc Annual Report	2.2	4.8	7.0	0.1	1.7	4.3	6.0	0.1
Paid to the Company's auditor for other services to the Group
Audit of the Company's subsidiaries	1.1	4.8	5.9	1.1	0.7	3.2	3.9	0.6
Total audit fees	3.3	9.6	12.9	1.2	2.4	7.5	9.9	0.7
Audit related assurance services(1)	0.8	1.0	1.8	–	0.5	0.8	1.3	0.1
Taxation compliance services	–	0.2	0.2	0.3	–	0.1	0.1	0.1
Taxation advisory services	0.2	0.2	0.4	0.1	0.4	0.3	0.7	0.2
Other assurance services(2)	0.4	1.3	1.7	0.6	0.2	1.4	1.6	0.5
Total non-audit fees	1.4	2.7	4.1	1.0	1.1	2.6	3.7	0.9

(1) Includes \$1.3 million (2011: \$1.3 million) for the interim review.

(2) Includes \$0.1 million (2011: \$0.1 million) for the audit of Group pension plans.

4. OPERATING PROFIT AND UNDERLYING EARNINGS BY SEGMENT

The following table analyses operating profi t (including attributable share of associates' operating profi t) by segment and reconciles it to underlying earnings by segment. In 2012 Amapá has been reclassifi ed from the Iron Ore and Manganese segment to the Other Mining and Industrial segment to align with internal management reporting. Comparatives have been reclassifi ed to align with current presentation.

Underlying earnings is an alternative earnings measure, which the directors consider to be a useful additional measure of the Group's performance. Underlying earnings is profi t for the fi nancial year attributable to equity shareholders of the Company before special items and remeasurements and is therefore presented after net fi nance costs, income tax expense and non-controlling interests. For a reconciliation from '(Loss)/profi t for the fi nancial year attributable to equity shareholders of the Company' to 'Underlying earnings for the fi nancial year', see note 13.

					2012					2011
US\$ million	Operating profi t/(loss) before special items and remeasure ments(1)	Operating special items and remeasure ments (note 5)	Operating profi t/(loss) after special items and remeasure ments	Net fi nance costs, income tax expense and non controlling interests	Underlying earnings	Operating profi t/(loss) before special items and remeasure ments(1)	Operating special items and remeasure ments (note 5)	Operating profi t/(loss) after special items and remeasure ments	Net fi nance costs, income tax expense and non controlling interests	Underlying earnings
Iron Ore and
Manganese	2,949	5,139	(2,190)	(1,912)	1,037	4,400	79	4,321	(2,943)	1,457
Metallurgical Coal	405	365	40	(130)	275	1,189	–	1,189	(345)	844
Thermal Coal	793	(1)	794	(270)	523	1,230	(1)	1,231	(328)	902
Copper	1,687	(9)	1,696	(779)	908	2,461	1	2,460	(851)	1,610
Nickel	26	184	(158)	(15)	11	57	72	(15)	(34)	23
Platinum	(120)	921	(1,041)	(105)	(225)	890	6	884	(480)	410
Diamonds	496	456	40	(184)	312	659	18	641	(216)	443
Other Mining and
Industrial	337	28	309	(108)	229	315	70	245	(140)	175
Exploration	(206)	–	(206)	11	(195)	(121)	–	(121)	3	(118)
Corporate Activities
and Unallocated Costs	(203)	68	(271)	167	(36)	15	2	13	359	374
Total	6,164	7,151	(987)	(3,325)	2,839	11,095	247	10,848	(4,975)	6,120
Analysed as:
Core operations	5,996	7,127	(1,131)	(3,278)	2,718	10,964	177	10,787	(4,910)	6,054
Non-core
operations(2)	168	24	144	(47)	121	131	70	61	(65)	66

(1) Operating profi t/(loss) before special items and remeasurements includes attributable share of associates' operating profi t before special items and remeasurements which is reconciled to 'Share of net income from associates' in note 2.

(2) Non-core operations relate to Amapá, Tarmac and, until November 2012, Scaw South Africa.

Underlying earnings by origin

US\$ million	2012	2011
South Africa	1,449	2,726
Other Africa	357	326
South America	1,359	2,080
North America	(198)	218
Australia and Asia	336	967
Europe	(464)	(197)
	2,839	6,120

5. SPECIAL ITEMS AND REMEASUREMENTS

Special items are those items of fi nancial performance that the Group believes should be separately disclosed on the face of the income statement to assist in the understanding of the underlying fi nancial performance achieved by the Group. Such items are material by nature or amount to the year's results and require separate disclosure in accordance with IAS 1 paragraph 97. Special items that relate to the operating performance of the Group are classifi ed as operating special items and principally include impairment charges. Non-operating special items include profi ts and losses on disposals of investments and businesses as well as certain adjustments relating to business combinations.

Remeasurements comprise other items which the Group believes should be reported separately to aid an understanding of the underlying fi nancial performance of the Group. This category includes:

Unrealised gains and losses on 'non-hedge' derivative instruments open at the year end (in respect of future transactions) and the reversal of the historical marked to market value of such instruments settled in the year. Where the underlying transaction is recorded in the income statement, the realised gains or losses are recorded in underlying earnings in the same year as the underlying transaction for which such instruments provide an economic, but not formally designated, hedge. If the underlying transaction is recorded in the balance sheet, for example, capital expenditure, the realised amount remains in remeasurements on settlement of the derivative. Such amounts are classifi ed in the income statement as operating when the underlying exposure is in respect of the operating performance of the Group and otherwise as fi nancing.
Foreign exchange impacts arising in US dollar functional currency entities where tax calculations are generated based on local currency fi nancial information and hence deferred tax is susceptible to currency fl uctuations. Such amounts are included within income tax expense.
The remeasurement and subsequent depreciation of a previously held equity interest as a result of a business combination.

5. SPECIAL ITEMS AND REMEASUREMENTS continued

			2012			2011
	Subsidiaries			Subsidiaries
	and joint			and joint
US\$ million	ventures	Associates(1)	Total	ventures	Associates(1)	Total
Impairment of Minas-Rio	(4,960)	–	(4,960)	–	–	–
Platinum operations	(860)	–	(860)	–	–	–
Cessation of Loma de Níquel	(159)	–	(159)	(84)	–	(84)
Other impairments and related charges	(168)	(62)	(230)	(70)	–	(70)
Onerous contract provisions	(386)	–	(386)	–	–	–
Reversal of De Beers inventory uplift	(421)	–	(421)	–	–	–
Restructuring costs	(23)	–	(23)	(10)	(9)	(19)
Operating special items	(6,977)	(62)	(7,039)	(164)	(9)	(173)
Operating remeasurements	(116)	4	(112)	(65)	(9)	(74)
Operating special items and remeasurements	(7,093)	(58)	(7,151)	(229)	(18)	(247)
Loss on transfer of Tarmac Quarry Materials to assets held for sale	(135)	–	(135)	–	–	–
Loss on transfer of Amapá to assets held for sale	(404)	–	(404)	–	–	–
Disposal of Scaw South Africa	(21)	–	(21)	–	–	–
Disposal of Mondi	27	–	27	–	–	–
Disposal of Lisheen and Black Mountain	–	–	–	397	–	397
Disposal of Tarmac businesses	–	–	–	(75)	–	(75)
Kumba Envision Trust	(77)	–	(77)	–	–	–
Platinum BEE transactions and related charges	–	–	–	(141)	–	(141)
Other	16	–	16	2	20	22
Non-operating special items	(594)	–	(594)	183	20	203
Non-operating remeasurement – net gain on acquisition of De Beers	1,988	–	1,988	–	–	–
Non-operating special items and remeasurements	1,394	–	1,394	183	20	203
Financing special items	–	–	–	–	(9)	(9)
Financing remeasurements	(89)	1	(88)	203	2	205
Total special items and remeasurements before tax and
non-controlling interests	(5,788)	(57)	(5,845)	157	(5)	152
Special items and remeasurements tax	1,113	(3)	1,110	(119)	1	(118)
Non-controlling interests on special items and remeasurements	404	(1)	403	12	3	15
Net total special items and remeasurements attributable to equity
shareholders of the Company	(4,271)	(61)	(4,332)	50	(1)	49

(1) Relates to the Iron Ore and Manganese, Platinum and, until 16 August, Diamonds segment in 2012 (2011: Diamonds only).

Operating special items

Minas-Rio

Platinum operations

Cessation of Loma de Níquel

A charge of \$159 million has arisen at Loma de Níquel due to the cancellation of its mining concessions in November 2012. The charge comprises \$70 million of accelerated depreciation (2011: \$84 million) and \$89 million of related closure and retrenchment costs, including inventory write-offs of \$61 million.

Other impairments and related charges

Other impairments and related charges of \$230 million (2011: \$70 million) relate to various impairments across the Group, including an impairment of \$42 million of fi xed assets relating to onerous contracts at Callide (Metallurgical Coal); an impairment of \$44 million relating to Wesizwe, an available for sale asset held in Platinum where the fair value has had a signifi cant and prolonged decline; and \$50 million of asset impairments recognised in Samancor, an associate investment. In 2011 the \$70 million charge related to the impairment of Tarmac Building Products.

Onerous contract provisions

The charge of \$386 million in relation to onerous contracts principally refl ects a provision increase of \$292 million for coal supply agreements inherited on acquisition of Callide in 2000. The pricing in the agreements, which extend to 2031, is signifi cantly below market rates resulting in the unavoidable costs of meeting the obligations exceeding the economic benefi t expected to be received from the contract.

The settlement of an unused inherited transhipment contract at Amapá resulted in a charge of \$43 million and the settlement of unutilised energy contracts at Minas-Rio resulted in a charge of \$38 million.

Reversal of De Beers inventory uplift

Inventory held by De Beers at the date of acquisition is required to be recognised at fair value under IFRS. This results in negligible margins being realised upon the subsequent sale of inventory held at the acquisition date. The reversal of fair value uplifts on inventory sold in 2012 of \$421 million has been excluded from the Group's underlying earnings so as not to distort the operating margins of De Beers and to provide more useful information about the performance of the Group.

Operating remeasurements

Operating remeasurements refl ect a net loss of \$112 million (2011: net loss of \$74 million) principally in respect of non-hedge derivatives related to capital expenditure in Iron Ore Brazil. Derivatives which have been realised during the period had a cumulative net loss since their inception of \$71 million (2011: net gain of \$383 million). The depreciation and amortisation charge arising due to the fair value uplift on the pre-existing 45% shareholding of De Beers, which was required on acquisition of a controlling stake, is \$41 million in 2012.

5. SPECIAL ITEMS AND REMEASUREMENTS continued

Non-operating special items

In May 2012 the Competition Commission approved the formation of a 50:50 joint venture between the Group and Lafarge combining their cement, aggregates, ready-mix concrete, asphalt and asphalt surfacing, maintenance services, and waste services businesses in the UK subject to a number of conditions being met. In July 2012 the Group accepted the conditions of the Competition Commission and consequently the associated Tarmac Quarry Materials assets were classifi ed as held for sale and recognised at fair value less costs to sell. This resulted in a loss being recognised of \$135 million.

The Group completed the sale of Scaw South Africa (Pty) Ltd (Scaw South Africa), an integrated steel maker, in November 2012. This resulted in a net cash infl ow of \$100 million, generating a loss on disposal of \$21 million.

The Group sold its 5.28% shareholding in Mondi in November 2012 for net proceeds of \$273 million, realising a net fair value gain recycled from reserves of \$27 million.

The Kumba Envision Trust charge of \$77 million relates to Kumba's broad based employee share scheme provided solely for the benefi t of non-managerial Historically Disadvantaged South African employees who do not participate in other Kumba share schemes.

Non-operating remeasurement

The non-operating remeasurement of \$1,988 million (2011: nil) refl ects the net gain of \$2,017 million, after transaction costs, resulting from the remeasurement to fair value of the Group's existing 45% shareholding held in De Beers at the date a controlling stake was acquired. This includes a \$2.7 billion uplift on depreciable assets which will unwind through operating remeasurements in the current and future years.

Financing remeasurements

Financing remeasurements refl ect a net loss of \$88 million (2011: net gain of \$205 million) and relates to an embedded interest rate derivative, non-hedge derivatives relating to debt and other fi nancing remeasurements.

Special items and remeasurements tax

The total tax credit relating to subsidiaries and joint ventures of \$1,113 million (2011: charge of \$119 million) comprises a current tax charge of \$8 million (2011: charge of \$12 million) and a deferred tax credit of \$1,121 million (2011: charge of \$107 million).

The credit relating to one-off tax items of \$922 million (2011: credit of \$137 million) relates principally to the net deferred tax credit of \$960 million relating to Minas-Rio and a net deferred tax credit of \$70 million relating to the reassessment of deferred tax assets as a result of changes in tax regimes within operating segments, partially offset by the write-off of the deferred tax asset in Amapá of \$108 million following the decision to sell the system.

The tax credit of \$377 million on special items and remeasurements primarily arises on the impairments at Platinum and the reversal of the De Beers inventory uplift.

6. UNDERLYING EBITDA

Earnings before interest, tax, depreciation and amortisation (underlying EBITDA) is operating profi t before special items and remeasurements, depreciation and amortisation in subsidiaries and joint ventures and includes attributable share of underlying EBITDA of associates.

US\$ million 2012	2011
Iron Ore and Manganese(1) 3,198	4,586
Metallurgical Coal 877	1,577
Thermal Coal 972	1,410
2,179 Copper	2,750
Nickel 50	84
Platinum 580	1,672
Diamonds 711	794
Other Mining and Industrial(1) 485	540
Exploration (206)	(121)
Corporate Activities and Unallocated Costs (160)	56
Underlying EBITDA 8,686	13,348

(1) In 2012 Amapá has been reclassifi ed from Iron Ore and Manganese to Other Mining and Industrial to align with internal management reporting. Comparatives have been reclassifi ed to align with current year presentation.

Underlying EBITDA is reconciled to operating profi t, including attributable share of associates, before special items and remeasurements and to 'Total profi t from operations and associates' as follows:

US\$ million	2012	2011
Underlying EBITDA	8,686	13,348
Depreciation and amortisation: subsidiaries and joint ventures	(2,289)	(1,967)
Depreciation and amortisation: associates	(233)	(286)
Operating profi t, including associates, before special items and remeasurements	6,164	11,095
Operating special items and remeasurements	(7,093)	(229)
Non-operating special items and remeasurements	1,394	183
Associates' net special items and remeasurements	(61)	(1)
Share of associates' net fi nance costs, tax and non-controlling interests	(266)	(449)
Total profi t from operations and associates	138	10,599

Financial statements

7. EXPLORATION EXPENDITURE

US\$ million	2012	2011
By commodity
Iron ore	23	5
Metallurgical coal	18	5
Thermal coal	14	9
Copper	39	27
Nickel	32	26
Platinum group metals	4	5
Diamonds	23	–
Phosphates and niobium	2	–
Central exploration activities	51	44
	206	121

8. EMPLOYEE NUMBERS AND COSTS

The average number of employees, excluding contractors and associates' employees, and including a proportionate share of employees within joint venture entities, was:

Thousand	2012	2011
By segment
Iron Ore and Manganese(1)	8	7
Metallurgical Coal	4	3
Thermal Coal	9	9
Copper	5	5
Nickel	2	2
Platinum	57	55
Diamonds(2)	3	–
Other Mining and Industrial(1)	16	17
Corporate Activities and Unallocated Costs	2	2
	106	100

(2) The average number of employees in Diamonds refl ects the acquisition of De Beers from 16 August 2012.

The average number of employees by principal location of employment was:

Thousand	2012	2011
South Africa	82	79
Other Africa	2	1
South America	11	10
North America	1	–
Australia and Asia	4	4
Europe	6	6
	106	100

Payroll costs in respect of the employees included in the tables above were:

US\$ million	2012	2011
Wages and salaries	4,522	4,201
Social security costs	166	142
Post employment benefi ts(1)	378	343
Share-based payments (see note 29)	321	260
Total payroll costs	5,387	4,946
Reconciliation:
Less: employee costs capitalised	(247)	(229)
Less: employee costs included within special items	(107)	(10)
Employee costs included in operating costs	5,033	4,707

(1) Includes contributions to defi ned contribution pension and medical plans, and current service costs related to defi ned benefi t pension and medical schemes, and other benefi ts provided to certain employees during retirement, see note 28.

In accordance with IAS 24 Related Party Disclosures (Amended), key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including any director (executive and non-executive) of the Group.

Compensation for key management was as follows:

US\$ million	2012	2011
Salaries and short term employee benefi ts	24	23
Social security costs	3	2
Termination benefi ts	2	–
Post employment benefi ts	3	8
Share-based payments	25	22
	57	55

Key management comprises members of the Board and the Executive Committee.

Disclosure of directors' emoluments, pension entitlements, share options and long term incentive plan awards required by the Companies Act 2006 and those specifi ed for audit by Regulation 11 and Schedule 8 of the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 are included in the Remuneration report.

9. NET FINANCE (COSTS)/INCOME

Finance costs and exchange (losses)/gains are presented net of hedges for respective interest bearing and foreign currency borrowings.

The weighted average capitalisation rate applied to qualifying capital expenditure was 4.2% (2011: 5.0%).

US\$ million	2012	2011
Investment income
Interest income from cash and cash equivalents	155	239
Other interest income	195	194
Expected return on defi ned benefi t arrangements	200	199
Dividend income from fi nancial asset investments	54	59
	604	691
Less: interest income capitalised	(7)	(23)
Total investment income	597	668
Interest expense
Interest and other fi nance expense	(691)	(615)
Interest payable on convertible bond	(25)	(68)
Unwinding of discount on convertible bond	(25)	(71)
Interest cost on defi ned benefi t arrangements	(230)	(205)
Unwinding of discount relating to provisions and other liabilities	(114)	(80)
	(1,085)	(1,039)
Less: interest expense capitalised	287	344
Total interest expense	(798)	(695)
Other fi nancing (losses)/gains
Net foreign exchange losses	(90)	(16)
Net fair value (losses)/gains on fair value hedges	(24)	16
Other net fair value gains	27	7
Total other fi nancing (losses)/gains	(87)	7
Net fi nance costs before remeasurements	(288)	(20)

Remeasurements (see note 5)	(89)	203
Net fi nance (costs)/income after remeasurements	(377)	183

10. FINANCIAL INSTRUMENT GAINS AND LOSSES

The net gains and losses recorded in the Consolidated income statement in respect of fi nancial instruments were as follows:

US\$ million	2012	2011
At fair value through profi t and loss
Cash fl ow hedge derivatives transferred from equity(1)	(4)	(5)
Fair value hedge derivatives	(193)	(263)
Fair value hedge underlying instruments	169	279
Foreign exchange gains/(losses)	12	(9)
Other fair value movements(2)	(144)	(205)
Loans and receivables
Foreign exchange gains	17	9
Interest income at amortised cost(3)	307	368
Available for sale
Net gain transferred on sale from equity	67	10
Dividend income	54	59
Impairment of available for sale investments	(84)	–
Foreign exchange losses	(30)	–
Other fi nancial liabilities
Foreign exchange (losses)/gains	(106)	240
Interest expense at amortised cost(3)	(404)	(345)

(1) These amounts are included in Group revenue.

(2) Includes the impact of provisional pricing, see note 3, and certain operating and fi nancing remeasurements, see note 5.

(3) Interest income and expense at amortised cost are shown net of amounts capitalised.

11. INCOME TAX EXPENSE

a) Analysis of charge for the year

US\$ million	2012	2011
United Kingdom corporation tax (credit)/charge	(12)	16
South Africa tax	802	1,307
Other overseas tax	605	1,067
Prior year adjustments	61	(92)
Current tax(1)	1,456	2,298
Deferred tax	32	443
Income tax expense before special items and remeasurements	1,488	2,741
Special items and remeasurements tax	(1,113)	119
Income tax expense	375	2,860

(1) Includes royalties which meet the defi nition of income tax and are in addition to royalties recorded in operating costs.

b) Factors affecting tax charge for the year

The effective tax rate for the year of (156.9)% (2011: 26.5%) is lower than (2011: same as) the applicable weighted average statutory rate of corporation tax in the United Kingdom of 24.5% (2011: 26.5%). The reconciling items, excluding the impact of associates, are:

US\$ million	2012	2011
(Loss)/profi t before tax	(239)	10,782
Less: share of net income from associates	(432)	(977)
(Loss)/profi t before tax (excluding associates)	(671)	9,805
Tax on (loss)/profi t (excluding associates) calculated at United Kingdom corporation tax rate of 24.5% (2011: 26.5%)	(164)	2,598
Tax effects of:
Items not taxable/deductible for tax purposes
Exploration expenditure	43	27
Non-taxable/deductible net foreign exchange loss	7	24
Non-taxable net interest income	(25)	(20)
Other non-deductible expenses	51	60
Other non-taxable income	(63)	(57)
Temporary difference adjustments
Current year losses not recognised	86	38
Recognition of losses not previously recognised	(69)	(103)
Other temporary differences	(40)	(57)
Special items and remeasurements	305	77
Other adjustments
Secondary tax on companies and dividend withholding taxes	26	407
Effect of differences between local and United Kingdom rates	68	(61)
Prior year adjustments to current tax	61	(92)
Other adjustments	89	19
Income tax expense	375	2,860

IAS 1 requires income from associates to be presented net of tax on the face of the income statement. Associates' tax is therefore not included within the Group's income tax expense. Associates' tax included within 'Share of net income from associates' for the year ended 31 December 2012 is \$205 million (2011: \$384 million). Excluding special items and remeasurements this becomes \$202 million (2011: \$385 million).

The effective rate of tax before special items and remeasurements including attributable share of associates' tax for the year ended 31 December 2012 was 29.0%. The increase compared to the equivalent effective tax rate of 28.3% for the year ended 31 December 2011 is due to the reduced impact of certain non-recurring factors. The non-recurring factors in 2012 include further recognition of previously unrecognised tax losses and the reassessment of certain withholding tax provisions across the Group. In future periods it is expected that the effective tax rate, including associates' tax, will remain above the United Kingdom statutory tax rate.

c) Tax amounts included in total comprehensive income

An analysis of tax by individual item presented in the Consolidated statement of comprehensive income is presented below:

US\$ million	2012	2011
Tax on items recognised directly in equity
Net gain on revaluation of available for sale investments	(79)	(26)
Net (gain)/loss on cash fl ow hedges	(1)	20
Net exchange difference on translation of foreign operations	(16)	11
Actuarial net (gain)/loss on post employment benefi t plans	(19)	19
	(115)	24
Tax on items transferred from equity
Transferred to income statement: disposal of available for sale investments	30	–
Transferred to initial carrying amount of hedged items: cash fl ow hedges	(1)	(12)
Transferred to income statement: cash fl ow hedges	–	(2)
	29	(14)

d) Tax amounts recognised directly in equity

Capital gains tax of \$290 million relating to the profi t on sale of a 25.4% share in Anglo American Sur SA (AA Sur) in August 2012 has been charged directly to equity (2011: \$1,017 million relating to the profi t on sale of a 24.5% share in AA Sur in November 2011). There were no other material current tax amounts charged directly to equity in 2012 or 2011. Deferred tax of \$110 million has been charged directly to equity (2011: charge of \$127 million), see note 27.

12. DIVIDENDS

Dividends payable during the year are as follows:

US\$ million	2012	2011
Final ordinary dividend for 2011 – 46 US cents per ordinary share (2010: 40 US cents per ordinary share)	559	495
Interim ordinary dividend for 2012 – 32 US cents per ordinary share (2011: 28 US cents per ordinary share)	411	339
	970 (1)	834 (1)

(1) Of this, \$599 million (2011: \$561 million) was recognised in the parent Company.

Total dividends paid during the year were \$970 million (2011: \$818 million). In 2011 the difference to dividends payable arose due to movements in exchange rates between the date of recognition and the date of payment.

The directors are proposing a fi nal dividend in respect of the fi nancial year ended 31 December 2012 of 53 US cents per share. Based on shares eligible for dividends at 31 December 2012, this will result in an estimated distribution of \$676 million of shareholders' funds, of which \$395 million will be distributed by the parent Company. These fi nancial statements do not refl ect this dividend payable as it is still subject to shareholder approval.

As stated in note 29, the employee benefi t trust has waived the right to receive dividends on the shares it holds.

13. EARNINGS PER SHARE

US\$	2012	2011
(Loss)/profi t for the fi nancial year attributable to equity shareholders of the Company
Basic (loss)/earnings per share	(1.19)	5.10
Diluted (loss)/earnings per share	(1.19)	4.89
Headline earnings for the fi nancial year(1)
Basic earnings per share	0.95	4.89
Diluted earnings per share	0.95	4.69
Underlying earnings for the fi nancial year(1)
Basic earnings per share	2.26	5.06
Diluted earnings per share	2.24	4.85

(1) Basic and diluted earnings per share are also shown based on headline earnings, a Johannesburg Stock Exchange (JSE Limited) defi ned performance measure, and underlying earnings, which the directors consider to be a useful additional measure of the Group's performance. Both earnings measures are further explained below.

The calculation of basic and diluted earnings per share is based on the following data:

		(Loss)/profi t attributable
	to equity shareholders of the Company		Headline earnings		Underlying earnings
	2012	2011	2012	2011	2012	2011
Earnings (US\$ million)
Basic (loss)/earnings	(1,493)	6,169	1,197	5,913	2,839	6,120
Effect of dilutive potential ordinary shares
Interest payable on convertible bond (net of tax)(1)	–	50	–	50	19	50
Unwinding of discount on convertible bond (net of tax)(1)	–	52	–	52	19	52
Diluted earnings	(1,493)	6,271	1,197	6,015	2,877	6,222
Number of shares (million)
Basic number of ordinary shares outstanding	1,254	1,210	1,254	1,210	1,254	1,210
Effect of dilutive potential ordinary shares
Share options and awards	–	10	5	10	5	10
Convertible bond	–	62	–	62	23	62
Diluted number of ordinary shares outstanding	1,254	1,282	1,259	1,282	1,282	1,282

(1) All outstanding convertible bonds were converted or redeemed during the year, see note 24.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all potentially dilutive ordinary shares. Potential ordinary shares shall be treated as dilutive when, and only when, their conversion to ordinary shares would decrease earnings per share or increase loss per share from continuing operations. Consequently, in 2012 basic loss per share equals diluted loss per share and 16,325,905 (2011: 270,095) shares have been excluded from the calculation of diluted earnings per share as they are anti-dilutive as at 31 December 2012.

As at 31 December 2012, 10,339,454 (2011: 270,095) shares have been excluded from the calculation of diluted headline earnings per share and diluted underlying earnings per share as they are anti-dilutive.

Basic and diluted number of ordinary shares outstanding represent the weighted average for the year. The average number of ordinary shares in issue excludes shares held by employee benefi t trusts and Anglo American plc shares held by Group companies.

13. EARNINGS PER SHARE continued

Underlying earnings is presented after non-controlling interests and excludes special items and remeasurements, see note 5. Underlying earnings is distinct from 'Headline earnings', which is a JSE Limited defi ned performance measure.

The calculation of basic and diluted earnings per share, based on headline and underlying earnings, uses the following earnings data:

US\$ million	2012	2011
(Loss)/profi t for the fi nancial year attributable to equity shareholders of the Company	(1,493)	6,169
Operating special items	6,050	70
Operating special items – tax	(1,600)	–
Operating special items – non-controlling interests	(123)	–
Non-operating special items and remeasurements	(1,492)	(347)
Non-operating special items – tax	35	36
Non-operating special items – non-controlling interests	(180)	–
Financing special items	–	9
Tax special items	–	(24)
Headline earnings for the fi nancial year	1,197	5,913
Operating special items(1)	989	103
Operating remeasurements	112	74
Non-operating special items and remeasurements(2)	98	144
Financing remeasurements	88	(205)
Special items and remeasurements tax	455	106
Non-controlling interests on special items and remeasurements	(100)	(15)
Underlying earnings for the fi nancial year	2,839	6,120

(1) Includes onerous contract provisions, accelerated depreciation and the reversal of the inventory uplift on De Beers.

(2) Principally includes Kumba Envision Trust charge and transaction costs relating to the De Beers acquisition (2011: Platinum BEE transactions and related charges).

14. INTANGIBLE ASSETS

			2012			2011
US\$ million	Brands, contracts and other intangibles(1)	Goodwill(2)	Total	Brands, contracts and other intangibles(1)	Goodwill(2)	Total
Net book value
At 1 January	83	2,239	2,322	85	2,231	2,316
Acquired through business combinations	1,588	2,355	3,943	–	–	–
Additions	34	–	34	26	–	26
Amortisation charge for the year(3)	(37)	–	(37)	(20)	–	(20)
Impairments and losses on assets transferred to held for sale	(30)	(1,169)	(1,199)	–	(15)	(15)
Disposals and transfer to assets held for sale	(7)	(441)	(448)	–	(25)	(25)
Adjustments relating to deferred and contingent consideration	–	–	–	–	81	81
Currency movements	(14)	(30)	(44)	(8)	(33)	(41)
At 31 December	1,617	2,954	4,571	83	2,239	2,322
Cost	1,724	2,954	4,678	182	2,239	2,421
Accumulated amortisation	(107)	–	(107)	(99)	–	(99)

(1) Includes \$517 million (2011: nil) of assets with indefi nite lives acquired through the acquisition of De Beers. Brands, contracts and other intangible assets are provided net of cumulative impairment charges of \$29 million (2011: \$37 million).

(2) The goodwill balances provided are net of cumulative impairment charges of \$1,120 million (2011: \$337 million).

(3) Includes \$6 million (2011: nil) of amortisation arising due to the fair value uplift of the Group's pre-existing 45% shareholding in De Beers. This has been included within operating remeasurements.

Impairment tests for goodwill

Goodwill is allocated for impairment testing purposes to cash generating units (CGUs) or groups of CGUs which refl ect how it is monitored for internal management purposes. This allocation largely represents the Group's segments. Any goodwill associated with CGUs subsumed within these segments is not signifi cant when compared to the goodwill of the Group (2011: material components of goodwill within Iron Ore and Manganese and Other Mining and Industrial). The allocation of goodwill to CGUs or groups of CGUs is as follows:

US\$ million	2012	2011
Iron Ore and Manganese
Iron Ore Brazil	–	1,123
Thermal Coal	88	88
Copper	124	124
Nickel	10	10
Platinum	230	230
Diamonds	2,324	–
Other Mining and Industrial
Tarmac(1)	–	456
Other	178	208
	2,954	2,239

(1) The goodwill balance in Tarmac as at 31 December 2012 relates to Tarmac Quarry Materials and has been transferred to assets held for sale, see note 34.

For the purposes of goodwill impairment testing, the recoverable amount of a CGU is determined based on a fair value less costs to sell basis, with the exception of Minas-Rio which is determined on a value in use basis.

14. INTANGIBLE ASSETS continued

Value in use is based on the present value of future cash fl ows expected to be derived from the CGU or reportable segment in its current state. Fair value less costs to sell is normally supported by observable market data (in the case of listed subsidiaries, market share price at 31 December of the respective entity) or discounted cash fl ow models taking account of assumptions that would be made by market participants.

Expected future cash fl ows are inherently uncertain and could materially change over time. They are signifi cantly affected by a number of factors including ore reserves and resources, together with economic factors such as commodity prices, discount rates, exchange rates, estimates of costs to produce reserves and future capital expenditure. Management believes that any reasonably possible change in a key assumption on which the recoverable amounts are based would not cause the carrying amounts to exceed their recoverable amounts.

Cash fl ow projections are based on fi nancial budgets and mine life plans or non-mine production plans, incorporating key assumptions as detailed below:

Reserves and resources

Ore reserves and, where considered appropriate, mineral resources are incorporated in projected cash fl ows, based on ore reserves and mineral resource statements and exploration and evaluation work undertaken by appropriately qualifi ed persons. Mineral resources are included where management has a high degree of confi dence in their economic extraction, despite additional evaluation still being required prior to meeting the requirements of reserve classifi cation.

For further information refer to the Ore Reserves and Mineral Resources section of the Annual Report.

Commodity prices

Commodity prices are based on latest internal forecasts for commodity prices, benchmarked with external sources of information, to ensure they are within the range of available analyst forecasts. Where existing sales contracts are in place, the effects of such contracts are taken into account in determining future cash fl ows.

Operating costs and capital expenditure

Operating costs and capital expenditure are based on fi nancial budgets covering a three year period. Cash fl ow projections beyond three years are based on mine life plans or non-mine production plans as applicable, and internal management forecasts. Cost assumptions incorporate management experience and expectations, as well as the nature and location of the operation and the risks associated therewith. Underlying input cost assumptions are consistent with related output price assumptions.

Non-commodity based businesses

For non-commodity based businesses, margin and revenue are based on fi nancial budgets covering a three year period. Beyond the fi nancial budget, revenue is forecast using a steady growth rate consistent with the markets in which those businesses operate, and for those periods fi ve years or more from the balance sheet date, at a rate not exceeding the long term growth rate for the country of operation. Where existing sales contracts are in place, the effects of such contracts are taken into account in determining future cash fl ows.

Discount rates

Cash fl ow projections used in fair value less costs to sell impairment models are discounted based on a real post-tax discount rate of 6.5% (2011: 6.0%). The discount rate for Minas-Rio is a real pre-tax rate of 8.5% (2011: 8.0%). Adjustments to the rate are made for any risks that are not refl ected in the underlying cash fl ows.

Foreign exchange rates

Foreign exchange rates are based on latest internal forecasts for foreign exchange, benchmarked with external sources of information for relevant countries of operation. Foreign exchange rates are kept constant from 2017 onwards.

Minas-Rio

The Minas-Rio iron ore project (Minas-Rio) in Brazil was acquired in two separate transactions in 2007 and 2008. Minas-Rio is expected to produce 26.5 Mtpa of high quality pellet feed in its fi rst phase of development, with the potential to increase to 29.8 Mtpa following asset optimisation. Pre-feasibility studies for the subsequent expansion phases of Minas-Rio commenced during 2011, supported by an estimated resource base at that time of 5.77 billion tonnes, as detailed in the 2011 Ore Reserves and Mineral Resources statement. We have subsequently converted 1.45 billion tonnes to Ore Reserves.

While progress is being made, construction activities at the benefi ciation plant and land access along the 525 km pipeline route have been impeded by a series of challenges, including three legal injunctions. All three injunctions were resolved during the second half of 2012 and construction activity in the affected areas has resumed.

Additional capital expenditure has been incurred as a result of, inter alia, the delays arising from the injunctions, scope changes and higher than expected infl ation of operational costs. Management has completed a detailed review to assess the impact of these additional costs and the forecast capital expenditure for the fi rst phase of Minas-Rio has increased from \$5.8 billion to \$8.8 billion, including a \$0.6 billion contingency, on an attributable basis.

The delivery of the project on the revised schedule is dependent upon a number of development milestones: suppression of caves at the mine site; completion of the tailings dam before the rainy season; land release for the transmission line to the benefi ciation plant and pipeline; and fulfi lment of installation licences' conditions such that operating licences can be issued in due course. Subject to no further unexpected interventions and the successful completion of these key milestones in the next 12 months, fi rst ore on ship is anticipated at the end of 2014.

The valuation of Minas-Rio at 31 December 2012 has been assessed by reference to its value in use, determined on a discounted cash fl ow basis (real pre-tax discount rate of 8.5%). The valuation considers the risk of further escalation in capital expenditure and of further delay to fi rst ore on ship. It also considers the impact of further unanticipated impediments to progress. These risks refl ect the history of unforeseen challenges that have affected the project to date. The valuation model employs long term iron ore prices based on detailed analysis of market fundamentals and adjusted for iron ore quality. The long term iron ore price which is used in the valuation from 2022 onwards is within the range of published analyst forecasts and is slightly above the median of \$80 per tonne.

Based on this valuation, the Group has recorded an impairment charge of \$4,960 million (before tax) against the carrying value of the asset. Of this charge, \$1,105 million has been recorded against goodwill and \$3,855 million has been recorded against mining properties, with an associated deferred tax credit of \$960 million. The post-tax impairment charge is \$4,000 million.

15. PROPERTY, PLANT AND EQUIPMENT

					2012					2011
US\$ million	Mining properties and leases(1)	Land and buildings	Plant and equipment	Other(2)	Total	Mining properties and leases(1)	Land and buildings	Plant and equipment	Other(2)	Total
Net book value
At 1 January	14,643	2,620	14,822	8,464	40,549	15,376	2,004	10,839	11,591	39,810
Acquired through
business combinations	7,307	420	395	790	8,912	–	–	–	–	–
Additions	338	44	181	5,394	5,957	352	76	287	5,834	6,549
Depreciation charge
for the year(3)	(559)	(200)	(1,641)	(44)	(2,444)	(414)	(113)	(1,501)	(42)	(2,070)
Impairments
and losses on transfer
to assets held for sale	(4,009)	(35)	(352)	(794)	(5,190)	–	–	(61)	–	(61)
Disposal of assets	(5)	(4)	(45)	(12)	(66)	(2)	(7)	(39)	(28)	(76)
Disposal and transfer
to assets held for sale	(644)	(148)	(1,007)	(155)	(1,954)	(39)	(4)	(13)	(1)	(57)
Reclassifi cations(4)	558	346	2,149	(3,053)	–	532	826	6,408	(7,929)	(163)
Currency movements	(264)	(47)	(217)	(147)	(675)	(1,162)	(162)	(1,098)	(961)	(3,383)
At 31 December	17,365	2,996	14,285	10,443	45,089	14,643	2,620	14,822	8,464	40,549
Cost	25,057	4,001	23,358	10,628	63,044	19,532	3,450	24,116	8,648	55,746
Accumulated
depreciation	(7,692)	(1,005)	(9,073)	(185)	(17,955)	(4,889)	(830)	(9,294)	(184)	(15,197)

(1) Includes amounts in relation to deferred stripping.

(2) Includes \$10,193 million (2011: \$8,088 million) of assets in the course of construction, which are not depreciated.

(3) Includes \$2,258 million (2011: \$1,947 million) of depreciation within operating profi t, \$70 million (2011: \$84 million) of accelerated depreciation, a \$35 million (2011: nil) depreciation charge arising due to the fair value uplift on the pre-existing 45% shareholding of De Beers (see note 5) and \$81 million (2011: \$39 million) of pre-commercial production depreciation which has been capitalised. See note 2 for a split of depreciation, and amortisation for intangibles, by segment.

(4) Relates mainly to amounts transferred from assets in the course of construction. In 2011 the net amount of \$163 million relates to federal tax credits on qualifying capital projects in Brazil. These credits have been reclassifi ed, as appropriate, to refl ect the expected realisation.

Included in the additions above is \$280 million (2011: \$321 million) of net interest expense incurred on borrowings funding the construction of qualifying assets which has been capitalised during the year.

Assets held under fi nance leases relate to plant and equipment with a net book value of \$27 million (2011: \$25 million). Depreciation charges in the year amounted to \$7 million (2011: \$9 million).

The net book value of land and buildings comprises:

US\$ million	2012	2011
Freehold	2,952	2,604
Leasehold – long	41	8
Leasehold – short (less than 50 years)	3	8
	2,996	2,620

16. ENVIRONMENTAL REHABILITATION TRUSTS

The Group makes contributions to controlled funds that were established to meet the cost of some of its restoration and environmental rehabilitation liabilities, primarily in South Africa. The funds comprise the following investments:

US\$ million	2012	2011
Equity	150	146
Bonds	151	130
Cash	92	84
	393	360

These assets are primarily rand denominated. Cash is held in short term fi xed deposits or earns interest at fl oating inter-bank rates. Bonds earn interest at a weighted average fi xed rate of 8% (2011: 6%) for an average period of fi ve years (2011: four years). Equity investments are recorded at fair value through profi t and loss while other assets are treated as loans and receivables.

These funds are not available for the general purposes of the Group. All income from these assets is reinvested to meet specifi c environmental obligations. These obligations are included in provisions, see note 26.

17. INVESTMENTS IN ASSOCIATES

US\$ million	2012	2011
At 1 January	5,240	4,900
Net income from associates	432	977
Dividends received	(286)	(344)
Share of expense recognised directly in equity, net of tax	(6)	(32)
Other equity movements	(4)	–
Investment in equity and capitalised loans	114	47
Interest on capitalised loans	9	23
Acquired through business combinations	12	–
Repayment of capitalised loans	(36)	(4)
Transfer to available for sale investments	–	(66)
Disposals(1)	(2,372)	–
Other movements	1	(1)
Currency movements	(41)	(260)
At 31 December(2)	3,063	5,240

(1) Represents the carrying value of the Group's pre-existing 45% shareholding in De Beers prior to the acquisition of a controlling interest on 16 August 2012, see note 32.

(2) The fair value of the Group's investment in Atlatsa Resources Corporation (previously known as Anooraq Resources Corporation) at 31 December 2012 was \$18 million (2011: \$51 million).

The Group's total investments in associates comprise:

US\$ million	2012	2011
Equity	2,359	4,593
Loans(1)	704	647
	3,063	5,240

(1) The Group's total investments in associates include long term debt which in substance forms part of the Group's investment. These loans are not repayable in the foreseeable future.

The Group's attributable share of the summarised income statement information of associates is shown in note 2. Summarised balance sheet information of associates is as follows:

US\$ million	2012	2011
Non-current assets	2,521	6,111
Current assets	1,494	2,188
Current liabilities	(379)	(742)
Non-current liabilities	(573)	(2,317)
Group's share of associates' net assets	3,063	5,240

Segmental information is provided as follows:

		Share of net income		Aggregate investment
US\$ million	2012	2011	2012	2011
By segment
Iron Ore and Manganese	31	142	902	936
Metallurgical Coal	79	141	277	294
Thermal Coal	248	317	1,085	932
Platinum	(94)	(65)	786	848
Diamonds	168	442	13	2,230
	432	977	3,063	5,240

	Aggregate investment
US\$ million	2012	2011
By geography
South Africa	1,165	1,950
Other Africa	–	996
South America	1,075	917
North America	–	343
Australia and Asia	807	794
Europe	16	240
	3,063	5,240

The Group's share of associates' contingent liabilities incurred jointly by investors is \$33 million (2011: \$112 million).

Details of principal associates are set out in note 38.

18. JOINT VENTURES

The Group's share of the summarised financial information of joint venture entities that are proportionately consolidated in the financial statements is as follows:

US\$ million	2012	2011
Non-current assets	10,407	2,546
Current assets	1,000	572
Current liabilities	(651)	(434)
Non-current liabilities	(1,299)	(703)
Group's share of joint venture entities' net assets	9,457	1,981

Revenue	2,394	1,932
Operating costs	(1,915)	(944)
Net fi nance costs	(39)	(44)
Income tax expense	(110)	(230)
Group's share of joint venture entities' profi t for the fi nancial year	330	714

The Group's share of joint venture entities' contingent liabilities incurred jointly with other venturers is \$25 million (2011: \$32 million) and its share of capital commitments is \$569 million (2011: \$74 million).

Within the Metallurgical Coal segment, the Group also holds interests in a number of proportionately consolidated jointly controlled operations. The Group's share of net assets of such operations is \$1,802 million (2011: \$1,538 million) and its share of profi t for the fi nancial year is \$224 million (2011: \$615 million). The Group's share of these operations' contingent liabilities incurred jointly with other venturers is \$32 million (2011: \$19 million) and its share of capital commitments is \$85 million (2011: \$80 million).

Details of principal joint ventures are set out in note 38.

19. FINANCIAL ASSET INVESTMENTS

			2012			2011
		Available			Available
	Loans and	for sale		Loans and	for sale
US\$ million	receivables	investments	Total	receivables	investments	Total
At 1 January	1,690	1,206	2,896	1,920	1,300	3,220
Additions	8	8	16	4	84	88
Acquired through business combinations	41	19	60	–	–	–
Interest receivable	14	–	14	76	–	76
Net repayments	(79)	–	(79)	(22)	–	(22)
Transfer to assets held for sale	(16)	–	(16)	–	–	–
Disposals	(314)	(273)	(587)	–	(14)	(14)
Movements in fair value	26	173	199	(10)	115	105
Currency movements	(54)	(69)	(123)	(278)	(279)	(557)
At 31 December	1,316	1,064	2,380	1,690	1,206	2,896

No provision for impairment is recorded against fi nancial assets classifi ed as 'Loans and receivables' (2011: nil).

Maturity analysis of fi nancial asset investments:

US\$ million	2012	2011
Current	102	–
Non-current	2,278	2,896
	2,380	2,896

20. INVENTORIES

US\$ million	2012	2011
Raw materials and consumables	936	837
Work in progress	1,500	1,488
Finished products	2,569	1,192
	5,005	3,517

The cost of inventories recognised as an expense and included in cost of sales amounted to \$15,776 million (2011: \$16,146 million). An additional \$421 million was recognised as an expense within operating special items (2011: nil) relating to the reversal of fair value uplifts on De Beers inventory, see note 5.

Inventories held at net realisable value amounted to \$352 million (2011: \$285 million).

Write-down of inventories (net of revaluation of provisionally priced purchases) amounted to \$145 million, including write-offs of \$61 million relating to inventory at Loma de Níquel recorded in operating special items (2011: \$16 million).

There were nil inventory write-downs reversed and recognised as a reduction in the inventory expense for the year (2011: nil).

21. TRADE AND OTHER RECEIVABLES

			2012			2011
	Due within	Due after		Due within	Due after
US\$ million	one year	one year	Total	one year	one year	Total
Trade receivables	2,520	204	2,724	2,704	168	2,872
Other receivables	570	318	888	744	236	980
Prepayments and accrued income	185	50	235	226	33	259
	3,275	572	3,847	3,674	437	4,111

The historical level of customer default is minimal and as a result the credit quality of year end trade receivables which are not past due is considered to be high. Of the year end trade receivables balance the following were past due at 31 December (stated after associated impairment provision):

US\$ million	2012	2011
Less than one month	29	137
Greater than one month, less than two months	7	16
Greater than two months, less than three months	2	7
Greater than three months	4	19
	42	179

The overdue debtor ageing profi le above is typical of the industry in which certain of the Group's businesses operate. Given this, the existing insurance cover (including letters of credit from fi nancial institutions) and the nature of the related counterparties, these amounts are considered recoverable.

Total trade receivables are stated net of the following impairment provision:

US\$ million	2012	2011
At 1 January	54	53
Charge for the year	–	6
Unused amounts reversed	(6)	–
Disposals and transfer to assets held for sale	(25)	(3)
Currency movements	–	(2)
At 31 December	23	54

22. TRADE AND OTHER PAYABLES

US\$ million	2012	2011
Trade payables	2,701	3,001
Tax and social security	105	177
Other payables	707	939
Accruals and deferred income(1)	1,041	981
	4,554	5,098

(1) Includes \$18 million (2011: nil) of deferred income recorded within non-current liabilities.

23. FINANCIAL ASSETS

The carrying amounts and fair values of fi nancial assets are as follows:

		2012		2011
US\$ million	Estimated fair value	Carrying value	Estimated fair value	Carrying value
At fair value through profi t and loss
Trade and other receivables(1)	581	581	596	596
Derivative fi nancial assets(2)	848	848	840	840
Loans and receivables
Cash and cash equivalents	9,094	9,094	11,732	11,732
Trade and other receivables(1)	3,031	3,031	3,256	3,256
Financial asset investments	1,286	1,316	1,647	1,690
Available for sale investments
Financial asset investments	1,064	1,064	1,206	1,206
Total fi nancial assets	15,904	15,934	19,277	19,320

(1) Trade and other receivables exclude prepayments and accrued income.

(2) Derivative instruments are analysed between those which are 'Held for trading' and those designated into hedge relationships in note 25.

For fi nancial assets which are traded on an active market, such as listed investments, fair value is determined by reference to market value. For non-traded fi nancial assets, fair value is calculated using discounted cash fl ows, considered to be reasonable and consistent with those that would be used by a market participant, unless carrying value is considered to approximate fair value.

23. FINANCIAL ASSETS continued

Fair value hierarchy

An analysis of fi nancial assets carried at fair value is set out below:

				2012				2011
US\$ million	Level 1(1)	Level 2(2)	Level 3(3)	Total	Level 1(1)	Level 2(2)	Level 3(3)	Total
At fair value through profi t and loss
Trade and other receivables	–	581	–	581	–	596	–	596
Derivative fi nancial assets	1	813	34	848	–	677	163	840
Available for sale investments
Financial asset investments	980	11	73	1,064	1,142	10	54	1,206
	981	1,405	107	2,493	1,142	1,283	217	2,642

(1) Valued using unadjusted quoted prices in active markets for identical fi nancial instruments. This category includes listed equity shares.

(2) Valued using techniques based signifi cantly on observable market data. Instruments in this category are valued using valuation techniques where all of the inputs that have a signifi cant effect on the valuation are directly or indirectly based on observable market data.

(3) Instruments in this category have been valued using a valuation technique where at least one input (which could have a signifi cant effect on the instrument's valuation) is not based on observable market data. Where inputs can be observed from market data without undue cost and effort, the observed input is used. Otherwise, management determines a reasonable estimate for the input. Financial assets included within level 3 primarily consist of embedded derivatives, fi nancial asset investments and certain cross currency swaps of Brazilian real denominated borrowings, whose valuation depends upon unobservable inputs.

The movements in the fair value of the level 3 fi nancial assets are shown in the following table:

US\$ million	2012	2011
At 1 January	217	96
Net (loss)/gain recorded in remeasurements	(141)	37
Net gain recorded in the statement of comprehensive income	19	9
Cash fl ow	–	(29)
Additions	–	9
Disposals and transfer to assets held for sale	–	(12)
Reclassifi cation from/to level 3 fi nancial liabilities	14	123
Currency movements	(2)	(16)
At 31 December	107	217

For the level 3 fi nancial assets, changing certain inputs to reasonably possible alternative assumptions may change the fair value signifi cantly. Where signifi cant, the effect of a change in these assumptions to a reasonably possible alternative assumption is outlined in the table below. These sensitivities have been calculated by amending the fair value of the level 3 fi nancial assets at 31 December for a change in each individual assumption, as outlined below, while keeping all other assumptions consistent with those used to calculate the fair value recognised in the fi nancial statements.

		2012	2011
US\$ million	Change in assumption	Increase/(decrease) in fair value of assets	Increase/(decrease) in fair value of assets
Derivative fi nancial assets	Increase of 5% in dividend forecast	5	10
	Decrease of 5% in dividend forecast	(5)	(10)
	Shift of TJLP curve(1)	n/a	n/a
Financial asset investments	Decrease of 10% in liquidity discount percentage	9	11
	Increase of 10% in liquidity discount percentage	(9)	(11)

(1) TJLP is a Brazilian domestic interest rate. The sensitivities are provided on the net liability position of such level 3 fi nancial instruments and are disclosed in note 24.

Financial asset risk exposures are set out in note 25.

24. FINANCIAL LIABILITIES

The carrying amounts and fair values of fi nancial liabilities are as follows:

				2011
US\$ million	Estimated fair value	Carrying value	Estimated fair value	Carrying value
At fair value through profi t and loss
Trade and other payables(1)	296	296	262	262
Derivative fi nancial liabilities(2)	1,081	1,081	1,112	1,112
Designated into fair value hedge
Borrowings	13,735	13,425	8,867	8,074
Financial liabilities at amortised cost
Trade and other payables(1)	4,102	4,102	4,637	4,637
Borrowings	4,181	4,329	(3) 5,526	4,799
Other non-current liabilities	29	29	55	55
Total fi nancial liabilities	23,424	23,262	20,459	18,939

(1) Trade and other payables exclude tax and social security and deferred income.

(2) Derivative instruments are analysed between those which are 'Held for trading' and those designated into hedge relationships in note 25.

(3) The fair value of the convertible bond at 31 December 2011 represented the quoted price of the debt and therefore included the portion accounted for in equity.

24. FINANCIAL LIABILITIES continued

For fi nancial liabilities which are traded on an active market, such as listed debt instruments, fair value is determined by reference to market value. For non-traded fi nancial liabilities, fair value is calculated using discounted cash fl ows, considered to be reasonable and consistent with those that would be used by a market participant, unless carrying value is considered to approximate fair value.

Fair value hierarchy

An analysis of fi nancial liabilities carried at fair value is set out below:

				2012				2011
US\$ million	Level 1(1)	Level 2(2)	Level 3(3)	Total	Level 1(1)	Level 2(2)	Level 3(3)	Total
At fair value through profi t and loss
Trade and other payables	–	296	–	296	–	262	–	262
Derivative fi nancial liabilities	–	865	216	1,081	–	924	188	1,112
	–	1,161	216	1,377	–	1,186	188	1,374

(1) Valued using unadjusted quoted prices in active markets for identical fi nancial instruments.

(3) Instruments in this category have been valued using a valuation technique where at least one input (which could have a signifi cant effect on the instrument's valuation) is not based on observable market data. Where inputs can be observed from market data without undue cost and effort, the observed input is used. Otherwise, management determines a reasonable estimate for the input. Financial instruments included within level 3 primarily consist of embedded derivatives and certain cross currency swaps of Brazilian real denominated borrowings, whose valuation depends upon unobservable inputs and commodity sales contracts which do not meet the conditions for the 'own use' exemption under IAS 39.

The movements in the fair value of the level 3 fi nancial liabilities are shown in the following table:

US\$ million	2012	2011
At 1 January	188	60
Net gain/(loss) recorded in remeasurements	14	(5)
Cash fl ow	–	15
Reclassifi cation to/from level 3 fi nancial assets	14	123
Currency movements	–	(5)
At 31 December	216	188

For the level 3 fi nancial liabilities, changing certain inputs to reasonably possible alternative assumptions may change the fair value signifi cantly. Where signifi cant, the effect of a change in these assumptions to a reasonably possible alternative assumption is outlined in the table below. These sensitivities have been calculated by amending the fair value of the level 3 fi nancial liabilities at 31 December for a change in each individual assumption, as outlined below, while keeping all other assumptions consistent with those used to calculate the fair value recognised in the fi nancial statements.

		2012	2011
US\$ million	Change in assumption	Increase in fair value of liabilities	Increase in fair value of liabilities
Derivative fi nancial liabilities	Shift of TJLP curve(1)	17	21

(1) TJLP is a Brazilian domestic interest rate. The sensitivities are provided on the net liability position of such level 3 fi nancial instruments.

Financial liability risk exposures are set out in note 25.

Analysis of borrowings

An analysis of borrowings, as presented on the Consolidated balance sheet, is set out below:

			2012			2011
US\$ million	Due within one year	Due after one year	Total	Due within one year	Due after one year	Total
Secured
Bank loans and overdrafts(1)	5	21	26	55	276	331
Obligations under fi nance leases(2)	3	19	22	4	17	21
	8	40	48	59	293	352
Unsecured
Bank loans and overdrafts	251	2,871	3,122	673	1,722	2,395
Bonds issued under EMTN programme	994	6,382	7,376	163	4,167	4,330
US bonds	767	4,628	5,395	–	3,408	3,408
Convertible bond(3)	–	–	–	–	1,504	1,504
Other loans	584	1,229	1,813	123	761	884
	2,596	15,110	17,706	959	11,562	12,521
Total	2,604	15,150	17,754	1,018	11,855	12,873

(1) Assets with a book value of \$49 million (2011: \$408 million) have been pledged as security, of which \$35 million (2011: \$170 million) are property, plant and equipment, \$10 million

(2011: \$113 million) are fi nancial assets and \$4 million (2011: \$125 million) are inventories. Related to these assets are borrowings of \$26 million (2011: \$331 million). (2) Details of assets held under fi nance leases are provided in note 15. The minimum lease payments under fi nance leases fall due as follows:

US\$ million	2012	2011
Within one year	5	4
Greater than one year, less than fi ve years	14	12
Greater than fi ve years	12	13
	31	29
Future fi nance charges on fi nance leases	(9)	(8)
Present value of fi nance lease liabilities	22	21

(3) All outstanding convertible bonds were converted or redeemed during the year, see below.

24. FINANCIAL LIABILITIES continued

Net additional medium and long term borrowings were \$5,633 million (2011: \$964 million) and net repayments of short term borrowings were \$747 million (2011: \$1,261 million) as disclosed in the Consolidated cash fl ow statement.

Corporate bonds

During 2012 the Group issued corporate bonds with a US\$ equivalent value of \$5.1 billion in the US, European and South African markets. These included \$600 million 2.625% senior notes due 2017, \$750 million 2.625% senior notes due 2017, \$600 million 4.125% senior notes due 2022, €750 million 3.50% guaranteed notes due 2022, €750 million 2.75% guaranteed notes due 2019 and €750 million 2.50% guaranteed notes due 2018 issued under the Euro Medium Term Note (EMTN) programme, and R600 million fl oating rate notes at 3M JIBAR + 1.38% due 2017 and R1.4 billion 9.27% fi xed rate notes due 2019 issued under the South African Domestic Medium Term Note programme.

Convertible bond

On 23 March 2012 Anglo American plc gave notice that it had exercised its right to redeem its \$1.7 billion of convertible bonds (the Bonds) on 22 May 2012 (the optional redemption date). The Bonds were due to mature on 7 May 2014. On 13 April 2012 following the announcement of the recommended 2011 full year dividend, and in accordance with the terms and conditions of the Bonds, the conversion price was adjusted from £18.36 to £18.02.

Of the \$1,700 million Bonds issued, \$1,678 million were converted to equity prior to the optional redemption date, including \$1 million converted in 2011, and the remaining \$22 million were redeemed by the Group. As a result, 62.5 million ordinary shares were issued and the fi nancial liability of \$1,529 million, representing the notional value of the outstanding Bonds of \$1,699 million less unamortised discount of \$170 million, was derecognised. The balance in the convertible debt reserve of \$355 million, which related to the Bonds, was transferred to share premium (\$170 million) and retained earnings (\$185 million).

25. FINANCIAL RISK MANAGEMENT AND DERIVATIVES

The Group is exposed in varying degrees to a variety of fi nancial instrument related risks. The Board approves and monitors the risk management processes, including documented treasury policies, counterparty limits, controlling and reporting structures. The risk management processes of the Group's independently listed subsidiaries are in line with the Group's own policy.

The types of risk exposure, the way in which such exposure is managed and quantifi cation of the level of exposure in the Consolidated balance sheet at year end is provided as follows (subcategorised into credit risk, liquidity risk and market risk).

Credit risk

The Group's principal fi nancial assets, including amounts in assets held for sale, are cash, trade and other receivables, investments and derivative fi nancial instruments. The Group's maximum exposure to credit risk primarily arises from these fi nancial assets and is as follows:

US\$ million	2012	2011
Cash and cash equivalents	9,312	11,732
Trade and other receivables(1)	4,003	3,852
Financial asset investments(2)	1,331	1,690
Derivative fi nancial assets	848	840
Financial guarantees(3)	33	51
	15,527	18,165

(1) Trade and other receivables exclude prepayments and accrued income.

(2) Financial asset investments exclude available for sale investments.

(3) Financial guarantees issued by the Group in respect of third party liabilities represent an exposure to credit risk in excess of the Group's fi nancial assets.

The Group limits credit risk on liquid funds and derivative fi nancial instruments through diversifi cation of exposures with a range of approved fi nancial institutions. Counterparty limits are set for each fi nancial institution with reference to credit ratings assigned by S&P, Moody's and Fitch Ratings.

Given the diverse nature of the Group's operations (both in relation to commodity markets and geographically), together with insurance cover (including letters of credit from fi nancial institutions), it does not have signifi cant concentration of credit risk in respect of trade receivables, with exposure spread over a large number of customers.

An allowance for impairment of trade receivables is made where there is an identifi ed loss event, which based on previous experience, is evidence of a reduction in the recoverability of the cash fl ows. Details of the credit quality of trade receivables and the associated provision for impairment are disclosed in note 21.

Liquidity risk

The Group ensures that there are suffi cient committed loan facilities (including refi nancing, where necessary) in order to meet short term business requirements, after taking into account cash fl ows from operations and its holding of cash and cash equivalents, as well as any Group distribution restrictions that exist. In addition, certain projects are fi nanced by means of limited recourse project fi nance, if appropriate.

The expected undiscounted cash fl ows of the Group's fi nancial liabilities (including associated derivatives), by remaining contractual maturity, based on conditions existing at the balance sheet date are as follows:

						2012						2011
	Within one year			One to two years			Within one year			One to two years
US\$ million	Fixed interest	Floating interest	Capital repayment	Fixed interest	Floating interest	Capital repayment	Fixed interest	Floating interest	Capital repayment	Fixed interest	Floating interest	Capital repayment
Financial liabilities
(excluding derivatives)	(647)	(202)	(1) (6,981)	(493)	(163)	(2,336)	(549)	(181)	(5,962)(1)	(549)	(127)	(2,433)
Net settled derivatives(2)	619	(389)	(127)	485	(253)	(27)	470	(246)	2	470	(250)	(140)
	(28)	(591)	(7,108)	(8)	(416)	(2,363)	(79)	(427)	(5,960)	(79)	(377)	(2,573)

						2012						2011
			Two to fi ve years	Greater than fi ve years		Two to fi ve years			Greater than fi ve years
	Fixed	Floating	Capital	Fixed	Floating	Capital	Fixed	Floating	Capital	Fixed	Floating	Capital
US\$ million	interest	interest	repayment	interest	interest	repayment	interest	interest	repayment	interest	interest	repayment
Financial liabilities
(excluding derivatives)	(1,064)	(218)	(5,746)	(619)	(67)	(7,695)	(798)	(254)	(6,551)	(354)	(104)	(3,952)
Net settled derivatives(2)	1,058	(551)	(464)	616	(308)	(126)	761	(305)	(468)	350	(127)	(219)
	(6)	(769)	(6,210)	(3)	(375)	(7,821)	(37)	(559)	(7,019)	(4)	(231)	(4,171)

(1) Assumes maximum cash outfl ow in respect of third party guarantees issued by the Group and repayment of all short term borrowings with no refi nancing.

(2) The expected maturities are not materially different from the contracted maturities.

The Group had the following undrawn committed borrowing facilities at 31 December:

US\$ million	2012	2011
Expiry date
Within one year(1)	2,923	1,781
Greater than one year, less than two years	569	1,268
Greater than two years, less than fi ve years	5,765	5,294
Greater than fi ve years	–	76
	9,257	8,419

(1) Includes undrawn rand facilities equivalent to \$1.5 billion (2011: \$1.6 billion) in respect of a series of facilities with 364 day maturities which roll automatically on a daily basis, unless notice is served.

Market risk

Market risk is the risk that fi nancial instrument fair values will fl uctuate due to changes in market prices. The signifi cant market risks to which the Group is exposed are foreign exchange risk, interest rate risk and commodity price risk.

Foreign exchange risk

As a global business, the Group is exposed to many currencies principally as a result of non-US dollar operating costs and to a lesser extent, from non-US dollar revenues. The Group's policy is generally not to hedge such exposures as hedging is not deemed appropriate given the diversifi ed nature of the Group, though exceptions can be approved by the Group Management Committee.

In addition, currency exposures exist in respect of non-US dollar approved capital expenditure projects and non-US dollar borrowings in US dollar functional currency entities. The Group's policy is that such exposures should be hedged subject to a review of the specifi c circumstances of the exposure.

The exposure of the Group's fi nancial assets and liabilities (excluding intra-group loan balances) to currency risk is as follows:

				2012				2011
US\$ million	Financial assets (excluding derivatives)	Impact of currency derivatives(1)	Derivative assets	Total fi nancial assets – exposure to currency risk	Financial assets (excluding derivatives)	Impact of currency derivatives(1)	Derivative assets	Total fi nancial assets – exposure to currency risk
US dollar	9,241	(64)	808	9,985	10,639	(186)	742	11,195
Rand	3,894	64	37	3,995	5,761	186	98	6,045
Brazilian real	728	–	–	728	839	–	–	839
Sterling	123	–	1	124	467	–	–	467
Australian dollar	494	–	–	494	383	–	–	383
Euro	45	–	1	46	9	–	–	9
Other currencies	561	–	1	562	382	–	–	382
Total fi nancial assets	15,086	–	848	15,934	18,480	–	840	19,320

				2012				2011
US\$ million	Financial liabilities (excluding derivatives)	Impact of currency derivatives(1)	Derivative liabilities	Total fi nancial liabilities – exposure to currency risk	Financial liabilities (excluding derivatives)	Impact of currency derivatives(1)	Derivative liabilities	Total fi nancial liabilities – exposure to currency risk
US dollar	(8,269)	(8,492)	(1,046)	(17,807)	(6,970)	(5,282)	(1,096)	(13,348)
Rand	(3,287)	(5)	(35)	(3,327)	(3,595)	(37)	(16)	(3,648)
Brazilian real	(1,597)	1,119	–	(478)	(1,608)	1,138	–	(470)
Sterling	(913)	785	–	(128)	(1,181)	740	–	(441)
Australian dollar	(422)	–	–	(422)	(564)	–	–	(564)
Euro	(6,601)	6,593	–	(8)	(3,436)	3,428	–	(8)
Other currencies	(1,092)	–	–	(1,092)	(473)	13	–	(460)
Total fi nancial liabilities	(22,181)	–	(1,081)	(23,262)	(17,827)	–	(1,112)	(18,939)

(1) Where currency derivatives are held to manage fi nancial instrument exposures, the notional principal amount is reallocated to refl ect the remaining exposure to the Group.

Interest rate risk

Interest rate risk arises due to fl uctuations in interest rates which impact on the value of short term investments and fi nancing activities. The Group's exposure to interest rate risk is particularly with reference to changes in US and South African interest rates.

The Group's policy is to borrow funds at fl oating rates of interest as, over the longer term, this is considered by management to give somewhat of a natural hedge against commodity price movements, given the correlation with economic growth (and industrial activity), which in turn shows a high correlation with commodity price fl uctuation. In certain circumstances, the Group uses interest rate swap contracts to manage its exposure to interest rate movements on a portion of its existing debt. Strategic hedging using fi xed rate debt may also be undertaken from time to time if approved by the Group Management Committee.

In respect of fi nancial assets, the Group's policy is to invest cash at fl oating rates of interest and to maintain cash reserves in short term investments (less than one year) in order to maintain liquidity, while achieving a satisfactory return for shareholders.

The exposure of the Group's fi nancial assets (excluding intra-group loan balances) to interest rate risk is as follows:

					2012					2011
	Interest bearing fi nancial assets		Non-interest bearing fi nancial assets				Interest bearing fi nancial assets		Non-interest bearing fi nancial assets
	Floating	Fixed	Equity			Floating	Fixed	Equity
US\$ million	rate	rate(1)	investments	Other	Total	rate	rate(1)	investments	Other	Total
Financial assets (excluding derivatives)(2)	9,651	508	1,062		3,865 15,086	12,623	689	1,206	3,962	18,480
Derivative assets	748	–	–	100	848	638	–	–	202	840
Financial asset exposure to interest
rate risk	10,399	508	1,062		3,965 15,934	13,261	689	1,206	4,164	19,320

(1) Includes \$397 million (2011: \$534 million) of preference shares in BEE entities.

(2) At 31 December 2012 and 31 December 2011 no interest rate swaps were held in respect of fi nancial asset exposures.

Floating rate fi nancial assets consist mainly of cash and bank term deposits. Interest on fl oating rate fi nancial assets is based on the relevant national inter-bank rates. Fixed rate fi nancial assets consist principally of fi nancial asset investments and cash, and have a weighted average interest rate of 11.6% (2011: 12.7%) for an average period of one year (2011: three years). Equity investments have no maturity period and the majority are fully liquid.

The exposure of the Group's fi nancial liabilities (excluding intra-group loan balances) to interest rate risk is as follows:

	2012							2011
	Interest bearing fi nancial liabilities		Non-interest bearing		Interest bearing fi nancial liabilities		Non-interest bearing
US\$ million	Floating rate	Fixed rate	fi nancial liabilities	Total	Floating rate	Fixed rate	fi nancial liabilities	Total
Financial liabilities (excluding derivatives)	(4,296)	(13,444)	(4,441)	(22,181)	(3,254)	(9,610)	(4,963)	(17,827)
Impact of interest rate swaps(1)	(13,135)	13,135	–	–	(8,074)	8,074	–	–
Derivative liabilities	(165)	–	(916)	(1,081)	(158)	–	(954)	(1,112)
Financial liability exposure to interest rate risk	(17,596)	(309)	(5,357)	(23,262)	(11,486)	(1,536)	(5,917)	(18,939)

(1) Where interest rate swaps are held to manage fi nancial liability exposures the notional principal amount is reallocated to refl ect the remaining exposure to the Group.

Interest on fl oating rate fi nancial liabilities is based on the relevant national inter-bank rates. Remaining fi xed rate borrowings accrue interest at a weighted average interest rate of 6.2% (2011: 9.3%) for an average period of three years (2011: two years). Average maturity on non-interest bearing instruments is 17 months (2011: 12 months).

Commodity price risk

The Group's earnings are principally exposed to movements in the prices of the commodities it produces.

The Group policy is generally not to hedge commodity price risk, although some hedging may be undertaken for strategic reasons. In such cases, the Group generally uses forward and deferred contracts to hedge the price risk.

Certain of the Group's sales and purchases are provisionally priced and as a result are susceptible to future price movements. The exposure of the Group's fi nancial assets and liabilities to commodity price risk is as follows:

				2012				2011
	Commodity price linked		Not		Commodity price linked		Not
US\$ million	Subject to price movements	Fixed price(1)	linked to commodity price	Total	Subject to price movements	Fixed price(1)	linked to commodity price	Total
Total net fi nancial instruments (excluding
derivatives)	304	1,087	(8,486)	(7,095)	352	945	(644)	653
Commodity derivatives (net)	(1)	–	–	(1)	(17)	–	–	(17)
Non-commodity derivatives (net)	–	–	(232)	(232)	–	–	(255)	(255)
Total fi nancial instrument exposure to
commodity risk	303	1,087	(8,718)	(7,328)	335	945	(899)	381

(1) Includes receivables and payables for commodity sales and purchases not subject to price adjustment at the balance sheet date.

Derivatives

In accordance with IAS 32 Financial Instruments: Presentation and IAS 39, the fair values of derivatives are separately recorded on the balance sheet within 'Derivative fi nancial assets' and 'Derivative fi nancial liabilities'. Derivatives are classifi ed as current or non-current depending on the maturity of the derivative.

The Group utilises derivative instruments to manage certain market risk exposures as explained above. The Group does not use derivative fi nancial instruments for speculative purposes, however it may choose not to designate certain derivatives as hedges for accounting purposes. Such derivatives are classifi ed as 'non-hedges' and fair value movements are recorded in the income statement.

The use of derivative instruments is subject to limits and the positions are regularly monitored and reported to senior management.

Embedded derivatives

Derivatives embedded in other fi nancial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of their host contract and the host contract is not carried at fair value. Embedded derivatives may be designated into hedge relationships and are accounted for in accordance with the Group's accounting policy set out in note 1.

Cash fl ow hedges

In certain cases the Group classifi es its forward foreign currency and commodity price contracts, which hedge highly probable forecast transactions, as cash fl ow hedges. Where this designation is documented, changes in fair value are recognised in equity until the hedged transactions occur, at which time the respective gains or losses are transferred to the income statement (or hedged balance sheet item) in accordance with the Group's accounting policy set out in note 1.

Fair value hedges

The majority of interest rate swaps (taken out to swap the Group's fi xed rate borrowings to fl oating rate, in accordance with the Group's policy) have been designated as fair value hedges. The carrying value of the hedged debt is adjusted at each balance sheet date to refl ect the impact on its fair value of changes in market interest rates. Changes in the fair value of the hedged debt are offset against fair value changes in the interest rate swap and classifi ed within net fi nance costs in the income statement.

Non-hedges

The Group may choose not to designate certain derivatives as hedges. This may occur where the Group is economically hedged but IAS 39 hedge accounting cannot be achieved or where gains and losses on both the derivative and hedged item naturally offset in the income statement, which for example may be the case for certain cross currency swaps of non-US dollar debt. Where derivatives have not been designated as hedges, fair value changes are recognised in the income statement in accordance with the Group's accounting policy set out in note 1 and are classifi ed as fi nancing or operating depending on the nature of the associated hedged risk.

The fair value of the Group's open derivative position at 31 December (excluding normal purchase and sale contracts held off balance sheet), recorded within 'Derivative fi nancial assets' and 'Derivative fi nancial liabilities' is as follows:

				Current				Non-current
		2012		2011		2012		2011
US\$ million	Asset	Liability	Asset	Liability	Asset	Liability	Asset	Liability
Cash fl ow hedge
Forward foreign currency contracts	3	–	6	(1)	–	–	–	–
Fair value hedge
Interest rate swaps	31	–	–	–	687	(6)	538	–
Forward commodity contracts	1	(2)	–	(5)	–	–	–	–
Non-hedge ('Held for trading')
Forward foreign currency contracts	35	(124)	117	(121)	–	(1)	11	(33)
Cross currency swaps	31	(124)	49	–	60	(781)	55	(908)
Other	–	(30)	–	(35)	–	(13)	64	(9)
	101	(280)	172	(162)	747	(801)	668	(950)

These marked to market valuations are in no way predictive of the future value of the hedged position, nor of the future impact on the profit of the Group. The valuations represent the cost of closing all hedge contracts at year end, at market prices and rates available at the time.

Normal purchase and normal sale contracts

Commodity based contracts that meet the scope exemption in IAS 39 (in that they are settled through physical delivery of the Group's production or are used within the production process), are classifi ed as normal purchase or sale contracts. In accordance with IAS 39 these contracts are not marked to market.

Capital risk management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefi ts for other stakeholders and, with cognisance of forecast future market conditions and structuring, to maintain an optimal capital structure to reduce the cost of capital.

In order to manage the short and long term capital structure, the Group adjusts the amount of ordinary dividends paid to shareholders, returns capital to shareholders (via, for example, share buybacks and special dividends), arranges debt to fund new acquisitions and may also sell non-core assets to reduce debt.

The Group monitors capital on the basis of the ratio of net debt to total capital (gearing). Net debt is calculated as total borrowings less cash and cash equivalents (including derivatives which provide an economic hedge of debt and the net debt of disposal groups). Total capital is calculated as 'Net assets' (as shown in the Consolidated balance sheet) excluding net debt. Total capital and gearing are as follows:

US\$ million	2012	2011	2010
Net assets	43,787	43,189	37,971
Net debt including hedges (see note 31c)	8,615	1,374	7,384
Total capital	52,402	44,563	45,355
Gearing	16.4%	3.1%	16.3%

The increase in gearing since 31 December 2011 refl ects the \$7.2 billion increase in net debt in the year. Net assets at 31 December 2012 were \$0.6 billion higher than at 31 December 2011 due to net movements in equity, including the conversion of the convertible bond, offsetting the retained loss for the year. Gearing levels remain at a sustainable level given the Group's strong level of operating cash fl ows.

Financial instrument sensitivities

Financial instruments affected by market risk include borrowings, deposits, derivative fi nancial instruments, trade receivables and trade payables. The following analysis, required by IFRS 7, is intended to illustrate the sensitivity of the Group's fi nancial instruments (at 31 December) to changes in commodity prices, interest rates and foreign currencies.

The sensitivity analysis has been prepared on the basis that the components of net debt, the ratio of fi xed to fl oating interest rates of the debt and derivatives portfolio and the proportion of fi nancial instruments in foreign currencies are all constant and on the basis of the hedge designations in place at 31 December. In addition, the commodity price impact for provisionally priced contracts is based on the related trade receivables and trade payables at 31 December. As a consequence, this sensitivity analysis relates to the position at 31 December.

The following assumptions were made in calculating the sensitivity analysis:

All income statement sensitivities also impact equity.
For debt and other deposits carried at amortised cost, carrying value does not change as interest rates move.
No sensitivity is provided for interest accruals as these are based on pre-agreed interest rates and therefore are not susceptible to further rate changes.
Changes in the carrying value of derivatives (from movements in commodity prices and interest rates) designated as cash fl ow hedges are assumed to be recorded fully within equity on the grounds of materiality.
No sensitivity has been calculated on derivatives and related underlying instruments designated into fair value hedge relationships as these are assumed materially to offset one another.
All hedge relationships are assumed to be fully effective on the grounds of materiality.
Debt with a maturity of less than one year is fl oating rate, unless it is a long term fi xed rate debt in its fi nal year.
Translation of foreign subsidiaries and operations into the Group's presentation currency has been excluded from the sensitivity.

Using the above assumptions, the following table shows the illustrative effect on the income statement and equity that would result from reasonably possible changes in the relevant commodity price. The Group has determined that at 31 December 2012 and 31 December 2011, based on the above assumptions, there is no signifi cant sensitivity to changes in market interest rates.

		2012		2011
US\$ million	Income statement	Equity	Income statement	Equity
Foreign currency sensitivities(1)
+10% US dollar to rand	(74)	(73)	(81)	(77)
–10% US dollar to rand	74	73	81	77
+10% US dollar to Brazilian real(2)	190	190	402	405
–10% US dollar to Brazilian real(2)	(194)	(194)	(279)	(282)
+10% US dollar to Australian dollar	41	41	36	36
–10% US dollar to Australian dollar	(41)	(41)	(36)	(36)
+10% US dollar to Chilean peso(2)	29	29	15	15
–10% US dollar to Chilean peso(2)	(36)	(36)	(18)	(18)
Commodity price sensitivities
10% increase in the copper price	63	63	37	37
10% decrease in the copper price	(63)	(63)	(37)	(37)
10% increase in the platinum price	(17)	(17)	(15)	(15)
10% decrease in the platinum price	17	17	15	15

(1) + represents strengthening of US dollar against the respective currency.

(2) Includes sensitivities for non-hedge derivatives related to capital expenditure.

The above sensitivities are calculated with reference to a single moment in time and are subject to change due to a number of factors including: • fl uctuating trade receivable and trade payable balances

derivative instruments and borrowings settled throughout the year
fl uctuating cash balances
changes in currency mix

As the sensitivities are limited to year end fi nancial instrument balances, they do not take account of the Group's sales and operating costs, which are highly sensitive to changes in commodity prices and exchange rates. In addition, each of the sensitivities is calculated in isolation, whilst in reality commodity prices, interest rates and foreign currencies do not move independently.

26. PROVISIONS FOR LIABILITIES AND CHARGES

					2012
	Environmental		Employee
US\$ million	restoration(1)	Decommissioning(1)	benefi ts	Other	Total
At 1 January	989	349	257	607	2,202
Acquired through business combinations	83	129	118	217	547
Charged to the income statement	90	–	218	424	732
Capitalised	37	42	–	(9)	70
Unwinding of discount	60	29	1	12	102
Amounts applied	(37)	(2)	(129)	(109)	(277)
Unused amounts reversed	(34)	(1)	–	(143)	(178)
Transfer to liabilities directly associated with assets classifi ed as held for sale	(83)	(22)	(10)	(108)	(223)
Currency movements	(16)	(7)	(16)	12	(27)
At 31 December	1,089	517	439	903	2,948

(1) The Group makes contributions to controlled funds to meet the cost of some of its environmental restoration and decommissioning liabilities, see note 16.

Maturity analysis of total provisions:

US\$ million	2012	2011
Current	564	372
Non-current	2,384	1,830
	2,948	2,202

Environmental restoration

The Group has an obligation to undertake restoration, rehabilitation and environmental work when environmental disturbance is caused by the development or ongoing production of a mining property. A provision is recognised for the present value of such costs. It is anticipated that these costs will be incurred over a period in excess of 20 years.

Decommissioning

Provision is made for the present value of costs relating to the decommissioning of plant or other site restoration work. It is anticipated that these costs will be incurred over a period in excess of 20 years.

Employee benefi ts

Provision is made for statutory or contractual employee entitlements including long service leave, annual leave, sickness pay obligations and cash settled share-based payment obligations. It is anticipated that these costs will be incurred when employees choose to take their benefi ts.

Other

Other provisions primarily relate to indemnities, warranties and legal claims. It is anticipated that these costs will be incurred over a fi ve year period. Other provisions also includes obligations for certain long term contracts where the unavoidable costs of meeting the Group's obligations is expected to exceed the benefi ts to be received, see note 5. It is anticipated these costs will be incurred over a period in excess of 15 years.

27. DEFERRED TAX

The movement in net deferred tax liabilities during the year is as follows:

US\$ million	2012	2011
At 1 January	(5,200)	(5,252)
Credited/(charged) to the income statement	1,090	(550)
(Charged)/credited to the statement of comprehensive income	(86)	10
Charged directly to equity	(110)	(127)
Acquired through business combinations	(850)	–
Transfer to assets held for sale	118	–
Disposal of businesses	–	5
Currency movements	192	714
At 31 December	(4,846)	(5,200)
Comprising:
Deferred tax assets	1,223	530
Deferred tax liabilities	(6,069)	(5,730)

The amount of deferred tax recognised in the balance sheet is as follows:

US\$ million	2012	2011
Deferred tax assets
Tax losses	374	273
Post employment benefi ts	118	35
Share-based payments	9	15
Enhanced tax depreciation	560	–
Other temporary differences	162	207
	1,223	530
Deferred tax liabilities
Capital allowances in excess of depreciation	(3,311)	(3,334)
Fair value adjustments	(2,582)	(1,806)
Tax losses	29	103
Derivatives	15	(167)
Provisions	416	393
Chilean withholding tax	(570)	(656)
Other temporary differences	(66)	(263)
	(6,069)	(5,730)

27. DEFERRED TAX continued

The amount of deferred tax credited/(charged) to the income statement is as follows:

US\$ million	2012	2011
Capital allowances in excess of depreciation	(22)	(615)
Fair value adjustments	(133)	(118)
Tax losses	11	167
Derivatives	99	36
Provisions	41	82
Chilean withholding taxes	86	(137)
Other temporary differences	1,008 (1)	35
	1,090	(550)

(1) In 2012 this principally relates to Minas-Rio (\$960 million credit). This is made up of a deferred tax credit of \$1,360 million in relation to the impairment of Minas-Rio and a deferred tax charge of \$400 million in relation to the partial derecognition of a deferred tax asset for enhanced tax depreciation in Minas-Rio.

The current expectation regarding the maturity of deferred tax balances is as follows:

US\$ million	2012	2011
Deferred tax assets
Recoverable within one year	131	52
Recoverable after one year	1,092	478
	1,223	530
Deferred tax liabilities
Payable within one year	(368)	(505)
Payable after one year	(5,701)	(5,225)
	(6,069)	(5,730)

The Group has the following balances in respect of which no deferred tax asset has been recognised:

				2012				2011
US\$ million	Tax losses – revenue	Tax losses – capital	Other temporary differences	Total	Tax losses – revenue	Tax losses – capital	Other temporary differences	Total
Expiry date
Within one year	17	–	–	17	–	–	–	–
Greater than one year, less than fi ve years	286	–	–	286	–	–	–	–
Greater than fi ve years	3	–	2,997	3,000	111	–	–	111
No expiry date	4,467	1,097	1,953	7,517	3,082	1,067	403	4,552
	4,773	1,097	4,950	10,820	3,193	1,067	403	4,663

The Group also has unused tax credits of \$16 million (2011: \$18 million) for which no deferred tax asset is recognised in the balance sheet. All of these credits expire within fi ve years.

No deferred tax has been recognised in respect of temporary differences associated with investments in subsidiaries, branches and associates and interests in joint ventures where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future. The aggregate amount of temporary differences associated with such investments in subsidiaries, branches and associates and interests in joint ventures is represented by the contribution of those investments to the Group's retained earnings and amounted to \$22,442 million (2011: \$25,876 million).

28. RETIREMENT BENEFITS

The Group operates a number of defined contribution and defined benefit pension plans. It also operates post employment medical arrangements, principally in southern Africa.

Defi ned contribution plans

The defi ned contribution pension and medical cost represents the actual contributions payable by the Group to the various plans. At 31 December 2012 there were no material outstanding or prepaid contributions and so no accrual or prepayment has been disclosed in the balance sheet in relation to these plans.

The assets of the defi ned contribution plans are held separately in independently administered funds. The charge in respect of these plans is calculated on the basis of the contribution payable by the Group in the fi nancial year. The charge for the year for defi ned contribution pension plans (net of amounts capitalised) was \$262 million (2011: \$254 million) and for defi ned contribution medical plans (net of amounts capitalised) was \$69 million (2011: \$57 million).

Defi ned benefi t pension plans and post employment medical plans

Following the Group's acquisition of De Beers on 16 August 2012, the Group has consolidated the defined benefit pension and post employment healthcare plans of De Beers.

The majority of the defined benefit pension plans are funded. The assets of these plans are held separately from those of the Group, in independently administered funds, in accordance with statutory requirements or local practice throughout the world. The unfunded liabilities are principally in relation to termination indemnity plans in South America.

The post employment medical arrangements provide health benefi ts to retired employees and certain dependants. Eligibility for cover is dependent upon certain criteria. The majority of these plans are unfunded, and are principally in southern Africa.

The Group's provision of anti-retroviral therapy to HIV positive staff has not signifi cantly impacted the post employment medical plan liability.

Independent qualifi ed actuaries carry out full valuations every three years using the projected unit credit method. The actuaries have updated the valuations to 31 December 2012.

28. RETIREMENT BENEFITS continued

Actuarial assumptions

The principal assumptions used to determine the actuarial present value of benefi t obligations and pension charges and credits under IAS 19 Employee Benefi ts are detailed below (shown as weighted averages):

			2012			2011
%	Southern Africa	The Americas	Europe	Southern Africa	The Americas	Europe
Defi ned benefi t pension plans
Average discount rate for plan liabilities	8.1	6.9	4.3	8.5	7.8	4.8
Average rate of infl ation	6.3	3.5	2.8	6.5	3.6	2.7
Average rate of increase in salaries	(1) 8.3	6.2	(2) 2.9	(1) 7.8	6.5	(2) n/a
Average rate of increase of pensions in payment	6.3	3.2	3.1	6.5	3.3	3.0
Average long term rate of return on plan assets(3)	8.4	10.2	4.2	9.2	12.8	5.0
Post employment medical plans
Average discount rate for plan liabilities	8.0	n/a	3.7	8.5	n/a	n/a
Average rate of infl ation	6.3	n/a	2.3	6.5	n/a	n/a
Expected average increase in healthcare costs	7.7	n/a	7.0	7.9	n/a	n/a

(1) With the exception of De Beers, plans in southern Africa have ceased future accrual of benefi ts but some benefi ts remain linked to salary increases.

(2) With the exception of De Beers, European plans have ceased future accrual of benefi ts.

(3) The long term expected return on plan assets has been set with reference to current market yields on government and corporate bonds, plus expected equity and corporate bondoutperformance over government bonds in the relevant jurisdictions. The expected return on cash assets has been set with reference to current bank base rates. The overall long term expected rate of return for each asset class is weighted by the asset allocation to the asset class at the balance sheet date.

Mortality assumptions are determined based on standard mortality tables with adjustments, as appropriate, to refl ect experience of conditions locally. In southern Africa, the PA90 tables (2011: PA90 tables) are used. The main plans in Europe use the SAPS tables with plan specifi c adjustments based on mortality investigations (2011: SAPS tables). The main plans in the Americas use the RV2009 and AT2000 tables (2011: RV2009 and AT2000 tables). The mortality tables used imply that a male or female aged 60 at the balance sheet date has the following future life expectancy:

		Male		Female
Years	2012	2011	2012	2011
Southern Africa	20.1	20.9	24.9	25.8
The Americas	23.3	23.2	27.4	27.2
Europe	28.5	27.4	30.1	30.0

Summary of plans by geography

The Group's plans in respect of pension and post employment healthcare are summarised as follows:

				2012				2011
US\$ million	Southern Africa	The Americas	Europe	Total	Southern Africa	The Americas	Europe	Total
Assets(1)
Defi ned benefi t pension plans in surplus	176	–	–	176	70	–	–	70
Liabilities
Defi ned benefi t pension plans in defi cit	–	(225)	(603)	(828)	–	(181)	(171)	(352)
Post employment medical plans in defi cit	(573)	–	(8)	(581)	(287)	–	–	(287)
	(573)	(225)	(611)	(1,409)	(287)	(181)	(171)	(639)

(1) Amounts are included in 'Other non-current assets'.

Five year summary of plan assets and liabilities

US\$ million	2012	2011	2010	2009	2008
Defi ned benefi t pension plans
Fair value of plan assets	5,327	2,583	2,732	2,731	2,073
Present value of plan liabilities	(5,862)	(2,792)	(2,840)	(2,975)	(2,157)
Net defi cit	(535)	(209)	(108)	(244)	(84)
Surplus restriction	(117)	(73)	(59)	(106)	(61)
Net defi cit after surplus restriction	(652)	(282)	(167)	(350)	(145)

Actuarial gain/(loss) on plan assets(1)	151	(32)	76	184	(392)
Actuarial gain/(loss) on plan liabilities(2)	66	(135)	19	(361)	208
Post employment medical plans
Fair value of plan assets	21	22	25	20	17
Present value of plan liabilities	(602)	(309)	(337)	(322)	(241)
Net defi cit	(581)	(287)	(312)	(302)	(224)

Actuarial gain on plan assets(3)	–	1	2	–	1
Actuarial (loss)/gain on plan liabilities(4)	(35)	(22)	(13)	(10)	16

(1) Net experience gains on pension plan assets were \$151 million (2011: losses of \$32 million; 2010: gains of \$76 million; 2009: gains of \$184 million; 2008: losses of \$392 million).

(2) Net experience losses on pension plan liabilities were \$123 million (2011: losses of \$10 million; 2010: gains of \$38 million; 2009: losses of \$17 million; 2008: losses of \$29 million).

(3) Net experience gains on medical plan assets were nil (2011: gains of \$1 million; 2010: gains of \$2 million; 2009: nil; 2008: gains of \$1 million).

(4) Net experience losses on medical plan liabilities were \$32 million (2011: losses of \$1 million; 2010: gains of \$5 million; 2009: losses of \$3 million; 2008: losses of \$7 million).

28. RETIREMENT BENEFITS continued

The actuarial gain recognised in the Consolidated statement of comprehensive income of \$165 million (2011: loss of \$214 million) includes a charge for the increase in the surplus restriction of \$17 million (2011: charge for the increase of \$26 million). The movement in the surplus restriction in the Consolidated statement of comprehensive income differs from that in the table above due to the exclusion of a surplus restriction on De Beers' pension plans of \$30 million arising from the acquisition, and exchange differences. Cumulative net actuarial losses recognised in the Consolidated statement of comprehensive income are \$427 million (2011: \$592 million; 2010: \$378 million; 2009: \$509 million; 2008: \$292 million).

Income statement

The amounts recognised in the income statement are as follows:

			2012			2011
US\$ million	Pension plans	Post employment medical plans	Total	Pension plans	Post employment medical plans	Total
Analysis of the amount charged to operating profi t
Current service costs	18	4	22	18	3	21
Effects of settlements	9	–	9	–	–	–
Total within operating costs	27	4	31	18	3	21
Analysis of the amount charged to net fi nance costs
Expected return on plan assets(1)	(199)	(1)	(200)	(197)	(2)	(199)
Interest costs on plan liabilities(2)	196	34	230	181	24	205
Net charge to net fi nance costs	(3)	33	30	(16)	22	6
Total charge to the income statement	24	37	61	2	25	27

(1) Included in 'Investment income', see note 9.

(2) Included in 'Interest expense', see note 9.

Pension plan assets and liabilities by geography

The split of the present value of funded and unfunded obligations in defi ned benefi t pension plans, the fair value of the pension assets and the long term expected rate of return at 31 December are as follows:

							2012							2011
		Southern Africa		The Americas		Europe	Total		Southern Africa		The Americas		Europe	Total
	Rate of return %	Fair value US\$ million	Rate of return %	Fair value US\$ million	Rate of return %	Fair value US\$ million	Fair value US\$ million	Rate of return %	Fair value US\$ million	Rate of return %	Fair value US\$ million	Rate of return %	Fair value US\$ million	Fair value US\$ million
Equity	9.5	652	7.0	11	5.5	1,150	1,813	11.5	283	14.6	13	7.0	726	1,022
Bonds	7.8	1,077	10.5	133	3.8	1,605	2,815	8.1	512	12.6	124	3.7	715	1,351
Other	7.7	116	10.7	3	2.6	580	699	6.5	42	11.8	5	1.4	163	210
Fair value of pension
plan assets(1)		1,845		147		3,335	5,327		837		142		1,604	2,583
Present value of funded obligations(1)		(1,589)		(163)		(3,895)	(5,647)		(718)		(150)		(1,751)	(2,619)
Present value of unfunded obligations		–		(209)		(6)	(215)		–		(173)		–	(173)
Present value of pension plan liabilities		(1,589)		(372)		(3,901)	(5,862)		(718)		(323)		(1,751)	(2,792)
Net surplus/(defi cit) in pension plans		256		(225)		(566)	(535)		119		(181)		(147)	(209)
Surplus restriction related to pension plans		(80)		–		(37)	(117)		(49)		–		(24)	(73)
Recognised pension plan assets/(liabilities)		176		(225)		(603)	(652)		70		(181)		(171)	(282)
Amounts in the balance sheet
Pension assets		176		–		–	176		70		–		–	70
Pension liabilities		–		(225)		(603)	(828)		–		(181)		(171)	(352)
		176		(225)		(603)	(652)		70		(181)		(171)	(282)

(1) The fair value of assets was used to determine the funding level of the plans. The fair value of the assets of the funded plans was sufficient to cover 94% (2011: 99%) of the benefits that had accrued to members after allowing for expected increases in future earnings and pensions. Companies within the Group are paying contributions as required in accordance with local actuarial advice.

28. RETIREMENT BENEFITS continued

Movement analysis

The changes in the fair value of plan assets are as follows:

			2012			2011
US\$ million	Pension plans	Post employment medical plans	Total	Pension plans	Post employment medical plans	Total
At 1 January	2,583	22	2,605	2,732	25	2,757
Acquired through business combinations	2,417	–	2,417	–	–	–
Effects of settlements	(50)	–	(50)	(31)	–	(31)
Expected return	(1) 199	1	200	(1) 197	2	199
Actuarial gains/(losses)	(1) 151	–	151	(1) (32)	1	(31)
Contributions paid by employer(2)	90	–	90	81	–	81
Benefi ts paid	(151)	(1)	(152)	(136)	(1)	(137)
Contributions paid by plan participants	1	–	1	1	–	1
Currency movements	87	(1)	86	(229)	(5)	(234)
At 31 December	5,327	21	5,348	2,583	22	2,605

(1) The actual return on assets in respect of pension plans was \$350 million (2011: \$165 million).

(2) The Group expects to contribute approximately \$162 million to its pension plans and \$32 million to its post employment medical plans in 2013.

The changes in the present value of defi ned benefi t obligations are as follows:

			2012			2011
		Post employment
	Pension	medical		Pension	employment medical
US\$ million	plans	plans	Total	plans	plans	Total
At 1 January	(2,792)	(309)	(3,101)	(2,840)	(337)	(3,177)
Acquired through business combinations	(2,974)	(302)	(3,276)	–	–	–
Current service costs	(18)	(3) (1)	(21)	(18)	(3)	(21)
Effects of settlements	41	–	41	31	–	31
Interest costs	(196)	(30) (1)	(226)	(181)	(24)	(205)
Actuarial gains/(losses)	66	(36) (1)	30	(135)	(22)	(157)
Benefi ts paid	151	(1) 24	175	136	16	152
Contributions paid by plan participants	(1)	–	(1)	(1)	–	(1)
Transfer to liabilities directly associated with assets held for sale	–	39	39	–	–	–
Currency movements	(139)	15	(124)	216	61	277
At 31 December	(5,862)	(602)	(6,464)	(2,792)	(309)	(3,101)

(1) Movements in post employment medical plans exclude movements within the obligations transferred to held for sale.

Healthcare sensitivity analysis

Amounts recognised in the Consolidated income statement in respect of post employment medical plans are sensitive to assumed healthcare cost trend rates. A 1% change in assumed healthcare cost trend rates would have the following effects:

		1% increase		1% decrease
US\$ million	2012	2011	2012	2011
Effect on the sum of service costs and interest costs	8	4	(5)	(3)
Effect on defi ned benefi t obligations	78	35	(63)	(28)

29. CALLED-UP SHARE CAPITAL AND SHARE-BASED PAYMENTS Called-up share capital

		2012	2011
	Number of shares	US\$ million	Number of shares	US\$ million
Called-up, allotted and fully paid:
5% cumulative preference shares of £1 each	50,000	–	50,000	–

Ordinary shares of 5486/91 US cents each:
At 1 January	1,342,967,458	738	1,342,932,714	738
Allotted during the year	62,492,295	34	34,744	–
At 31 December	1,405,459,753	772	1,342,967,458	738

During 2012, 8,354 ordinary shares of 5486/91 US cents each were allotted to certain non-executive directors by subscription of their post-tax directors' fees (2011: 5,487 ordinary shares). In addition, 62,483,941 ordinary shares of 5486/91 US cents each were allotted upon the conversion of Anglo American plc convertible bonds due 2014 (2011: 29,257), see note 24.

Excluding shares held in treasury (but including the shares held by the Group in other structures, as outlined in the Tenon and Employee benefi t trust sections below) the number and carrying value of called-up, allotted and fully paid ordinary shares as at 31 December 2012 was 1,390,954,633 and \$764 million (2011: 1,323,428,547; \$727 million).

At general meetings, every member who is present in person has one vote on a show of hands and, on a poll, every member who is present in person or by proxy has one vote for every ordinary share held.

29. CALLED-UP SHARE CAPITAL AND SHARE-BASED PAYMENTS continued

In the event of winding up, the holders of the cumulative preference shares will be entitled to the repayment of a sum equal to the nominal capital paid up, or credited as paid up, on the cumulative preference shares held by them and any accrued dividend, whether such dividend has been earned or declared or not, calculated up to the date of the winding up.

No ordinary shares were allotted on exercise of employee share option plans (2011: nil).

Own shares

Number of ordinary shares of 5486/91 US cents	2012	2011
Own shares
Treasury shares	14,505,120	19,538,911
Own shares held by subsidiaries and employee benefi t trusts	115,970,790	115,226,079
Total own shares	130,475,910	134,764,990

The movement in treasury shares during the year is as follows:

Number of ordinary shares of 5486/91 US cents	2012	2011
Treasury shares
At 1 January	19,538,911	22,880,468
Transferred to employees in settlement of share awards	(5,033,791)	(3,341,557)
At 31 December	14,505,120	19,538,911

Tenon

Tenon Investment Holdings (Pty) Limited (Tenon), a wholly owned subsidiary of Anglo American South Africa Limited (AASA), has entered into agreements with Epoch Investment Holdings Limited (Epoch), Epoch Two Investment Holdings Limited (Epoch Two) and Tarl Investment Holdings Limited (Tarl) (collectively the Investment Companies), each owned by independent charitable trusts whose trustees are independent of the Group. Under the terms of these agreements, the Investment Companies have purchased Anglo American plc shares on the market and have granted to Tenon the right to nominate a third party (which may include Anglo American plc but not any of its subsidiaries) to take transfer of the Anglo American plc shares each has purchased on the market. Tenon paid the Investment Companies 80% of the cost of the Anglo American plc shares including associated costs for this right to nominate, which together with subscriptions by Tenon for non-voting participating redeemable preference shares in the Investment Companies, provided all the funding required to acquire the Anglo American plc shares through the market. These payments by Tenon were sourced from the cash resources of AASA. Tenon is able to exercise its right of nomination at any time up to 31 December 2025 against payment of an average amount of \$6.41 per share to Epoch, \$9.96 per share to Epoch Two and \$8.27 per share to Tarl which will be equal to 20% of the total costs respectively incurred by Epoch, Epoch Two and Tarl in purchasing shares nominated for transfer to the third party. These funds will then become available for redemption of the preference shares issued by the Investment Companies. The amount payable by the third party on receipt of the Anglo American plc shares will accrue to Tenon and, in accordance with paragraph 33 of IAS 32, any resulting gain or loss recorded by Tenon will not be recognised in the Consolidated income statement of Anglo American plc.

Under the agreements, the Investment Companies will receive dividends on the shares they hold and have agreed to waive the right to vote on those shares. The preference shares issued to the charitable trusts are entitled to a participating right of up to 10% of the profi t after tax of Epoch and 5% of the profi t after tax of Epoch Two and Tarl. The preference shares issued to Tenon will carry a fi xed coupon of 3% plus a participating right of up to 80% of the profi t after tax of Epoch and 85% of the profi t after tax of Epoch Two and Tarl. Any remaining distributable earnings in the Investment Companies, after the above dividends, are then available for distribution as ordinary dividends to the charitable trusts.

The structure effectively provides Tenon with a beneficial interest in the price risk on these shares together with a participation in future dividend receipts. The Investment Companies will retain legal title to the shares until Tenon exercises its right to nominate a transferee.

At 31 December 2012 the Investment Companies together held 112,300,129 (2011: 112,300,129) Anglo American plc shares, which represented 8.1% (2011: 8.5%) of the ordinary shares in issue (excluding treasury shares) with a market value of \$3,455 million (2011: \$4,125 million). The Investment Companies are not permitted to hold more than an aggregate of 10% of the issued share capital of Anglo American plc at any one time.

Although the Group has no voting rights in the Investment Companies and cannot appoint or remove trustees of the charitable trusts, the Investment Companies continue to meet the accounting defi nition of a subsidiary in accordance with IAS 27. As a result, the Investment Companies are consolidated in accordance with the defi nitions of IAS 27 and the principles set out in SIC-12.

Employee benefi t trust

The provision of shares to certain of the Company's share option and share incentive schemes may be facilitated by an employee benefi t trust or settled by the issue of treasury shares. During 2012 no shares (2011: nil) from the trust were transferred to employees in settlement of share awards. The employee benefi t trust has waived the right to receive dividends on these shares.

The market value of the 985 shares (2011: 985 shares) held by the trust at 31 December 2012 was \$30,000 (2011: \$36,000).

The costs of operating the trust are borne by the Group but are not material.

Share-based payments

During the year ended 31 December 2012 the Group had share-based payment arrangements with employees relating to shares of the Company, the details of which are described in the Remuneration report. All of these Company schemes are equity settled, either by award of ordinary shares (BSP, LTIP and SIP) or award of options to acquire ordinary shares (ESOS, DOP and SAYE). The ESOS is now closed to new participants, having been replaced with the BSP. The DOP has since replaced the ESOS for use in special circumstances, relating to the recruitment or retention of key executives. No options have been granted under the DOP.

29. CALLED-UP SHARE CAPITAL AND SHARE-BASED PAYMENTS continued

The total share-based payment charge relating to Anglo American plc shares for the year is split as follows:

US\$ million	2012	2011
BSP	103	92
LTIP	46	36
Other schemes	8	15
Share-based payment charge relating to Anglo American plc shares(1)	157	143

(1) In addition, there are equity settled employee share-based payment charges of \$89 million (2011: \$47 million) relating to Kumba Iron Ore Limited shares and \$72 million (2011: \$72 million) relating to Anglo American Platinum Limited shares. Certain business units also operate cash settled employee share-based payment schemes. These schemes had a net charge of \$3 million (2011: credit of \$2 million).

Schemes settled by award of ordinary shares

The fair value of ordinary shares awarded under the BSP, LTIP and LTIP – AOSC, being the more material share schemes, was calculated using a Black Scholes model. The fair value of shares awarded under the LTIP – TSR scheme was calculated using a Monte Carlo model. The assumptions used in these calculations are set out below:

				2012				2011
Arrangement(1)	BSP	LTIP	LTIP – AOSC	LTIP – TSR	BSP	LTIP	LTIP – AOSC	LTIP – TSR
Date of grant	02/03/12	02/03/12	02/03/12	02/03/12	04/03/11	04/03/11	04/03/11	04/03/11
Number of instruments	4,579,741	1,044,808	329,665	329,665	3,364,610	879,630	267,407	267,407
Share price at the date of grant (£)	26.41	26.41	26.41	26.41	32.08	31.99	31.99	31.99
Contractual life (years)	3	3	3	3	3	3	3	3
Vesting conditions	(2)	(3)	(4)	(5)	(2)	(3)	(4)	(5)
Expected volatility	40%	40%	40%	40%	40%	40%	40%	40%
Risk free interest rate	0.5%	0.5%	0.5%	0.5%	1.9%	1.9%	1.9%	1.9%
Expected departures	5% pa	5% pa	5% pa	5% pa	5% pa	5% pa	5% pa	5% pa
Expected outcome of meeting performance
criteria (at date of grant)	100%	100%	100%	n/a	100%	100%	100%	n/a
Fair value at date of grant (weighted
average) (£)	25.78	26.41	26.41	15.24	33.25	33.25	33.25	21.80

(1) The number of instruments used in the fair value models may differ from the total number of instruments awarded in the year due to awards made subsequent to the fair value calculations. The fair value calculated per the assumptions above has been applied to the total number of awards. The difference in income statement charge is not considered signifi cant.

(2) Three years of continuous employment with enhancement shares having variable vesting based on non-market based performance conditions.

(3) Three years of continuous employment.

(4) Variable vesting dependent on three years of continuous employment and Group AOSC target being achieved.

(5) Variable vesting dependent on three years of continuous employment and market based performance conditions being achieved.

The expected volatility is based on historic volatility over the last fi ve years. The risk free interest rate is the yield on zero-coupon UK government bonds with a term similar to the expected life of the award.

The charges arising in respect of the other Anglo American plc employee share schemes that the Group operated during the year are not considered material.

The movements in the number of shares for the more signifi cant share-based payment arrangements are as follows:

Bonus Share Plan(1)

Ordinary shares of 5486/91 US cents may be awarded under the terms of this scheme for no consideration.

	2012	2011
Outstanding at 1 January	10,106,373	9,020,260
Conditionally awarded in year	4,579,239	3,366,076
Vested in year	(4,264,598) (1,052,193)
Forfeited in year		(764,181) (1,227,770)
Outstanding at 31 December	9,656,833	10,106,373

(1) The BSP was approved by shareholders in 2004 as a replacement for the ESOS. Further information in respect of the BSP, including performance conditions, is shown in the Remuneration report.

Long Term Incentive Plan(1)(2)

Ordinary shares of 5486/91 US cents may be awarded under the terms of this scheme for no consideration.

	2012	2011
Outstanding at 1 January	3,720,535	4,012,568
Conditionally awarded in year	1,704,138	1,414,444
Vested in year	(1,060,822)	(730,807)
Forfeited in year	(378,080)	(975,670)
Outstanding at 31 December	3,985,771	3,720,535

(1) The early vesting of share awards is permitted at the discretion of the Company upon, inter alia, termination of employment, ill health or death.

(2) The LTIP awards are contingent on pre-established performance criteria being met. Further information in respect of this scheme is shown in the Remuneration report.

Share Incentive Plan

Ordinary shares of 5486/91 US cents may be awarded under the terms of this scheme for no consideration.

	Awards outstanding at	Awards outstanding at
	31 December 2012	31 December 2011	Latest release date
Share Incentive Plan	1,115,426	1,016,074	7 December 2015

29. CALLED-UP SHARE CAPITAL AND SHARE-BASED PAYMENTS continued

Schemes settled by award of options

The fair value of options granted under the SAYE scheme, being the only material option scheme, was calculated using a Black Scholes model. The assumptions used in these calculations for the current and prior years are set out in the table below:

Arrangement(1)	2012 SAYE	2011 SAYE
Date of grant	20/04/12	20/04/11
Number of instruments	245,790	115,026
Exercise price (£)	19.68	25.47
Share price at the date of grant (£)	24.60	31.85
Contractual life (years)	3.5-7.5	3.5-7.5
Vesting conditions(2)	3-7	3-7
Expected volatility	40%	40%
Expected option life (years)	3.5-7.5	3.5-7.5
Risk free interest rate (weighted average)	0.9%	2.3%
Expected departures	5% pa	5% pa
Fair value per option granted (weighted average) (£)	6.14	11.77

(2) Number of years of continuous employment.

The expected volatility is based on historic volatility over the last fi ve years. The expected life is the average expected period to exercise. The risk free interest rate is the yield on zero-coupon UK government bonds with a term similar to the expected life of the option.

A reconciliation of option movements for the more signifi cant share-based payment arrangements over the year to 31 December 2012 and the prior year is shown below. All options outstanding at 31 December 2012 with an exercise date on or prior to 31 December 2012 are deemed exercisable. Options were exercised regularly during the year and the weighted average share price for the year ended 31 December 2012 was £21.43 (2011: £27.96).

Executive Share Option Scheme(1)

Options to acquire ordinary shares of 5486/91 US cents were outstanding under the terms of this scheme as follows:

		2012		2011
		Weighted		Weighted
		average		average
		exercise		exercise
	Number	price £	Number	price £
Outstanding at 1 January	2,500,107	11.42	3,488,329	11.22
Exercised in year	(809,259)	10.83	(949,341)	10.75
Forfeited in year	(56,051)	13.42	(38,881)	10.09
Outstanding at 31 December	1,634,797	11.64	2,500,107	11.42

(1) The early exercise of share options is permitted at the discretion of the Company upon, inter alia, termination of employment, ill health or death.

SAYE Share Option Scheme(1)

Options to acquire ordinary shares of 5486/91 US cents were outstanding under the terms of this scheme as follows:

	2012			2011
		Weighted average exercise		Weighted average exercise
	Number	price £	Number	price £
Outstanding at 1 January	1,520,677	12.91	1,669,812	12.33
Granted in year	245,790	24.60	115,026	25.47
Exercised in year	(589,299)	10.11	(125,333)	14.99
Forfeited in year	(128,664)	20.86	(138,828)	14.47
Outstanding at 31 December	1,048,504	16.26	1,520,677	12.91

(1) The early exercise of share options is permitted at the discretion of the Company upon, inter alia, termination of employment, ill health or death.

30. CONSOLIDATED EQUITY ANALYSIS

Fair value and other reserves comprise:

					Total
	Convertible	Available	Cash		fair value
	debt	for sale	fl ow hedge	Other	and other
US\$ million	reserve	reserve	reserve	reserves(1)	reserves
Balance at 1 January 2011	355	468	38	831	1,692
Total comprehensive income/(expense)	–	108	(33)	–	75
Other	–	–	–	(7)	(7)
Balance at 1 January 2012	355	576	5	824	1,760
Total comprehensive income	–	118	10	–	128
Conversion of convertible bond	(355)	–	–	–	(355)
Other	–	–	–	(667)	(667)
Balance at 31 December 2012	–	694	15	157	866

(1) Following a capital reduction in the Corporate segment, \$667 million has been transferred from the legal reserve to retained earnings, reducing the legal reserve from \$675 million to \$8 million. Other reserves also comprise a revaluation reserve of \$34 million (2011: \$34 million) and a capital redemption reserve of \$115 million (2011: \$115 million).

31. CONSOLIDATED CASH FLOW ANALYSIS

a) Reconciliation of (loss)/profi t before tax to cash fl ows from operations

US\$ million	2012	2011
(Loss)/profi t before tax	(239)	10,782
Depreciation and amortisation	2,289	1,967
Share-based payment charges	233	254
Non-operating special items and remeasurements	(1,394)	(183)
Operating and fi nancing remeasurements	205	(138)
Non-cash element of operating special items	6,913	105
Net fi nance costs before remeasurements	288	20
Share of net income from associates	(432)	(977)
Provisions	(127)	6
Increase in inventories	(330)	(352)
Increase in operating receivables	(31)	(264)
(Decrease)/increase in operating payables	(166)	457
Deferred stripping	(148)	(171)
Other adjustments	(40)	(8)
Cash fl ows from operations	7,021	11,498

b) Reconciliation to the balance sheet

	Cash and cash equivalents Short term borrowings			Medium and long term borrowings
US\$ million	2012	2011	2012	2011	2012	2011
Balance sheet	9,094	11,732	(2,604)	(1,018)	(15,150)	(11,855)
Balance sheet – disposal groups(1)	227	–	(14)	–	–	–
Bank overdrafts	(9)	–	9	–	–	–
Net debt classifi cations	9,312	11,732	(2,609)	(1,018)	(15,150)	(11,855)

(1) Disposal group balances are shown within 'Assets classifi ed as held for sale' and 'Liabilities directly associated with assets classifi ed as held for sale' on the balance sheet.

c) Movement in net debt

US\$ million	Cash and cash equivalents(1)	Debt due within one year	Debt due after one year	Net debt excluding hedges	Hedges(2)	Net debt including hedges
Balance at 1 January 2011	6,460	(1,535)	(11,904)	(6,979)	(405)	(7,384)
Cash fl ow	5,983	1,261	(964)	6,280	(226)	6,054
Unwinding of discount on convertible bond	–	–	(71)	(71)	–	(71)
Disposal of businesses	–	5	–	5	–	5
Reclassifi cations	–	(777)	777	–	–	–
Movement in fair value	–	–	(264)	(264)	404	140
Other non-cash movements	–	(18)	(38)	(56)	–	(56)
Currency movements	(711)	46	609	(56)	(6)	(62)
Balance at 1 January 2012	11,732	(1,018)	(11,855)	(1,141)	(233)	(1,374)
Cash fl ow	(2,309)	747	(5,633)	(7,195)	(149)	(7,344)
Unwinding of discount on convertible bond	–	–	(25)	(25)	–	(25)
Conversion of convertible bond	–	–	1,507	1,507	–	1,507
Acquired through business combinations	–	(3)	(1,578)	(1,581)	(15)	(1,596)
Disposal of businesses	–	53	228	281	–	281
Reclassifi cations	–	(2,396)	2,396	–	–	–
Movement in fair value	–	2	(198)	(196)	229	33
Other non-cash movements	–	(14)	(21)	(35)	–	(35)
Currency movements	(111)	20	29	(62)	–	(62)
Balance at 31 December 2012	9,312	(2,609)	(15,150)	(8,447)	(168)	(8,615)

(1) The Group operates in certain countries where the existence of exchange controls may restrict the use of certain cash balances (principally South Africa and Venezuela). These restrictions are not expected to have a material effect on the Group's ability to meet its ongoing obligations.

(2) Derivative instruments that provide an economic hedge of assets and liabilities in net debt are included above to refl ect the true net debt position of the Group at the year end. These consist of net current derivative liabilities of \$116 million (2011: assets of \$82 million) and net non-current derivative liabilities of \$52 million (2011: \$315 million) which are classifi ed within 'Derivative fi nancial assets' and 'Derivative fi nancial liabilities' on the balance sheet.

32. ACQUISITIONS

De Beers

On 16 August 2012 Anglo American plc acquired an additional 40% of the share capital of De Beers Société Anonyme (De Beers) to bring its total shareholding to 85%. De Beers is a leading diamond company with expertise in the exploration, mining and marketing of diamonds.

The Group funded the acquisition by way of cash consideration of \$5.2 billion, less cash acquired of \$0.4 billion. The acquisition has been accounted for as a business combination using the acquisition method of accounting with an effective date of 16 August 2012, being the date the Group gained control of De Beers.

The provisional fair values of identifi able assets and liabilities of De Beers as at the date of acquisition were:

US\$ million	2012
Assets
Intangible assets	1,588
Property, plant and equipment (including mineral properties and projects)	8,912
Investments in associates	12
Deferred tax assets	247
Inventory	2,133
Other assets(1)	328
Total assets	13,220

Liabilities
Provisions for liabilities and charges (including contingent liabilities(2) and retirement benefi t obligations)	(1,487)
Deferred tax liabilities	(1,097)
Loans and borrowings	(1,581)
Other liabilities	(468)
Total liabilities	(4,633)

Net assets acquired	8,587
Non-controlling interests(3)	(1,423)
Net attributable assets acquired	7,164
Goodwill	2,355
Net attributable assets including goodwill	9,519

Consideration
Cash	5,223
Net cash acquired with the subsidiary	(407)
Book value of existing shareholding	2,686
Fair value gain on existing 45% shareholding(4)	2,017
Total consideration	9,519

(1) The fair value of other assets includes receivables of \$202 million.

(2) Contingent liabilities of \$185 million relating to legal claims in various jurisdictions.

(3) Non-controlling interests have been measured at their proportionate share of De Beers' identifi able net assets. (4) Recognised as a non-operating remeasurement, see note 5.

Goodwill recognised arises principally from the signifi cant synergies associated with the Group having control of De Beers, the value associated with the De Beers' workforce and the requirement to recognise a deferred tax liability calculated as the difference between the tax effect of the fair value of the assets acquired and their tax bases. No goodwill is expected to be deductible for tax purposes. Intangible assets acquired relate to brand names, customer relationships and contracts.

From the acquisition date, De Beers has contributed \$2,353 million of revenue and \$159 million of underlying earnings to the Group. If the acquisition had completed on 1 January 2012, De Beers would have contributed revenue of \$6,074 million for 2012 (an increase of \$3,721 million) and underlying earnings of \$399 million (an increase of \$87 million).

The Group's attributable share of De Beers' earnings from the acquisition date after special items and remeasurements (including special items and remeasurements charges of \$319 million (after tax) relating to the reversal of fair value uplifts of inventory and depreciation and amortisation on fair value uplifts of the Group's pre-existing 45% shareholding) amounted to a \$160 million loss. If the acquisition of De Beers had been completed on 1 January 2012, the Group's attributable share of De Beers' earnings (including special items and remeasurements charges of \$485 million (after tax) relating to the reversal of fair value uplifts of inventory and depreciation and amortisation on fair value uplifts of the Group's pre-existing 45% shareholding) would have amounted to a \$80 million loss (increasing the Group's loss attributable to equity shareholders by \$76 million to \$1,569 million).

Other

On 20 July 2012 Anglo American plc increased its shareholding in Kumba Iron Ore Limited by 4.5% through the exercise of options acquired in 2011 and 2012. This increased the Group's shareholding from 65.2% to 69.7%, for a total cost of \$948 million.

The Group made no material acquisitions in 2011.

33. DISPOSALS OF SUBSIDIARIES AND JOINT VENTURES

US\$ million	2012	2011
Net assets disposed
Property, plant and equipment	208	167
Other non-current assets	65	79
Current assets	347	461
Current liabilities	(187)	(55)
Non-current liabilities	(273)	(108)
Net assets	160	544
Non-controlling interests	(5)	(42)
Net assets disposed	155	502
Cumulative translation (gain)/loss recycled from reserves	(6)	45
Other charges	2	–
Net (loss)/gain on disposals(1)	(21)	337
Net sales proceeds	130	884
Net cash and cash equivalents disposed	(38)	(358)
Accrued transaction costs and similar items	8	3
Net cash infl ow from disposals(2)	100	529

(1) Included in non-operating special items, see note 5.

(2) Net cash infl ow in the year ended 31 December 2012 was nil in respect of disposals in 2011 (2011: \$4 million in respect of disposals in 2010). Total net cash infl ow from disposals in 2012 was \$100 million (2011: \$533 million). Of this, a net cash infl ow of \$100 million (2011: \$514 million) related to disposals of subsidiaries and nil (2011: \$19 million) related to the sale of interests in joint ventures.

Disposal in 2012

On 24 April 2012 the Group announced the sale of Scaw South Africa and related companies to an investment consortium led by the Industrial Development Corporation of South Africa (IDC) and Anglo American's partners in Scaw South Africa, being Izingwe Holdings (Pty) Limited, Shanduka Resources (Pty) Limited and the Southern Palace Group of Companies (Pty) Limited, for a total consideration of \$440 million on a cash and debt free basis. Following this announcement, Scaw South Africa was transferred to assets held for sale.

The completion of the sale took place on 23 November 2012 for a combined net cash infl ow of \$100 million.

Disposals in 2011

Disposals of subsidiaries during 2011 mainly related to the disposal of Lisheen and a 74% interest in Black Mountain (the Group's remaining zinc operations) and disposals of Tarmac businesses (China, Turkey and Romania) in the Other Mining and Industrial segment.

34. ASSETS AND LIABILITIES HELD FOR SALE

The following assets and liabilities were classifi ed as held for sale at 31 December 2012. The Group expects to complete the sale of these businesses within 12 months of the reporting date. There were no assets or liabilities classifi ed as held for sale at 31 December 2011.

			2012
		Tarmac Quarry
US\$ million	Amapá	Materials	Total(1)
Intangible assets	1	418	419
Property, plant and equipment	171	1,655	1,826
Other non-current assets(2)	4	11	15
Total non-current assets	176	2,084	2,260
Inventories	103	111	214
Trade and other receivables	157	292	449
Cash and cash equivalents	26	201	227
Total current assets	286	604	890
Total assets classifi ed as held for sale	462	2,688	3,150
Trade and other payables	(149)	(406)	(555)
Short term borrowings	(11)	(3)	(14)
Provisions for liabilities and charges	(3)	(24)	(27)
Total current liabilities	(163)	(433)	(596)
Deferred tax liabilities	–	(150)	(150)
Provisions for liabilities and charges	(59)	(97)	(156)
Other non-current liabilities(2)	–	(17)	(17)
Total non-current liabilities	(59)	(264)	(323)
Total liabilities associated with assets classifi ed as held for sale	(222)	(697)	(919)
Net assets	240	1,991	2,231

(1) The Group's investments in Amapá and Tarmac Quarry Materials are included in the Other Mining and Industrial segment.

(2) Other non-current assets relate to loans and receivables and investments in associates. Other non-current liabilities relate to government grants received.

A loss on transfer to assets held for sale of \$404 million for Amapá and \$135 million for Tarmac Quarry Materials have been recognised in non-operating special items, see note 5.

35. CONTINGENT LIABILITIES

The Group is subject to various claims which arise in the ordinary course of business. Additionally, and as set out in the 2007 demerger agreement, Anglo American and the Mondi Group have agreed to indemnify each other, subject to certain limitations, against certain liabilities. Anglo American has also provided Mitsubishi Corporation LLC with indemnities against certain liabilities as part of the sale of a 24.5% interest in AA Sur. Having taken appropriate legal advice, the Group believes that a material liability arising from the indemnities provided is unlikely.

The Group is required to provide guarantees in several jurisdictions in respect of environmental restoration and decommissioning obligations. The Group has provided for the estimated cost of these activities.

No contingent liabilities were secured on the assets of the Group at 31 December 2012 or 31 December 2011.

Other

Kumba Iron Ore (Kumba)

Sishen Supply Agreement Arbitration

A dispute arose between Sishen Iron Ore Company Proprietary Limited (SIOC) and ArcelorMittal South Africa Limited (AMSA) in February 2010, in relation to SIOC's contention that the contract mining agreement concluded between them in 2001 had become inoperative as a result of the fact that AMSA had failed to convert its old order mining rights. This dispute has been referred to arbitration. On 9 December 2011 SIOC and AMSA agreed to delay the arbitration proceedings in relation to the Sishen Supply Agreement until the fi nal resolution of the mining rights dispute. This arbitration is only expected to commence in the fourth quarter of 2013, with possible resolution only expected in the third quarter of 2014 at the earliest.

An Interim Pricing Agreement (IPA 2) between SIOC and AMSA was in place until 31 July 2012 and was extended to 31 December 2012.

In December 2012 a further interim agreement was concluded, after negotiations which were facilitated by the Department of Trade and Industry (DTI). The further interim agreement will govern the sale of iron ore from the Sishen mine to AMSA for the period 1 January 2013 to 31 December 2013, or until the conclusion of the legal processes in relation to the 2001 Sishen Supply Agreement (whichever is the sooner), at a weighted average price of \$65 per tonne. Of the total 4.8 Mt, about 1.5 Mt is anticipated to be railed to Saldanha Steel and the rest to AMSA's inland operations.

21.4% undivided share of the Sishen mine mineral rights

On 3 February 2012 both the Department of Mineral Resources (DMR) and Imperial Crown Trading 289 Proprietary Limited (ICT) submitted applications for leave to appeal against the High Court judgment. SIOC applied for leave to present a conditional cross-appeal, in order to protect its rights. The Supreme Court of Appeal (SCA) hearing will be held on 19 February 2013, and the SCA judgment is expected to be received early in the second half of 2013.

The High Court order did not affect the interim supply agreement between AMSA and SIOC. SIOC will continue to take the necessary steps to protect its shareholders' interests in this regard.

Anglo American South Africa Limited (AASA)

AASA, a wholly owned subsidiary of the Company, is a defendant in 24 separate lawsuits in South Africa each one on behalf of a former mineworker (or his dependents or survivors) who allegedly contracted silicosis working for gold mining companies in which AASA was a shareholder and to which AASA provided various technical and administrative services. In addition, AASA is a defendant in one lawsuit fi led in the High Court in London, England on behalf of 19 former mineworkers or their dependents, a second lawsuit fi led there on behalf of 1,106 named former mineworkers or their dependents and also as a "representative claim" on behalf of all black underground miners in "Anglo gold mines" who have been certifi ed as suffering from silicosis and related diseases, a third lawsuit fi led there on behalf of 630 named former mineworkers or their dependents and a fourth lawsuit fi led there on behalf of 1,232 former mineworkers or their dependents. AASA is also named as one of 30 defendants in a class certifi cation application fi led in South Africa purportedly on behalf of 17,000 claimants.

The aggregate amount of claims in the 24 South African lawsuits is less than \$5 million. No specifi c amount of damages has been specifi ed in the claims fi led in England or the class certifi cation application fi led in South Africa.

If the individual claims are determined adversely to AASA there are a substantial number of additional former mineworkers (or their dependents or survivors) who may seek to bring similar claims or whose claims could become part of the representative claim fi led in England or the class action claim in South Africa. The arbitration hearing for 11 of the individual South African claims is expected to begin in October 2013.

AASA is contesting the jurisdiction of the English courts to hear the claims fi led against it in that jurisdiction and will oppose the application for class certifi cation in South Africa.

Platinum

At 31 December 2012 Platinum has certain unresolved tax matters that are currently under dispute with the South African Revenue Service (SARS). Platinum management has consulted with external tax and legal advisers, who support the positions taken. Nonetheless, Platinum management are actively discussing the issue with SARS with a view to seeking resolution and believe that the accounting for these matters is appropriate in the results for the year ended 31 December 2012.

36. COMMITMENTS

At 31 December the Group had the following outstanding capital commitments:

US\$ million	2012	2011
Contracted but not provided	2,792	2,131

In addition, Anglo American Marketing Limited had outstanding commitments under contracts relating to shipping services of \$1,033 million. In 2011 these commitments of \$1,186 million were met by Kumba Iron Ore Limited.

At 31 December the Group had the following commitments under non-cancellable operating leases:

US\$ million	2012	2011
Expiry date
Within one year	154	161
Greater than one year, less than two years	122	112
Greater than two years, less than fi ve years	200	185
Greater than fi ve years	277	347
	753	805

Operating leases relate principally to land and buildings, vehicles and shipping vessels.

37. RELATED PARTY TRANSACTIONS

The Group has a related party relationship with its subsidiaries, joint ventures and associates, see note 38.

The Company and its subsidiaries, in the ordinary course of business, enter into various sales, purchase and service transactions with joint ventures and associates and others in which the Group has a material interest. These transactions are under terms that are no less favourable to the Group than those arranged with third parties. These transactions are not considered to be signifi cant, other than purchases from De Beers' joint ventures which amounted to \$1,049 million in the period from 16 August 2012 (the date the Group obtained control of De Beers, see note 32) to 31 December 2012.

The Group had the following amounts receivable from joint ventures and associates:

	Joint ventures		Associates
US\$ million	2012	2011	2012	2011
Loans receivable(1)	261	263	305	572
Dividends received	–	–	286	344

(1) These loans are included in 'Financial asset investments'.

At 31 December 2012 the directors of the Company and their immediate relatives controlled 0.1% (2011: 0.1%) of the voting shares of the Company.

Remuneration and benefi ts received by directors are disclosed in the Remuneration report. Remuneration and benefi ts of key management personnel including directors are disclosed in note 8.

Information relating to pension fund arrangements is disclosed in note 28.

Other related party transactions in relation to De Beers

The Group has in prior years entered into various transactions with DB Investments SA and De Beers SA (together 'De Beers') which were considered to be related party transactions for the purposes of the United Kingdom Listing Authority's Listing Rules as a result of the interest in De Beers held by CHL Holdings Limited (CHL) and certain of its subsidiaries in which Mr N. F. Oppenheimer, a director of the Company at the time of these transactions, had a relevant interest for the purpose of the rules.

The related party transactions entered into and which continued to be relevant in the year ended 31 December 2012 are detailed below.

On 4 November 2011 Anglo American announced it had entered into an agreement with CHL and Centhold International Limited ('CHL Sellers'), together representing the Oppenheimer family interests in De Beers, to acquire their 40% interest in De Beers for a total cash consideration of \$5.1 billion, subject to adjustment and conditions as provided for in the agreement (the 'Transaction').

In view of the fact that the CHL Sellers were ultimately controlled through intermediary companies by trusts (the 'Seller Trusts') of which Mr N. F. Oppenheimer is a potential discretionary benefi ciary and Mr N. F. Oppenheimer had been a director of Anglo American within the 12 months preceding agreement of the Transaction, the Transaction was categorised as a related party transaction requiring the approval of Anglo American shareholders (other than Mr N. F. Oppenheimer and his associates). This approval was obtained at a general meeting of the Company held on 6 January 2012. Further information in relation to the Transaction was set out in the circular posted to the Company's shareholders in December 2011.

The Government of the Republic of Botswana elected not to exercise its pre-emption rights to participate in the Transaction on a proportionate basis and accordingly Anglo American's interest in De Beers increased to 85% on completion of the Transaction on 16 August 2012, following the obtaining of certain specifi ed regulatory and government approvals to which the Transaction was subject. Anglo American paid a total cash consideration of \$5.2 billion, comprising the adjusted purchase price under the Transaction.

At 31 December 2012 the amount of outstanding loans owed to the Group by De Beers was \$599 million (2011: \$301 million), which includes loans acquired from the CHL Sellers at the closing of the Transaction of \$277 million.

38. GROUP COMPANIES

The principal subsidiaries, joint ventures, associates and proportionately consolidated joint arrangements of the Group and the Group percentage of equity capital, joint arrangements and joint venture interests are set out below. All these interests are held indirectly by the parent company and are consolidated within these fi nancial statements. As permitted by section 410 of the Companies Act 2006, the Group has restricted the information provided to its principal subsidiaries in order to avoid a statement of excessive length.

			Percentage of equity owned(1)
Subsidiary undertakings	Country of incorporation	Business	2012	2011
Iron Ore and Manganese
Kumba Iron Ore Limited (see note 32)	South Africa	Iron ore	69.7%	65.2%
Anglo Ferrous Brazil SA	Brazil	Iron ore	100%	100%
Anglo American Minério de Ferro Brasil SA(2)	Brazil	Iron ore project	100%	100%
Metallurgical Coal
Anglo American Metallurgical Coal Holdings Limited	Australia	Coal	100%	100%
Peace River Coal Inc.	Canada	Coal	100%	100%
Thermal Coal
Anglo Coal(3)	South Africa	Coal	100%	100%

Copper
Anglo American Sur SA Anglo American Norte SA(4)	Chile Chile	Copper Copper	50.1% 100%	75.5% 100%
Minera Quellaveco SA	Peru	Copper project	81.9%	81.9%

Nickel
Anglo American Brasil Limitada (Barro Alto)	Brazil	Nickel project	100%	100%
Anglo American Brasil Limitada (Codemin)	Brazil	Nickel	100%	100%
Minera Loma de Níquel, CA	Venezuela	Nickel	91.4%	91.4%
Platinum
Anglo American Platinum Limited	South Africa	Platinum	79.9%	79.8%
Diamonds
De Beers Société Anonyme	Luxembourg	Diamonds	85%	45%

Other Mining and Industrial
Anglo American Fosfatos Brasil Limitada(5) Anglo American Nióbio Brasil Limitada(6)	Brazil	Fertilisers and acid	100% 100%	100%
Anglo Ferrous Amapá Mineração Limitada(7)	Brazil Brazil	Niobium Iron ore system	70%	100% 70%
Tarmac Group Limited	UK	Construction materials	100%	100%
Tarmac Building Products Limited	UK	Construction materials	100%	100%
Scaw South Africa Proprietary Limited(8)	South Africa	Steel, engineering works
		and grinding media	–	74%

See page 187 for footnotes.

38. GROUP COMPANIES continued

			Percentage of equity owned(9)
Joint ventures	Country of incorporation	Business	2012	2011
LLX Minas-Rio Logística Comercial Exportadora SA	Brazil	Port	49%	49%
Compañía Minera Doña Inés de Collahuasi SCM	Chile	Copper	44%	44%
Debswana(10)	Botswana	Diamonds	50%	–
Namdeb Holdings	Namibia	Diamonds	50%	–
AI Futtain Tarmac Quarry Products Limited	Dubai	Construction materials	49%	49%
Midland Quarry Products Limited	UK	Construction materials	50%	50%
Tarmac Oman Limited	Hong Kong	Construction materials	50%	50%
Midmac Tarmac Qatar LLC	Qatar	Construction materials	50%	50%

Percentage of equity owned(9)

Associates	Country of incorporation	Business	2012	2011
Samancor Holdings Proprietary Limited(11)	South Africa	Manganese	40%	40%
Groote Eylandt Mining Company Pty Limited (GEMCO)(11)	Australia	Manganese	40%	40%
Tasmanian Electro Metallurgical Company Pty Limited (TEMCO)(11)	Australia	Manganese	40%	40%
Jellinbah Group Pty Limited(12)	Australia	Coal	33.3%	33.3%
Cerrejón Zona Norte SA	Colombia	Coal	33.3%	33.3%
Carbones del Cerrejón LLC	Anguilla	Coal	33.3%	33.3%

				Percentage owned
Proportionately consolidated jointly controlled operations(13)	Location	Business	2012	2011
Drayton	Australia	Coal	88.2%	88.2%
Moranbah North	Australia	Coal	88%	88%
German Creek(14)	Australia	Coal	70%	70%
Foxleigh	Australia	Coal	70%	70%
Dawson	Australia	Coal	51%	51%

(1) The proportion of voting rights of subsidiaries held by the Group is the same as the proportion of equity owned.

(2) Anglo Ferrous Minas-Rio Mineração SA changed its name to Anglo American Minério de Ferro Brasil SA in 2012.

(3) A division of Anglo Operations Limited, a wholly owned subsidiary.

(4) Non-controlling interest of 0.018%.

(5) Copebrás Limitada changed its name to Anglo American Fosfatos Brasil Limitada in 2012.

(6) Mineração Catalão de Goiás Limitada changed its name to Anglo American Nióbio Brasil Limitada in 2012.

(7) Anglo Ferrous Amapá Mineração Limitada has been reclassifi ed from Iron Ore and Manganese to Other Mining and Industrial to align with internal management reporting.

(8) On 23 November 2012 the Group disposed of Scaw South Africa and related companies, see note 33.

(9) All equity interests shown are ordinary shares.

(10) Consolidated on a 19.2% proportionate basis, refl ecting economic interest.

(11) These entities have a 30 June year end.

(12) The Group's effective interest in the Jellinbah operation is 23.3%.

(13) The wholly owned subsidiary Anglo American Metallurgical Coal Holdings Limited holds the proportionately consolidated jointly controlled operations.

(14) The German Creek operation includes both Capcoal Open Cut and Underground operations.

Changes in ownership interests in subsidiaries

In July 2012 the Group increased its shareholding in Kumba Iron Ore Limited by 4.5% through the exercise of options acquired in 2011 and 2012, thereby increasing its shareholding from 65.2% to 69.7%.

In August 2012 the Group sold a 25.4% interest in Anglo American Sur to a Corporación Nacional del Cobre de Chile (Codelco) and Mitsui & Co., Ltd. joint venture company controlled by Codelco, for proceeds of \$1.9 billion. As disclosed in note 11d, capital gains tax of \$290 million relating to the profi t on sale has been charged directly to equity.

In August 2012 the Group acquired an additional 40% of the share capital of De Beers Société Anonyme, see note 32.

39. EVENTS OCCURRING AFTER END OF YEAR

Platinum

On 15 January 2013 the Group announced the outcome of its review of the Anglo American Platinum business to create a sustainable, competitive and profi table platinum business for the long term benefi t of all stakeholders. The key proposals from the review were to place the Khuseleka and Khomanani mines on care and maintenance, reconfi gure the Rustenburg operations into three operating mines, close the Union Mine North declines and place other processing assets on long term care and maintenance. Anglo American Platinum is engaging with the South African government, organised labour and other stakeholders and would pursue the consultation process in terms of the requirements of South African law prior to implementing these proposals.

As a result, if the Group is not expected to receive future economic benefi ts from these mines, property, plant and equipment, a post-tax impairment of up to \$0.6 billion could be recognised as an operating special item in the income statement in 2013.

The gross cash costs associated with the implementation of the Portfolio Review and overhead review, which is expected to be approximately \$0.3 billion (after tax: \$0.2 billion), would be expensed as incurred as an operating special item in the income statement during the course of 2013.

Other

On 7 January 2013 the Group announced the completion of the 50:50 joint venture with Lafarge, which combined their cement, aggregates, ready-mix concrete, asphalt and asphalt surfacing, maintenance services, and waste services businesses in the United Kingdom. The joint venture will be known as Lafarge Tarmac.

On 4 January 2013 the Group announced the sale of its 70% interest in the Amapá iron ore system in Brazil to Zamin Ferrous Ltd. The transaction is subject to state regulatory approval.

With the exception of the above and the proposed fi nal dividend for 2012, see note 12, there have been no material reportable events since 31 December 2012.

40. FINANCIAL STATEMENTS OF THE PARENT COMPANY

a) Balance sheet of the Company, Anglo American plc, as at 31 December 2012

US\$ million	Note	2012	2011
Fixed assets
Fixed asset investments	40c	12,361	13,046
Current assets
Amounts due from subsidiaries		14,950	13,496
Prepayments and other debtors		4	4
Cash at bank and in hand		41	23
		14,995	13,523
Creditors due within one year
Amounts owed to group undertakings		(448)	(395)
Other creditors		(4)	(12)
		(452)	(407)
Net current assets		14,543	13,116
Total assets less current liabilities		26,904	26,162
Liabilities due after more than one year
Convertible bond	40d	–	(1,504)
Net assets		26,904	24,658
Capital and reserves
Called-up share capital	40b	772	738
Share premium account	40b	4,357	2,714
Capital redemption reserve	40b	115	115
Other reserves	40b	1,955	1,955
Share-based payment reserve	40b	1	1
Convertible debt reserve	40b	–	355
Profi t and loss account	40b	19,704	18,780
Total shareholders' funds (equity)		26,904	24,658

The fi nancial statements of Anglo American plc, registered number 03564138, were approved by the Board of directors on 14 February 2013 and signed on its behalf by:

Cynthia Carroll René Médori

Chief Executive Finance Director

40. FINANCIAL STATEMENTS OF THE PARENT COMPANY continued

b) Reconciliation of movements in equity shareholders' funds

		Share	Capital		Share-based		Profi t
US\$ million	Called-up share capital	premium account	redemption reserve	Other reserves(1)	payment reserve	Convertible debt reserve	and loss account(2)	Total
Balance at 1 January 2011	738	2,713	115	1,955	6	355	12,650	18,532
Profi t for the fi nancial year	–	–	–	–	–	–	6,520	6,520
Dividends paid(3)	–	–	–	–	–	–	(561)	(561)
Issue of treasury shares under employee share
schemes	–	–	–	–	–	–	18	18
Share-based payments	–	–	–	–	1	–	–	1
Capital contribution to Group undertakings	–	–	–	–	–	–	147	147
Shares issued on conversion of bond	–	1	–	–	–	–	–	1
Transfer between share-based payment reserve
and profi t and loss account	–	–	–	–	(6)	–	6	–
Balance at 1 January 2012	738	2,714	115	1,955	1	355	18,780	24,658
Profi t for the fi nancial year	–	–	–	–	–	–	1,152	1,152
Dividends paid(3)	–	–	–	–	–	–	(599)	(599)
Issue of treasury shares under employee share
schemes	–	–	–	–	–	–	24	24
Share-based payments	–	–	–	–	1	–	–	1
Capital contribution to Group undertakings	–	–	–	–	–	–	161	161
Shares issued on conversion of bond	34	1,643	–	–	–	(355)	185	1,507
Transfer between share-based payment reserve
and profi t and loss account	–	–	–	–	(1)	–	1	–
Balance at 31 December 2012	772	4,357	115	1,955	1	–	19,704	26,904

(1) At 31 December 2012 other reserves of \$1,955 million (2011: \$1,955 million) were not distributable under the Companies Act 2006.

(2) At 31 December 2012 \$2,685 million (2011: \$2,685 million) of the Company profi t and loss account of \$19,704 million (2011: \$18,780 million) was not distributable under the Companies Act 2006. (3) Dividends paid relate only to shareholders on the United Kingdom principal register excluding dividends waived by Greenwood Nominees Limited as nominees for Butterfi eld Trust (Guernsey) Limited, the trustee for the Anglo American employee share scheme. Dividends paid to shareholders on the Johannesburg branch register are distributed by a South African subsidiary in accordance with the terms of the Dividend Access Share Provisions of Anglo American plc's Articles of Association. The directors are proposing a fi nal dividend in respect of the year ended 31 December 2012 of 53 US cents per share, see note 12.

The audit fee in respect of the parent company was \$7,792 (2011: \$7,156). Fees payable to Deloitte for non-audit services to the Company are not required to be disclosed because they are included within the consolidated disclosure in note 3.

c) Fixed asset investments

		Investment in subsidiaries
US\$ million	2012	2011
Cost
At 1 January	13,374	13,232
Capital contributions(1)	147	140
Additions	2,776	2
Capital reduction	(823)	–
Transfer to subsidiary	(3,096)	–
At 31 December	12,378	13,374
Provisions for impairment
At 1 January	(328)	(328)
Impairment charge	(9)	–
Transfer to subsidiary	320	–
At 31 December	(17)	(328)
Net book value	12,361	13,046

(1) This amount is net of \$14 million (2011: \$7 million) of intra-group recharges.

During 2012 Anglo Coal Holdings Limited undertook a capital reduction and repayment of share premium to Anglo American plc to the value of \$823 million. This resulted in a \$9 million impairment of the remaining investment in Anglo Coal Holdings Limited.

During 2012 the Company transferred its holding in Anglo American Finance (UK) Limited to another subsidiary, Anglo American Services (UK) Limited, in exchange for shares in Anglo American Services (UK) Limited. This additional investment in Anglo American Services (UK) Limited was recognised at the net carrying value of the Company's previous investment in Anglo American Finance (UK) Limited.

d) Convertible bond

On 23 March 2012 Anglo American plc gave notice that it had exercised its right to redeem its \$1.7 billion of 4% senior convertible bonds (the Bonds) on 22 May 2012 (the optional redemption date). The Bonds were due to mature on 7 May 2014. On 13 April 2012 following the announcement of the recommended 2011 full year dividend, and in accordance with the terms and conditions of the Bonds, the conversion price was adjusted from £18.36 to £18.02.

40. FINANCIAL STATEMENTS OF THE PARENT COMPANY continued

e) Accounting policies: Anglo American plc, the Company

The Anglo American plc (the Company) balance sheet and related notes have been prepared in accordance with United Kingdom Generally Accepted Accounting Principles (UK GAAP) and in accordance with UK company law. The fi nancial information has been prepared on a historical cost basis as modifi ed by the revaluation of certain fi nancial instruments.

A summary of the principal accounting policies is set out below.

The preparation of fi nancial statements in accordance with UK GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the fi nancial statements and the reported amounts of revenues and expenses during the period. Actual results may differ from those estimated.

As permitted by section 408 of the Companies Act 2006, the profi t and loss account of the Company is not presented as part of these fi nancial statements. The profi t after tax for the year of the Company amounted to \$1,152 million (2011: \$6,520 million).

Signifi cant accounting policies

Deferred tax

Deferred tax is provided in full on all timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, subject to the recoverability of deferred tax assets. Deferred tax assets and liabilities are not discounted.

Share-based payments

The Company has applied the requirements of FRS 20 Share-based Payment. In accordance with the transitional provisions, FRS 20 has been applied to all grants of equity instruments after 7 November 2002 that had not vested at 1 January 2005.

The Company makes equity settled share-based payments to the directors, which are measured at fair value at the date of grant and expensed on a straight line basis over the vesting period, based on the Company's estimate of shares that will eventually vest. For those share schemes with market vesting conditions, the fair value is determined using a Monte Carlo model at the grant date. The fair value of share options issued with non-market vesting conditions has been calculated using a Black Scholes model. For all other share awards, the fair value is determined by reference to the market value of the share at the grant date. For all share schemes with non-market vesting conditions, the likelihood of vesting has been taken into account when determining the associated charge. Vesting assumptions are reviewed during each reporting period to ensure they refl ect current expectations.

The Company also makes equity settled share-based payments to certain employees of certain subsidiary undertakings. Equity settled share-based payments that are made to employees of the Company's subsidiaries are treated as increases in equity over the vesting period of the award, with a corresponding increase in the Company's investments in subsidiaries, based on an estimate of the number of shares that will eventually vest.

Any payments received from subsidiaries are applied to reduce the related increases in investments in subsidiaries.

Accounting for share-based payments is the same as under IFRS 2 and details on the schemes and option pricing models relevant to the charge included in the Company fi nancial statements are set out in note 29 to the consolidated fi nancial statements of the Group for the year ended 31 December 2012.

Investments

Investments represent equity holdings in subsidiaries and are held at cost less provision for impairment.

Convertible debt

INTRODUCTION

The Ore Reserve and Mineral Resource estimates presented in this Annual Report are prepared in accordance with the Anglo American plc (AA plc) Reporting of Exploration Results, Mineral Resources and Ore Reserves standard. This standard requires that the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2004 edition (the JORC Code) be used as a minimum standard. Some Anglo American plc subsidiaries have a primary listing in South Africa where public reporting is carried out in accordance with the South African Code for Reporting of Exploration Results, Mineral Resources and Mineral Reserves (the SAMREC Code). The SAMREC Code is similar to the JORC Code and the Ore Reserve and Mineral Resource terminology appearing in this section follows the defi nitions in both the JORC (2004) and SAMREC (2007 Edition as amended July 2009) Codes.

The information on Ore Reserves and Mineral Resources was prepared by or under the supervision of Competent Persons as defi ned in the JORC or SAMREC Codes. All Competent Persons have suffi cient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking. All the Competent Persons consent to the inclusion in this report of the information in the form and context in which it appears. The names of the Competent Persons are lodged with the Anglo American plc Company Secretary and are available on request.

Anglo American Group companies are subject to a comprehensive programme of reviews aimed at providing assurance in respect of Ore Reserve and Mineral Resource estimates. The reviews are conducted by suitably qualifi ed Competent Persons from within the Anglo American Group, or by independent consultants. The frequency and depth of the reviews is a function of the perceived risks and/or uncertainties associated with a particular Ore Reserve and Mineral Resource, the overall value thereof and time that has lapsed since an independent third party review has been conducted. Those operations/projects subject to independent third party reviews during the year are indicated in footnotes to the tables.

The JORC and SAMREC Codes require the use of reasonable economic assumptions. These include long-range commodity price forecasts which are prepared by in-house specialists largely using estimates of future supply and demand and long term economic outlooks. Ore Reserves are dynamic and are more likely to be affected by fl uctuations in the prices of commodities, uncertainties in production costs, processing costs and other mining, legal, environmental, social and governmental factors which may impact the fi nancial condition and prospects of the Group. Mineral Resource estimates also change and tend to be infl uenced mostly by new information pertaining to the understanding of the deposit and secondly by the conversion to Ore Reserves.

To accommodate the various factors that are important in the development of a classifi ed Mineral Resource estimate, a scorecard approach can be used. Mineral Resource classifi cation defi nes the confi dence associated with different parts of the Mineral Resource. The confi dence that is assigned refers collectively to the reliability of the Grade and Tonnage estimates. This reliability includes consideration for the fi delity of the base data, the geological continuity predicated by the level of understanding of the geology, the likely precision of the estimated grades and understanding of grade variability, as well as various other factors that may infl uence the confi dence that can be placed on the Mineral Resource. Platinum, Nickel and Kumba Iron Ore have developed and applied their own scorecard approaches to the classifi cation of Mineral Resources.

The estimates of Ore Reserves and Mineral Resources are stated as at 31 December 2012. Unless otherwise stated, Mineral Resources are additional to those resources which have been modifi ed to produce the Ore Reserves and are reported on a dry tonnes basis. The fi gures in the tables have been rounded and, if used to derive totals and averages, minor differences with stated results could occur. Ore Reserves in the context of this Annual Report have the same meaning as 'Mineral Reserves' as defi ned by the SAMREC Code and the CIM (Canadian Institute of Mining and Metallurgy) Defi nition Standards on Mineral Resources and Mineral Reserves.

It is accepted that mine design and planning may include a portion of Inferred Mineral Resources. Inferred Mineral Resources in the Life of Mine Plan (LOM Plan) are described as 'Inferred (in LOM Plan)' separately from the remaining Inferred Mineral Resources described as 'Inferred (ex. LOM Plan)', as required. These resources are declared without application of any modifying factors.

The direct legal ownership that Anglo American holds in each operation and project is presented as the Attributable Percentage beside the name of each entity. Operations and projects which fall below the internal threshold for reporting (25% attributable interest) are excluded from the Ore Reserves and Mineral Resources estimates. Operations and projects which were disposed of or for which mining concessions expired during 2012 and hence not reported in 2012 are: Loma de Níquel.

In South Africa, the Minerals and Petroleum Resources Development Act, Number 28 of 2002 (MPRDA) was implemented on 1 May 2004, and effectively transferred custodianship of the previously privately held mineral rights to the State. Mining companies were given up to two years to apply for prospecting permit conversions and fi ve years to apply for mining licence conversions for existing operations.

A Prospecting Right is a new order right issued in terms of the MPRDA that is valid for up to fi ve years, with the possibility of a further extension of three years, that can be obtained either by the conversion of existing Old Order Prospecting Rights or through new applications. An Exploration Right is identical to a Prospecting Right, but is commodity specifi c in respect of petroleum and gas and is valid for up to three years which can be renewed for a maximum of three periods not exceeding two years each.

A Mining Right is a new order right issued in terms of the MPRDA valid for up to 30 years obtained either by the conversion of an existing Old Order Mining Right, or as a new order right pursuant to the exercise of the exclusive right of the holder of a new order Prospecting Right, or pursuant to an application for a new Mining Right. A Production Right is identical to a Mining Right, but is commodity specifi c in respect of petroleum and gas.

In preparing the Ore Reserve and Mineral Resource statement for South African assets, Anglo American plc has adopted the following reporting principles in respect of Prospecting Rights and Mining Rights:

Where applications for new order Mining Rights and Prospecting Rights have been submitted and these are still being processed by the relevant regulatory authorities, the relevant Ore Reserves and Mineral Resources have been included in the statement.
Where applications for new order Prospecting Rights have been initially refused by the regulatory authorities, but are the subject of ongoing legal process and discussions with the relevant authorities and where Anglo American plc has reasonable expectations that the Prospecting Rights will be granted in due course, the relevant Mineral Resources have been included in the statement (any associated comments appear in the footnotes).

ESTIMATED ORE RESERVES(1) (PROVED + PROBABLE)

as at 31 December 2012

Detailed Proved and Probable fi gures appear on the referenced pages

KUMBA IRON ORE		Attributable	Mine	Mining	Total Saleable
(See page 196 for details)		%	Life	Method	Tonnes		Grade
Kolomela		51.5	24	OP	209 Mt		64.4 %Fe
Sishen		51.5	17	OP	686 Mt		65.2 %Fe
Thabazimbi		51.5	6	OP	7 Mt		62.9 %Fe
IRON ORE BRAZIL (See page 197 for details)		Attributable %	Mine Life	Mining Method	Total Saleable Tonnes(2)		Grade
Serra do Sapo	Friable Itabirite and Hematite	100	27	OP	685 Mt		67.5 %Fe

SAMANCOR MANGANESE (See page 199 for details)		Attributable %	Mine Life	Mining Method	Total ROM Tonnes		Grade
GEMCO(3)		40.0	14	OP	97.4 Mt		45.0 %Mn
Mamatwan(4)		29.6	20	OP	72.8 Mt		37.1 %Mn
Wessels		29.6	45	UG	68.8 Mt		43.0 %Mn

METALLURGICAL COAL		Attributable	Mine	Mining	Total Saleable
(See page 200 for details)		%	Life	Method	Tonnes(5)		Saleable Quality
Callide	Thermal – Domestic	100	24	OC	239.2 Mt		4,350 kcal/kg
Capcoal (OC)	Metallurgical – Coking	76.8	23	OC	26.7 Mt		7.0 CSN
	Metallurgical – Other				68.7 Mt		6,980 kcal/kg
	Thermal – Export				3.7 Mt		7,050 kcal/kg
Capcoal (UG)	Metallurgical – Coking	70.0	11	UG	39.7 Mt		9.0 CSN
Dawson	Metallurgical – Coking	51.0	35	OC	93.8 Mt		7.5 CSN
	Thermal – Export				221.1 Mt		5,380 kcal/kg
Drayton	Thermal – Export	88.2	2	OC	9.2 Mt		6,630 kcal/kg
Foxleigh	Metallurgical – Other	70.0	3	OC	12.1 Mt		6,810 kcal/kg
Moranbah North Trend	Metallurgical – Coking Metallurgical – Coking	88.0 100	17 10	UG OC	97.2 Mt 14.0 Mt		8.0 CSN 7.0 CSN
	Thermal – Export				0.2 Mt		5,070 kcal/kg

THERMAL COAL		Attributable	Mine	Mining	Total Saleable
(See page 204 for details)		%	Life	Method	Tonnes(5)		Saleable Quality
Cerrejón	Thermal – Export	33.3	19	OC	743.1 Mt		6,170 kcal/kg
Goedehoop	Thermal – Export	100	8	UG & OC	38.3 Mt		6,200 kcal/kg
Greenside	Thermal – Export	100	11	UG	27.5 Mt		6,190 kcal/kg
Isibonelo	Synfuel	100	15	OC	70.5 Mt		4,520 kcal/kg
Kleinkopje	Thermal – Export	100	11	OC	17.4 Mt		6,190 kcal/kg
	Thermal – Domestic				19.6 Mt		4,580 kcal/kg
Kriel	Thermal – Domestic	73.0	13	UG & OC	104.1 Mt		4,580 kcal/kg
Landau	Thermal – Export	100	6	OC	20.2 Mt		6,210 kcal/kg
	Thermal – Domestic				5.9 Mt		4,170 kcal/kg
Mafube	Thermal – Export	50.0	14	OC	30.0 Mt		6,260 kcal/kg
	Thermal – Domestic				23.6 Mt		5,010 kcal/kg
New Denmark	Thermal – Domestic	100	26	UG	112.0 Mt		5,000 kcal/kg
New Vaal	Thermal – Domestic	100	19	OC	323.8 Mt		3,560 kcal/kg
Zibulo	Thermal – Export	73.0	18	UG & OC	56.0 Mt		6,100 kcal/kg
	Thermal – Domestic				32.4 Mt		4,900 kcal/kg
COPPER (See page 208 for details)		Attributable %	Mine Life	Mining Method	Total Contained Copper	Tonnes	Grade
Collahuasi	Heap Leach	44.0	70	OP	274 kt	44.1 Mt	0.62 %TCu
	Flotation – direct feed				20,402 kt	2,074.2 Mt	0.98 %TCu
	Flotation – stockpile				5,219 kt	1,069.2 Mt	0.49 %TCu
El Soldado	Flotation	50.1	23	OP	1,371 kt	170.3 Mt	0.80 %TCu
	Heap Leach				14 kt	3.0 Mt	0.45 %TCu
Los Bronces	Flotation	50.1	36	OP	9,240 kt	1,509.3 Mt	0.61 %TCu
	Dump Leach				1,891 kt	607.6 Mt	0.31 %TCu
Mantos Blancos	Flotation	100	8	OP	286 kt	35.6 Mt	0.80 %ICu
	Vat and Heap Leach				62 kt	15.4 Mt	0.41 %ASCu
	Dump Leach				84 kt	36.8 Mt	0.23 %ASCu
Mantoverde	Heap Leach	100	5	OP	229 kt	42.3 Mt	0.54 %ASCu
	Dump Leach				112 kt	44.2 Mt	0.25 %ASCu

NICKEL (See page 213 for details)		Attributable %	Mine Life	Mining Method	Total Contained Nickel	Tonnes	Grade
Barro Alto		100	17	OP	754 kt	46.8 Mt	1.61 %Ni
Niquelândia		100	22	OP	66 kt	4.9 Mt	1.34 %Ni
PLATINUM(6) (See page 214 for details)		Attributable %	Mine Life	Mining Method	Total Contained PGE	Tonnes	Grade (4E)
Main Sulphide Zone		79.9	n/a	UG	6.5 Moz (4E)	53.7 Mt	3.76 g/t
Merensky Reef				UG	12.5 Moz (4E)	82.3 Mt	4.71 g/t
Platreef				OP	89.1 Moz (4E)	1,008.9 Mt	2.75 g/t
UG2 Reef				UG	69.2 Moz (4E)	518.4 Mt	4.15 g/t
DIAMONDS(7) (See pages 217–221 for details)		Attributable %	LOM(8)	Mining Method	Saleable Carats
DBCi – Snap Lake		85.0	18	UG	2.0 M¢
DBCi – Victor		85.0	6	OP	2.3 M¢
DBCM – Venetia (OP)		62.9	9	OP	32.8 M¢
DBCM – Venetia (UG)		62.9	27	UG	70.0 M¢
Debswana – Damtshaa		42.5	17	OP	4.1 M¢
Debswana – Jwaneng		42.5	20	OP	88.3 M¢
Debswana – Letlhakane		42.5	4	OP	0.8 M¢
Debswana – Orapa		42.5	21	OP	85.7 M¢
Namdeb – Elizabeth Bay		42.5	7	OC	231 k¢
Namdeb – Mining Area 1		42.5	7	OC	74 k¢
Namdeb – Orange River		42.5	7	OC	359 k¢
Namdeb – Atlantic 1		42.5	15	MM	4,935 k¢
PHOSPHATE PRODUCTS (See page 222 for details)		Attributable %	Mine Life	Mining Method	Total ROM Tonnes		Grade
Ouvidor		100	40	OP	234.0 Mt		13.4 %P2O5
NIOBIUM (See page 223 for details)		Attributable %	Mine Life	Mining Method	Total Contained Product	Tonnes	Grade
Boa Vista	Oxide	100	4	OP	40 kt	3.9 Mt	1.03 %Nb2O5
	Phosphate Tailings				14 kt	2.0 Mt	0.73 %Nb2O5

Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.

LOM = Life of Mine (years) is based on scheduled Probable Reserves including Indicated and some Inferred Resources considered for life of mine planning.

Mining method: OP = Open Pit, UG = Underground, OC = Open Cut, MM = Marine Mining.

(1) Estimated Total Ore Reserves are the sum of Proved and Probable Ore Reserves (on an exclusive basis, i.e. Mineral Resources are reported as additional to Ore Reserves). Please refer to the detailed Business Units/Commodities Ore Reserve estimates tables for the individual Proved and Probable estimates. The Ore Reserve estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. Ore Reserve estimates for operations in South Africa were compiled in accordance with The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves, (The SAMREC Code, 2007 Edition as amended July 2009). The fi gures reported represent 100% of the Ore Reserves, the percentage attributable to Anglo American plc is stated separately. Rounding of fi gures may cause computational discrepancies. (2) Tonnes are reported on a wet basis. Assays are on a dry basis.

(3) GEMCO Manganese grades are given as per washed ore samples and should be read together with their respective yields.

(4) Mamatwan tonnages stated as wet metric tonnes.

(5) Total Saleable Tonnes represents the product tonnes produced quoted as metric tonnes on a Product moisture basis. The coal quality for Coal Reserves is quoted as either Calorifi c Value (CV) using kilo-calories per kilogram (kcal/kg) units on a Gross As Received (GAR) basis or Crucible Swell Number (CSN). CV is rounded to the nearest 10 kcal/kg and CSN to the nearest 0.5 index. Coal quality parameters for the Coal Reserves for Metallurgical – Coking, Metallurgical – Other and Thermal – Export collieries meet the contractual specifi cations for Coking Coal, PCI, metallurgical coal, steam coal and domestic coal. Coal quality parameters for the Coal Reserves for Thermal – Domestic and Synfuels collieries meet the specifi cations of the individual supply contracts. Metallurgical – Coking: High-, medium- or low-volatile semi-soft, soft or hard coking coal primarily for blending and use in the steel industry.

Metallurgical – Other: Semi-soft, soft, hard, semi-hard or anthracite coal, other than Coking Coal, such as pulverized coal injection (PCI) or other general metallurgical coal for the export or domestic market with a wider range of properties than Coking Coal.

Thermal – Export: Low- to high-volatile thermal coal primarily for export in the use of power generation; quality measured by calorifi c value (CV). Thermal – Domestic: Low- to high-volatile thermal coal primarily for domestic consumption for power generation.

Synfuel: Coal specifi cally for the domestic production of synthetic fuel and chemicals.

(6) Details of the individual operations appear in the Anglo American Platinum Annual Report.

The fi gures reported represent 100% of the Ore Reserves attributable to Anglo American Platinum unless otherwise noted.

4E is the sum of Platinum, Palladium, Rhodium and Gold in grammes per tonne (g/t).

(7) DBCi = De Beers Canada, DBCM = De Beers Consolidates Mines, Debswana = Debswana Diamond Company, Namdeb = Namdeb Holdings

k¢ = thousand carats. M¢ = million carats. Reported Diamond Reserves are based on a Bottom Cut Off (BCO) which refers to the bottom screen size aperture and varies between 1.00mm and 3.00mm (nominal square mesh). (8) LOM is quoted as Diamonds are reported on an inclusive basis.

ESTIMATED MINERAL RESOURCES(1) (MEASURED + INDICATED)

as at 31 December 2012

Detailed Measured, Indicated and Inferred fi gures appear on the referenced pages

KUMBA IRON ORE		Attributable	Mining	In-situ
(See page 196 for details)		%	Method	Tonnes		Grade
Kolomela		51.5	OP	60.3 Mt		65.0 %Fe
Sishen		51.5	OP	452.4 Mt		60.2 %Fe
Thabazimbi		51.5	OP	10.7 Mt		62.5 %Fe
IRON ORE BRAZIL		Attributable	Mining	In-situ
(See page 197 for details)		%	Method	Tonnes(2)		Grade
Itapanhoacanga	Friable Itabirite and Hematite	100	–	154.5 Mt		41.1 %Fe
	Compact Itabirite		–	96.8 Mt		34.3 %Fe
Serra do Sapo	Friable Itabirite and Hematite	100	OP	385.4 Mt		32.9 %Fe
Serro	Compact Itabirite Friable Itabirite and Hematite	100	– –	2,811.2 Mt 9.5 Mt		31.1 %Fe 63.6 %Fe

OMI (Non-core) (See page 198 for details)		Attributable	Mining	In-situ
Amapá	Canga	% 70.0	Method OP	Tonnes(2) 8.0 Mt		Grade 48.7 %Fe
	Colluvium		OP	61.6 Mt		38.8 %Fe
	Friable Itabirite and Hematite		OP	137.7 Mt		41.1 %Fe

SAMANCOR MANGANESE		Attributable	Mining	In-situ
(See page 199 for details)		%	Method	Tonnes		Grade
GEMCO(3)		40.0	OP	107.1 Mt		46.7 %Mn
Mamatwan(4)		29.6	OP	116.7 Mt		35.0 %Mn
Wessels		29.6	UG	137.8 Mt		43.8 %Mn
METALLURGICAL COAL		Attributable	Mining	In-situ
(See page 201 for details)		%	Method	Tonnes(5)		Coal Quality
Callide		100	OC	525.7 Mt		4,870 kcal/kg
Capcoal (OC) Capcoal (UG)		76.8 70.0	OC UG	41.7 Mt 144.3 Mt		7,080 kcal/kg 6,680 kcal/kg
Dawson		51.0	OC	311.1 Mt		6,660 kcal/kg
Drayton		88.2	OC	11.8 Mt		6,550 kcal/kg
Foxleigh		70.0	OC	33.3 Mt		7,110 kcal/kg
Moranbah North		88.0	UG	76.9 Mt		6,640 kcal/kg
Trend		100	OC	21.2 Mt		6,500 kcal/kg

THERMAL COAL (See page 206 for details)		Attributable %	Mining Method	In-situ Tonnes(5)		Coal Quality
Cerrejón		33.3	OC	1,063.6 Mt		6,440 kcal/kg
Goedehoop		100	UG&OC	158.8 Mt		5,490 kcal/kg
Greenside		100	UG	19.6 Mt		5,590 kcal/kg
Isibonelo		100	OC	16.3 Mt		5,250 kcal/kg
Kleinkopje		100	OC	30.4 Mt		5,040 kcal/kg
Kriel		73.0	UG&OC	18.8 Mt		5,060 kcal/kg
Landau		100	OC	94.8 Mt		4,960 kcal/kg
Mafube		50.0	OC	69.7 Mt		5,150 kcal/kg
Zibulo		73.0	UG&OC	349.0 Mt		4,920 kcal/kg
COPPER		Attributable	Mining	Contained
(See pages 210–211 for details)		%	Method	Copper	Tonnes	Grade
Collahuasi	Heap Leach	44.0	OP	3 kt	0.5 Mt	0.70 %TCu
	Flotation – direct feed			10,856 kt	1,153.6 Mt	0.94 %TCu
	Flotation – stockpile			1,263 kt	272.1 Mt	0.46 %TCu
El Soldado	Flotation	50.1	OP	248 kt	32.4 Mt	0.77 %TCu
	Heap Leach			0 kt	0.0 Mt	0.66 %TCu
Los Bronces	Flotation	50.1	OP	3,972 kt	982.4 Mt	0.40 %TCu
Mantos Blancos	Flotation	100	OP	734 kt	95.0 Mt	0.77 %ICu
	Vat and Heap Leach			67 kt	14.6 Mt	0.46 %ASCu
	Dump Leach			15 kt	8.8 Mt	0.17 %ASCu
Mantoverde	Heap Leach	100	OP	57 kt	11.8 Mt	0.48 %ASCu

NICKEL (See page 213 for details)		Attributable	Mining	Contained
Barro Alto	Direct Feed	% 100	Method OP	Nickel 193 kt	Tonnes 14.0 Mt	Grade 1.38 %Ni

	Stockpile			85 kt	7.1 Mt	1.19 %Ni
Niquelândia		100	OP	70 kt	5.7 Mt	1.24 %Ni
PLATINUM(6) (See page 215 for details)		Attributable %	Mining Method	Contained PGE	Tonnes	Grade (4E)
Main Sulphide Zone		79.9	UG	15.4 Moz (4E)	113.6 Mt	4.21 g/t
Merensky Reef			UG	85.7 Moz (4E)	479.9 Mt	5.55 g/t
Platreef			OP	62.8 Moz (4E)	891.8 Mt	2.19 g/t
UG2 Reef			UG	186.8 Moz (4E)	1,131.6 Mt	5.13 g/t
DIAMONDS(7) (See pages 217–221 for details)		Attributable %	Mining Method	Carats	Tonnes/Area	Grade
DBCi – Snap Lake		85.0	UG	4.7 M¢	2.5 Mt	189.27 cpht
DBCi – Victor		85.0	OP	2.5 M¢	12.9 Mt	19.34 cpht
DBCM – Namaqualand		62.9	OC	2.1 M¢	19.3 Mt	10.87 cpht
DBCM – Venetia (OP)		62.9	OP	35.4 M¢	34.2 Mt	103.46 cpht
DBCM – Venetia (UG)		62.9	UG	95.5 M¢	109.9 Mt	86.93 cpht
Debswana – Damtshaa		42.5	OP	6.3 M¢	29.3 Mt	21.46 cpht
Debswana – Jwaneng		42.5	OP	84.3 M¢	70.1 Mt	120.35 cpht
Debswana – Letlhakane		42.5	OP	7.8 M¢	27.4 Mt	28.62 cpht
Debswana – Orapa		42.5	OP	119.1 M¢	167.3 Mt	71.20 cpht
Namdeb – Douglas Bay		42.5	OC	111 k¢	1,502 kt	7.39 cpht
Namdeb – Elizabeth Bay		42.5	OC	548 k¢	4,718 kt	11.62 cpht
Namdeb – Mining Area 1		42.5	OC	178 k¢	17,597 kt	1.01 cpht
Namdeb – Orange River		42.5	OC	544 k¢	109,725 kt	0.50 cpht
Namdeb – Atlantic 1		42.5	MM	10,773 k¢	114,190 k m2	0.09 cpm2
Namdeb – Midwater		42.5	MM	330 k¢	1,339 k m2	0.25 cpm2
PHOSPHATE PRODUCTS (See page 222 for details)		Attributable %	Mining Method	Tonnes		Grade
Ouvidor		100	OP	64.1 Mt		11.9 %P2O5
NIOBIUM (See page 223 for details)		Attributable %	Mining Method	Contained Product	Tonnes	Grade
Boa Vista	Oxide	100	OP	42 kt	3.4 Mt	1.22 %Nb2O5

Mining method: OP = Open Pit, UG = Underground, OC = Open Cut, MM = Marine Mining.

(1) Estimated Measured plus Indicated Resources are the sum of the Measured and Indicated Mineral Resources (on an exclusive basis, i.e. Mineral Resources are reported as additional to Ore Reserves). Please refer to the detailed Business Units/Commodities Mineral Resource estimates tables for the individual Measured, Indicated and Inferred estimates. The Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. The Mineral Resource estimates for operations in South Africa were compiled in accordance with The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves, (The SAMREC Code, 2007 Edition as amended July 2009).

The fi gures reported represent 100% of the Mineral Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of fi gures may cause computational discrepancies. (2) Tonnes are reported on a wet basis. Assays are on a dry basis.

(3) GEMCO Manganese grades are given as per washed ore samples and should be read together with their respective yields.

(4) Mamatwan tonnages stated as wet metric tonnes.

(5) Coal Resources are quoted on a Mineable Tonnes In-Situ (MTIS) basis in million tonnes which are in addition to those resources which have been modifi ed to produce the reported Coal Reserves. Coal Resources are on an in-situ moisture basis. The coal quality for the Coal Resources is quoted on an in-situ heat content as Calorifi c Value (CV) using kilo-calories per kilogram (kcal/kg) units on a Gross As Received (GAR) basis. CV is rounded to the nearest 10 kcal/kg.

(6) Details of the individual operations appear in the Anglo American Platinum Annual Report. Merensky Reef and UG2 Reef Mineral Resources are estimated over a practical minimum mining width suitable for the deposit known as the 'Resource Cut'. The minimum mining width over which Mineral Resources are declared is 110cm. The 'Resource Cut' width takes cognisance of the mining method and geotechnical aspects in the hanging wall or footwall of the reef. The fi gures reported represent 100% of the Ore Reserves attributable to Anglo American Platinum unless otherwise noted. 4E is the sum of Platinum, Palladium, Rhodium and Gold in grammes per tonne (g/t).

(7) DBCi = De Beers Canada, DBCM = De Beers Consolidates Mines, Debswana = Debswana Diamond Company, Namdeb = Namdeb Holdings

k¢ = thousand carats. M¢ = million carats. k m² = thousand square metres. Grade is quoted as carats per hundred metric tonnes (cpht) or as carats per square meter (cpm²). Reported Diamond Resources are based on a Bottom Cut Off (BCO) which refers to the bottom screen size aperture and varies between 1.00mm and 3.00mm (nominal square mesh).

Diamond Resources are quoted as inclusive of those used to calculate Diamond Reserves and must not be added to the Diamond Reserves.

IRON ORE

estimates as at 31 December 2012

KUMBA IRON ORE

The Ore Reserve and Mineral Resource estimates were compiled in accordance with The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (The SAMREC Code, 2007 Edition as amended July 2009). The fi gures reported represent 100% of the Ore Reserves and Mineral Resources, the percentage attributable to Anglo American plc is stated separately. Anglo American plc's interest in Kumba Iron Ore Limited is 69.7%. Rounding of fi gures may cause computational discrepancies.

Kumba Iron Ore – Operations		Mine		Tonnes		Grade		Saleable Product
ORE RESERVES	Attributable %	Life	Classifi cation	2012	2011	2012	2011		2012		2011
Kolomela (OP)(1)	51.5	24		Mt	Mt	%Fe	%Fe	Mt	%Fe	Mt	%Fe
Hematite			Proved	107.6	109.7	64.8	64.9	107	64.8	110	65.0
			Probable	102.0	93.7	64.0	64.3	102	64.0	94	64.4
			Total	209.5	203.4	64.4	64.6	209	64.4	203	64.7
Sishen (OP)(2)	51.5	17				%Fe	%Fe
Hematite			Proved	642.9	525.8	59.4	58.9	485	65.3	393	65.0
			Probable	276.0	458.1	58.8	59.3	201	65.0	351	65.1
			Total	918.9	983.9	59.2	59.1	686	65.2	744	65.0
Thabazimbi (OP)(3)	51.5	6				%Fe	%Fe
Hematite			Proved	0.4	2.7	61.1	61.4	0	62.9	2	63.2
			Probable	9.0	7.7	60.6	60.4	7	62.9	6	63.0
			Total	9.5	10.4	60.6	60.7	7	62.9	8	63.1

Kumba Iron Ore – Operations				Tonnes		Grade
MINERAL RESOURCES	Attributable %	Classifi cation	2012	2011	2012	2011
Kolomela (OP)(4)	51.5		Mt	Mt	%Fe	%Fe
Hematite		Measured	43.3	46.6	64.9	65.0
		Indicated	17.0	16.1	65.2	65.1
		Measured and Indicated	60.3	62.7	65.0	65.0
		Inferred (in LOM Plan)	50.5	45.9	64.2	64.3
		Inferred (ex. LOM Plan)	55.7	53.7	62.8	62.7
		Total Inferred	106.2	99.6	63.5	63.4
Sishen (OP)(5)	51.5				%Fe	%Fe
Hematite		Measured	315.1	111.1	61.0	61.3
		Indicated	137.3	274.8	58.4	61.6
		Measured and Indicated	452.4	385.9	60.2	61.5
		Inferred (in LOM Plan)	24.7	173.4	56.0	49.1
		Inferred (ex. LOM Plan)	67.7	217.2	55.0	53.8
		Total Inferred	92.5	390.6	55.3	51.7
Thabazimbi (OP)(6)	51.5				%Fe	%Fe
Hematite		Measured	0.2	1.1	62.5	61.1
		Indicated	10.4	7.2	62.5	62.0
		Measured and Indicated	10.7	8.3	62.5	61.9
		Inferred (in LOM Plan)	2.8	3.0	60.7	61.8
		Inferred (ex. LOM Plan)	8.2	3.9	62.8	61.8
		Total Inferred	11.1	6.9	62.3	61.8

MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.

Kumba Iron Ore – Projects				Tonnes	Grade
MINERAL RESOURCES	Attributable %	Classifi cation	2012	2011	2012	2011
Zandrivierspoort(7)	25.8		Mt	Mt	%Fe	%Fe
Magnetite and Hematite		Measured	132.9	128.5	35.0	34.9
		Indicated	177.9	182.3	34.5	34.5
		Measured and Indicated	310.8	310.8	34.7	34.7
		Inferred	64.5	64.5	34.2	34.2

Mining method: OP = Open Pit. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.

The tonnage is quoted as dry metric tonnes and abbreviated as Mt for million tonnes.

The Mineral Resources are constrained by a resource pit shell, which defi nes the spatial limits of eventual economic extraction.

Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or Measured Resource after continued exploration.

The Phoenix Project is not reported in 2012; the previously declared Mineral Resource are being re-evaluated to consider different benefi ciation options and will have to be re-submitted for project approval.

(1) Kolomela Ore Reserves: Ore Reserves are reported above a cut-off of 42.0 %Fe including dilution. The effect of production is offset by the increase resulting from a life-of-mine plan update, which included a pit optimisation with updated economic assumptions.
(2) Sishen Ore Reserves: Ore Reserves are reported above a cut-off of 40.0 %Fe including dilution. The decrease is primarily due to production and a lower conversion rate of Mineral Resources to Ore Reserves.
(3) Thabazimbi Ore Reserves: Ore Reserves are reported above a cut-off of 54.6 %Fe including dilution. The decrease is primarily due to production and some Ore Reserves being re-allocated to Inferred Mineral Resources.
(4) Kolomela Mineral Resources: Mineral Resources are reported above a cut-off of 50.0 %Fe. The increase is due to changes in the resource shell as a result of pit a optimisation conducted based on updated economic assumptions.
(5) Sishen Mineral Resources: Mineral Resources are reported above a cut-off of 40.0 %Fe. The overall decrease is a result of a geological model update, revised estimation methods combined with new borehole information which resulted in a decrease of primarily BIF material.
Stockpile Resource estimates (Measured: 52.2 Mt at 58.1 %Fe; Indicated: 11.9 Mt at 57.7 %Fe; Inferred: 3.2 Mt at 56.7 %Fe) are excluded from the table.
(6) Thabazimbi Mineral Resources: Mineral Resources are reported above a cut-off of 55.0 %Fe. The increase is due to changes in the resource shell as a result of updated economic assumptions. (7) Zandrivierspoort: The Zandrivierspoort Project Mineral Resources are reported above a cut-off of 23.0 %Fe. A minor update to the resource classifi cation was undertaken in 2012.

Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2012 at Kolomela Mine.

Assumption with respect to Mineral Tenure

Sishen: In December 2011 judgment was delivered by the High Court regarding the status of the mining rights at the Sishen mine. The High Court held that, upon the conversion of SIOC's old order Mining Right relating to the Sishen mine properties in 2008, SIOC became the exclusive holder of a converted mining right for iron ore and quartzite in respect of the Sishen mine properties. The High Court held further that as a consequence, any decision taken by the Department: Mineral Resources (DMR) after such conversion in 2008 to accept or grant any further rights to iron ore at the Sishen mine properties was void. Finally, the High Court reviewed and set aside the decision of the DMR to grant a prospecting right to ICT relating to iron ore as to a 21.4% share in respect of the Sishen mine properties. Both the DMR and Imperial Crown Trading have lodged an appeal against the ruling by the High Court, which appeal is enrolled for hearing by the Supreme Court of Appeal on 19 February 2013 .

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IRON ORE

estimates as at 31 December 2012

IRON ORE BRAZIL

The Ore Reserves and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. The fi gures reported represent 100% of the Ore Reserves and Mineral Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of fi gures may cause computational discrepancies.

The Minas-Rio project is located in the state of Minas Gerais, Brazil and will include open pit mines and a benefi ciation plant producing high-grade pellet feed which will be transported, through a slurry pipeline, over 500km to the Port of Açu in the state of Rio de Janeiro. The project will largely be based on the two main deposits of Serra do Sapo and Itapanhoacanga. Two ore types, Friable and Compact Itabirite, have been identifi ed at Serra do Sapo and Itapanhoacanga. Only the friable material is being considered for Phase 1 of the project. The planned annual capacity of Phase 1 is 26.5 Mtpa of iron ore pellet feed (wet tonnes).

Iron Ore Brazil – Projects		Mine			Tonnes	Grade				Saleable Product
ORE RESERVES	Attributable %	Life	Classifi cation	2012	2011	2012	2011		2012		2011
Serra do Sapo (OP)(1)	100	27		Mt	Mt	%Fe	%Fe	Mt	%Fe	Mt	%Fe
Friable Itabirite and Hematite			Proved	–	–	–	–	–	–	–	–
			Probable	1,452.8	–	38.8	–	685	67.5	–	–
			Total	1,452.8	–	38.8	–	685	67.5	–	–

Iron Ore Brazil – Projects				Tonnes		Grade
MINERAL RESOURCES	Attributable %	Classifi cation	2012	2011	2012	2011
Itapanhoacanga(1)(2)	100		Mt	Mt	%Fe	%Fe
Friable Itabirite and Hematite		Measured	32.3	25.0	40.6	42.5
		Indicated	122.3	219.2	41.3	41.6
		Measured and Indicated	154.5	244.2	41.1	41.7
		Inferred	119.1	74.7	40.9	41.7
Compact Itabirite		Measured	23.2	10.9	33.6	33.2
		Indicated	73.6	95.8	34.5	33.8
		Measured and Indicated	96.8	106.7	34.3	33.7
		Inferred	57.2	43.9	34.5	33.2
Serra do Sapo (OP)(1)(3)	100				%Fe	%Fe
Friable Itabirite and Hematite		Measured	148.7	561.3	31.6	35.3
		Indicated	236.7	1,278.5	33.7	38.5
		Measured and Indicated	385.4	1,839.8	32.9	37.5
		Inferred (in LOM Plan)	108.5	–	38.3	–
		Inferred (ex. LOM Plan)	58.7	165.1	32.9	36.3
		Total Inferred	167.1	165.1	36.4	36.3
Compact Itabirite		Measured	559.9	565.0	31.0	31.0
		Indicated	2,251.3	2,253.9	31.1	31.1
		Measured and Indicated	2,811.2	2,818.9	31.1	31.1
		Inferred	476.8	477.3	31.1	31.1
Serro(4)	100				%Fe	%Fe
Friable Itabirite and Hematite		Measured	–	–	–	–
		Indicated	9.5	9.5	63.6	63.6
		Measured and Indicated	9.5	9.5	63.6	63.6
		Inferred	74.2	74.2	35.3	35.3
Compact Itabirite		Measured	–	–	–	–
		Indicated	–	–	–	–
		Measured and Indicated	–	–	–	–
		Inferred	308.2	308.2	31.6	31.6

MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.

Mining method: OP = Open Pit. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.

(1) Minas-Rio Project: The cut-off grade used is 25% Fe. Assays are on a dry basis. Tonnages are reported on a wet basis with an average moisture content of 4.2 wt% for Friable ore. Friable Itabirite and Hematite includes Friable Itabirite, Semi-Compact Itabirite, High Alumina Friable Itabirite, Soft Hematite and Canga.

The Minas-Rio Project comprises the following sub-areas: Itapanhoacanga and Serra do Sapo. Execution of this project remains subject to the normal regulatory processes of the Brazilian authorities. (2) Itapanhoacanga: Friable Itabirite and Hematite includes Friable Itabirite, Semi-Compact Itabirite, Soft Hematite and Hard Hematite. The decrease is as a result of the exclusion of the Quartz-X mineral area (Licence No. 832.666\2001) which is partially off-set by an increase due to new information obtained during the year.

(3) Serra do Sapo: Friable Itabirite and Hematite includes Friable Itabirite, Semi-Compact Itabirite, High Alumina Friable Itabirite, Soft Hematite and Canga. The Mineral Resources decrease is primarily due to conversion of Mineral Resources to Ore Reserves.

(4) Serro: The cut-off grade used is 25% Fe. Friable Itabirite and Hematite includes Friable Itabirite, Semi-Compact Itabirite and Hard Hematite (9.5 Mt @ 63.6% Fe). Tonnages are reported on a wet basis with an average moisture content of 4.7 wt%.

Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2012 at Serra do Sapo.

IRON ORE

estimates as at 31 December 2012

OTHER MINING AND INDUSTRIAL

The Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. The fi gures reported represent 100% of the Mineral Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of fi gures may cause computational discrepancies.

OMI (Non-core) – Operations			Tonnes		Grade
MINERAL RESOURCES Attributable %	Classifi cation	2012	2011	2012	2011
Amapá (OP)(1)(2) 70.0		Mt	Mt	%Fe	%Fe
Canga	Measured	–	2.6	–	54.2
	Indicated	8.0	10.5	48.7	48.5
	Measured and Indicated	8.0	13.1	48.7	49.6
	Inferred	6.3	1.3	46.1	41.5
Colluvium	Measured	10.0	12.0	39.2	40.4
	Indicated	51.6	56.0	38.7	38.3
	Measured and Indicated	61.6	68.0	38.8	38.7
	Inferred	14.2	18.6	35.1	34.7
Friable Itabirite and Hematite	Measured	34.0	33.5	39.8	40.5
	Indicated	103.8	112.0	41.5	41.7
	Measured and Indicated	137.7	145.5	41.1	41.4
	Inferred	16.1	26.0	43.7	40.1

Mining method: OP = Open Pit.

(1) Amapá – Mineral Resources: The cut-off grade used is 25% Fe. Assays are on a dry basis. Tonnages are reported on a wet basis with an average moisture content of 11 wt% for Canga, 10 wt% for Colluvium and 9 wt% for Friable Itabirite and Hematite ore. The decrease is as a result of depletion and new information along with a revised geological modelling methodology. (2) Amapá: Friable Itabirite and Hematite includes Friable Itabirite, Altered Friable Itabirite and Friable Hematite. The Mineral Resources comprise the Mário Cruz, Mário Cruz Leste, Martelo, Taboca, Taboca Leste, Vila do Meio, Vila do Meio Leste and Dragão areas.

MANGANESE

estimates as at 31 December 2012

SAMANCOR MANGANESE

The Ore Reserve and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004) and The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (The SAMREC Code, 2007 Edition as amended July 2009) as applicable. The fi gures reported represent 100% of the Ore Reserves and Mineral Resources (source: BHP Billiton), the percentage attributable to Anglo American plc is stated separately. Rounding of fi gures may cause computational discrepancies.

Samancor Manganese – Operations		Mine			Tonnes		Grade		Yield
ORE RESERVES	Attributable %	Life	Classifi cation	2012	2011	2012	2011	2012	2011
GEMCO (OP)(1)	40.0	14		Mt	Mt	%Mn	%Mn	%	%
			Proved	72.5	79.4	45.0	46.5	55.1	54.8
			Probable	24.9	25.9	45.0	45.6	55.1	54.2
			Total	97.4	105.3	45.0	46.3	55.1	54.7
Hotazel Manganese Mines	29.6					%Mn	%Mn
Mamatwan (OP)(2)		20	Proved	41.4	43.9	37.2	37.3
			Probable	31.4	30.5	37.1	37.1
			Total	72.8	74.4	37.1	37.2
Wessels (UG)(3)		45	Proved	3.9	4.1	44.8	44.0
			Probable	64.9	67.7	42.9	43.0
			Total	68.8	71.8	43.0	43.1

Samancor Manganese – Operations			Tonnes			Grade	Yield
MINERAL RESOURCES	Attributable %	Classifi cation	2012	2011	2012	2011	2012	2011
GEMCO (OP)(4)	40.0		Mt	Mt	%Mn	%Mn	%	%
		Measured	78.9	87.0	46.9	47.1	47.5	47.4
		Indicated	28.2	28.7	46.0	46.0	47.4	47.6
		Measured and Indicated	107.1	115.8	46.7	46.8	47.5	47.4
		Inferred	49.4	49.4	43.9	43.9	47.8	47.8
Hotazel Manganese Mines	29.6				%Mn	%Mn
Mamatwan (OP)(5)		Measured	62.0	64.8	35.5	35.7
		Indicated	54.7	54.7	34.5	34.5
		Measured and Indicated	116.7	119.5	35.0	35.2
		Inferred	4.3	4.2	34.5	34.4
Wessels (UG)(6)		Measured	11.4	13.8	45.7	46.0
		Indicated	126.4	129.5	43.6	44.2
		Measured and Indicated	137.8	143.3	43.8	44.4
		Inferred	–	–	–	–

MINERAL RESOURCES INCLUDE ORE RESERVES

	Tonnes		Grade		Yield
					2011
					%
					72.0
					74.4
					72.9
					71.8
					73.1
					75.1
					73.8
					68.4

					72.0
					67.8
					71.4
					69.5
					74.0
					70.3
					73.3
					67.1
Classifi cation Measured Indicated Measured and Indicated Inferred Measured Indicated Measured and Indicated Inferred Measured Indicated Measured and Indicated Inferred Measured Indicated Measured and Indicated Inferred	2012 Mt 11.0 6.6 17.5 2.9 4.1 2.4 6.5 5.0 4.6 0.8 5.4 0.8 2.3 0.5 2.8 1.8	2011 Mt 11.0 6.6 17.5 2.9 4.1 2.4 6.5 5.0 4.6 0.8 5.4 0.8 2.3 0.5 2.8 1.8	2012 %Mn 36.1 36.1 36.1 36.1 24.3 24.5 24.4 24.2 %Mn 36.4 36.1 36.4 36.8 24.7 24.1 24.6 25.1	2011 %Mn 36.1 36.1 36.1 36.1 24.3 24.5 24.4 24.2 %Mn 36.4 36.1 36.4 36.8 24.7 24.1 24.6 25.1	2012 % 72.0 74.4 72.9 71.8 73.1 75.1 73.8 68.4 72.0 67.8 71.4 69.5 74.0 70.3 73.3 67.1

Mining method: OP = Open Pit, UG = Underground. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.

Mamatwan tonnages stated as wet metric tonnes. Wessels and GEMCO tonnages stated as dry metric tonnes.

(1) GEMCO – Ore Reserves: Manganese grades are given as per washed ore samples and should be read together with their respective yields. The change is due to depletion from mining.

(2) Mamatwan Ore Reserves: The change is due to depletion from mining. (3) Wessels – Ore Reserves: The decrease is mainly due to the re-delineation of the suboutcrop positions of the orebodies, based on new borehole information
(4) GEMCO Mineral Resources: The change is due to depletion from mining.

(6) Wessels – Mineral Resources: The decrease is mainly due to the re-delineation of the suboutcrop positions of the orebodies, based on new borehole information.

(7) Beniomi and Bordeaux: Mn grades are for +0.15mm screen size fraction and should be read together with their respective tonnage yields. The Gabon Mining Concession and Mining Convention remain subject to ongoing negotiation. No Ore Reserves are yet reportable.

⁽⁵⁾ Mamatwan – Mineral Resources: A cut-off grade of 35% Mn is used to declare Mineral Resources within the M, C and N Zones at Mamatwan. Mineral Resources have also been declared from the X Zone, using a cut-off of 35% Mn, however, the Top Cut Resources comprising a total of 43.1 Mt are declared above a cut-off of 28% Mn. The change is due to depletion from mining and re-running the geological model.

estimates as at 31 December 2012

METALLURGICAL COAL

The Coal Reserve and Coal Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. The fi gures reported represent 100% of the Coal Reserves and Coal Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of fi gures may cause computational discrepancies. Anglo American Metallurgical Coal comprises export metallurgical and thermal coal operations located in Australia and Canada.

Metallurgical Coal – Australia Operations					ROM Tonnes(3)		Yield(4)		Saleable Tonnes(3)		(5) Saleable Quality
COAL RESERVES(1)	Attributable % (2)	Mine	Life Classifi cation	2012	2011	2012	2011	2012	2011	2012	2011
Callide (OC)	100	24		Mt	Mt	ROM %	ROM %	Mt	Mt	kcal/kg	kcal/kg
Thermal – Domestic			Proved	192.2	199.9	97.9	98.0	188.2	195.8	4,380	4,380
			Probable	52.0	52.0	98.0	98.0	51.0	51.0	4,250	4,250
			Total	244.2	251.9	97.9	98.0	239.2	246.8	4,350	4,350
Capcoal (OC)	76.8	23								CSN	CSN
Metallurgical – Coking			Proved	69.9	77.1	19.8	20.4	14.4	16.3	7.0	7.0
			Probable	72.5	72.5	16.4	16.4	12.3	12.3	6.5	6.5
			Total	142.4	149.5	18.0	18.5	26.7	28.6	7.0	7.0
										kcal/kg	kcal/kg
Metallurgical – Other			Proved			46.3	46.3	33.6	37.0	6,970	6,970
			Probable			46.5	46.5	35.0	35.0	6,990	6,990
			Total			46.4	46.4	68.7	72.1	6,980	6,980
Thermal – Export			Proved			2.7	2.8	2.0	2.3	kcal/kg 7,070	kcal/kg 7,060
			Probable			2.3	2.3	1.7	1.7	7,030	7,030
			Total			2.5	2.6	3.7	4.0	7,050	7,050
Capcoal (UG)	70.0	11								CSN	CSN
Metallurgical – Coking			Proved	36.0	40.6	75.1	73.7	28.5	31.6	9.0	9.0
			Probable	14.7	14.7	72.0	72.0	11.2	11.2	9.0	9.0
			Total	50.7	55.3	74.2	73.2	39.7	42.7	9.0	9.0
Dawson (OC)	51.0	35								CSN	CSN
Metallurgical – Coking			Proved	180.7	15.0	24.0	19.9	44.7	3.1	7.5	7.5
			Probable	227.2	149.0	21.0	16.0	49.1	24.5	7.5	7.5
			Total	407.9	163.9	22.4	16.4	93.8	27.5	7.5	7.5
										kcal/kg	kcal/kg
Thermal – Export			Proved			51.6	65.2	95.8	10.0	5,440	6,500
			Probable			53.6	59.4	125.3	90.9	5,340	6,500
			Total			52.7	59.9	221.1	101.0	5,380	6,500
Drayton (OC)	88.2	2								kcal/kg	kcal/kg
Thermal – Export			Proved Probable	7.9 4.2	3.2 19.7	76.0 76.0	75.3 75.6	6.0 3.2	2.4 14.9	6,650 6,600	6,260 6,260
			Total	12.0	22.9	76.0	75.6	9.2	17.3	6,630	6,260
Foxleigh (OC)	70.0	3								kcal/kg	kcal/kg
Metallurgical – Other			Proved	1.9	4.1	83.0	79.3	1.7	3.5	6,870	6,940
			Probable	12.6	13.7	77.7	77.2	10.4	11.3	6,800	6,810
			Total	14.5	17.8	78.4	77.7	12.1	14.8	6,810	6,840
Moranbah North (UG)	88.0	17								CSN	CSN
Metallurgical – Coking			Proved	109.5	114.8	76.6	76.4	88.5	92.6	8.0	8.0
			Probable	11.3	11.3	72.7	72.7	8.7	8.7	8.0	8.0
			Total	120.8	126.1	76.2	76.1	97.2	101.3	8.0	8.0
Australia Metallurgical – Coking 70.6				Mt	Mt	Plant %	Plant %	Mt	Mt	CSN	CSN
			Proved	598.0	454.6	58.4	68.2	176.0	143.5	8.0	8.0
			Probable	394.4	332.8	32.9	35.8	81.3	56.6	7.5	7.5
			Total	992.5	787.4	50.3	59.0	257.3	200.1	8.0	8.0
Australia Metallurgical – Other	75.8		Proved			48.1	49.1	35.3	40.5	kcal/kg 6,970	kcal/kg 6,970
			Probable			53.7	54.0	45.5	46.3	6,940	6,940
			Total			51.2	51.7	80.8	86.8	6,950	6,960
Australia Thermal – Export	52.9									kcal/kg	kcal/kg
			Proved			52.0	57.3	103.8	14.7	5,540	6,550
			Probable			53.5	60.7	130.2	107.5	5,390	6,480
			Total			52.9	60.3	233.9	122.2	5,460	6,480
Australia Thermal – Domestic	100									kcal/kg	kcal/kg
			Proved			97.9	98.0	188.2	195.8	4,380	4,380
			Probable			98.0	98.0	51.0	51.0	4,250	4,250
			Total			97.9	98.0	239.2	246.8	4,350	4,350
Metallurgical Coal – Canada Operations					ROM Tonnes(3)		Yield(4)		Saleable Tonnes(3)		Saleable Quality (5)
COAL RESERVES(1)	Attributable % (2)	Mine	Life Classifi cation	2012	2011	2012	2011	2012	2011	2012	2011
Trend (OC)	100	10		Mt	Mt	ROM %	ROM %	Mt	Mt	CSN	CSN
Metallurgical – Coking			Proved	17.9	20.3	66.3	65.0	12.4	13.9	7.0	7.0
			Probable	2.3	2.3	61.7	61.7	1.5	1.5	7.0	7.0
			Total	20.2	22.6	65.8	64.7	14.0	15.4	7.0	7.0
										kcal/kg	kcal/kg
Thermal – Export			Proved			0.7	0.7	0.1	0.1	5,070	5,070
			Probable			0.8	1.1	0.0	0.0	5,070	5,070

Mining method: OC = Open Cut, UG = Underground. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.

For the multi-product operations, the ROM tonnes apply to each product.

The Saleable tonnes cannot be calculated directly from the ROM reserve tonnes using the air dried yields as presented since the difference in moisture content is not taken into account. Attributable percentages for country totals are weighted by Saleable tonnes and should not be directly applied to the ROM tonnes.

Footnotes appear at the end of the section.

Metallurgical – Coking refers to a high-, medium- or low-volatile semi-soft, soft or hard coking coal primarily for blending and use in the steel industry; quality measured as Crucible Swell Number (CSN). Metallurgical – Other refers to semi-soft, soft, hard, semi-hard or anthracite coal, other than Coking Coal, such as pulverized coal injection (PCI) or other general metallurgical coal for the export or domestic market with a wider range of properties than Coking Coal; quality measured by calorifi c value (CV).

Total 0.7 0.7 0.2 0.2 5,070 5,070

Thermal – Export refers to low- to high-volatile thermal coal primarily for export in the use of power generation; quality measured by calorifi c value (CV).

Thermal – Domestic refers to low- to high-volatile thermal coal primarily for domestic consumption for power generation; quality measured by calorifi c value (CV).

estimates as at 31 December 2012

Metallurgical Coal – Operations			ROM Tonnes(3)		Yield(4)		Saleable Tonnes(3)		(5) Saleable Quality
TOTAL COAL RESERVES(1)	Attributable % (2)	Classifi cation	2012	2011	2012	2011	2012	2011	2012	2011
Metallurgical – Coking	72.1		Mt	Mt	Plant %	Plant %	Mt	Mt	CSN	CSN
		Proved	615.9	474.9	58.9	68.0	188.5	157.4	8.0	8.0
		Probable	396.8	335.1	33.4	36.5	82.8	58.1	7.5	7.5
		Total	1,012.7	810.0	51.1	59.5	271.3	215.5	8.0	8.0
Metallurgical – Other	75.8								kcal/kg	kcal/kg
		Proved			48.1	49.1	35.3	40.5	6,970	6,970
		Probable			53.7	54.0	45.5	46.3	6,940	6,950
		Total			51.2	51.7	80.8	86.8	6,950	6,960
Thermal – Export	52.9								kcal/kg	kcal/kg
		Proved			52.0	56.7	103.9	14.8	5,540	6,530
		Probable			53.5	60.7	130.2	107.6	5,390	6,470
		Total			52.8	60.2	234.1	122.4	5,460	6,480
Thermal – Domestic	100								kcal/kg	kcal/kg
		Proved			97.9	98.0	188.2	195.8	4,380	4,380
		Probable			98.0	98.0	51.0	51.0	4,250	4,250
		Total			97.9	98.0	239.2	246.8	4,350	4,350

Metallurgical Coal – Australia Operations				Tonnes		Coal Quality
COAL RESOURCES(6)	(2) Attributable %	Classifi cation	2012	2011	2012	2011
Callide (OC)	100		MTIS (6)	MTIS (6)	kcal/kg (7)	kcal/kg (7)
		Measured	260.7	260.7	4,940	4,940
		Indicated	265.1	265.1	4,810	4,810
		Measured and Indicated	525.7	525.7	4,870	4,870
		Inferred (in LOM Plan) (8)	15.3	15.3	4,240	4,240
Capcoal (OC)	76.8	Measured	13.8	13.8	7,080	7,080
		Indicated	27.9	27.9	7,080	7,080
		Measured and Indicated	41.7	41.7	7,080	7,080
		Inferred (in LOM Plan) (8)	36.6	36.6	6,710	6,710
Capcoal (UG)	70.0	Measured	76.3	76.3	6,730	6,730
		Indicated	68.0	68.0	6,620	6,620
		Measured and Indicated	144.3	144.3	6,680	6,680
		(8) Inferred (in LOM Plan)	0.3	0.3	6,630	6,630
Dawson (OC)	51.0	Measured	134.2	163.1	6,630	6,670
		Indicated	177.0	278.6	6,680	6,660
		Measured and Indicated	311.1	441.7	6,660	6,660
		Inferred (in LOM Plan) (8)	97.1	103.5	6,750	6,870
Drayton (OC)	88.2	Measured	3.7	2.4	6,490	6,870
		Indicated	8.0	12.3	6,580	6,850
		Measured and Indicated	11.8	14.7	6,550	6,850
		(8) Inferred (in LOM Plan)	0.0	0.4	5,820	6,050
Foxleigh (OC)	70.0	Measured	17.3	17.3	7,130	7,130
		Indicated	16.1	16.1	7,090	7,090
		Measured and Indicated	33.3	33.3	7,110	7,110
		Inferred (in LOM Plan) (8)	7.0	7.0	6,830	6,830
Moranbah North (UG)	88.0	Measured	55.7	55.7	6,670	6,670
		Indicated	21.3	21.3	6,570	6,570
		Measured and Indicated	76.9	76.9	6,640	6,640
		Inferred (in LOM Plan) (8)	0.1	0.1	6,980	6,980
Australia – Mine Leases	80.3	Measured	561.6	589.2	5,890	5,940
		Indicated	583.3	689.2	5,850	5,970
		Measured and Indicated	1,144.9	1,278.4	5,870	5,960
		(8) Inferred (in LOM Plan)	156.4	163.3	6,500	6,580
	COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.

Metallurgical Coal – Canada Operations				Tonnes		Coal Quality
COAL RESOURCES(6)	Attributable % (2)	Classifi cation	2012	2011	2012	2011
Trend (OC)	100		MTIS (6)	MTIS (6)	kcal/kg (7)	kcal/kg (7)
		Measured	15.9	15.9	6,500	6,500
		Indicated	5.3	5.3	6,500	6,500
		Measured and Indicated	21.2	21.2	6,500	6,500
		(8) Inferred (in LOM Plan)	1.4	1.4	6,500	6,500

COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.

Metallurgical Coal – Operations				Tonnes		Coal Quality
COAL RESOURCES(6)	(2) Attributable %	Classifi cation	2012	2011	2012	2011
TOTAL	80.6		MTIS (6)	MTIS (6)	kcal/kg (7)	kcal/kg (7)
		Measured	577.5	605.1	5,910	5,950
		Indicated	588.6	694.5	5,850	5,980
		Measured and Indicated	1,166.1	1,299.6	5,880	5,960
		Inferred (in LOM Plan) (8)	157.8	164.7	6,500	6,580

COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.

Footnotes appear at the end of the section.

estimates as at 31 December 2012

Metallurgical Coal – Australia Projects					ROM Tonnes (3) Yield (4)			Saleable Tonnes (3)		Saleable Quality (5)
COAL RESERVES(1)	Attributable % (2)	Mine Life	Classifi cation	2012	2011	2012	2011	2012	2011	2012	2011
Grosvenor	100	21		Mt	Mt	ROM %	ROM %	Mt	Mt	CSN	CSN
Metallurgical – Coking			Proved	76.1	76.1	66.2	66.2	53.2	53.2	8.5	8.5
			Probable	62.6	62.6	65.2	65.2	43.1	43.1	8.0	8.0
			Total	138.7	138.7	65.7	65.7	96.3	96.3	8.5	8.5

Metallurgical Coal – Australia Projects COAL RESOURCES(6)(8) Attributable % (2)				Tonnes	Coal Quality
		Classifi cation	2012	2011	2012	2011
Dartbrook	83.3		(6) MTIS	(6) MTIS	(7) kcal/kg	(7) kcal/kg
		Measured	386.1	386.1	5,720	5,720
		Indicated	24.8	24.8	5,460	5,460
		Measured and Indicated	410.9	410.9	5,700	5,700
Drayton South	88.2	Measured	492.1	405.7	6,240	6,580
		Indicated	189.0	173.4	6,260	6,540
		Measured and Indicated	681.1	579.2	6,250	6,570
Grosvenor	100	Measured	145.1	145.1	6,420	6,420
		Indicated	72.5	72.5	6,550	6,550
		Measured and Indicated	217.6	217.6	6,460	6,460
		(8) Inferred (in LOM Plan)	9.5	9.5	6,330	6,330
Moranbah South	50.0	Measured	349.6	191.5	6,180	6,050
		Indicated	302.3	307.1	6,410	6,350
		Measured and Indicated	651.8	498.6	6,290	6,230
Theodore	51.0	Measured	–	–	–	–
		Indicated	258.5	258.5	6,260	6,260
		Measured and Indicated	258.5	258.5	6,260	6,260
Australia – Projects	72.9	Measured	1,372.9	1,128.4	6,100	6,180
		Indicated	847.0	836.3	6,310	6,350
		Measured and Indicated	2,219.9	1,964.7	6,180	6,250
		Inferred (in LOM Plan) (8)	9.5	9.5	6,330	6,330

COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.

Metallurgical Coal – Canada Projects				Tonnes		Coal Quality
COAL RESOURCES(6)(8)	(2) Attributable %	Classifi cation	2012	2011	2012	2011
Belcourt Saxon	50.0		MTIS (6)	MTIS (6)	kcal/kg (7)	kcal/kg (7)
		Measured	166.7	166.7	6,500	6,500
		Indicated	4.3	4.3	6,500	6,500
		Measured and Indicated	171.0	171.0	6,500	6,500
Roman Mountain	100	Measured	30.6	20.0	6,290	6,640
		Indicated	6.4	6.8	6,300	6,660
		Measured and Indicated	37.0	26.7	6,290	6,650
Canada – Projects	58.9	Measured	197.3	186.7	6,470	6,510
		Indicated	10.7	11.0	6,380	6,600
		Measured and Indicated	208.0	197.7	6,460	6,520

Footnotes appear at the end of the section.

COAL estimates as at 31 December 2012

(1) Coal Reserves are quoted on a Run Of Mine (ROM) reserve tonnes basis, which represents the tonnes delivered to the plant. Saleable reserve tonnes represents the product tonnes produced. Coal Reserves (ROM and Saleable) are on the applicable moisture basis.
(2) Attributable (%) refers to 2012 only. For the 2011 Reported and Attributable fi gures, please refer to the 2011 Annual Report.
(3) ROM tonnes quoted on an As Delivered moisture basis, and Saleable tonnes on a Product moisture basis.
(4) Yield ROM % represents the ratio of Saleable reserve tonnes to ROM reserve tonnes and is quoted on a constant moisture basis or on an air dried to air dried basis whereas Plant % is based on the 'Feed to Plant' tonnes. The product yields (ROM %) for Proved, Probable and Total are calculated by dividing the individual Saleable reserves by the total ROM reserves per classifi cation. (5) The coal quality for the Coal Reserves is quoted as either Calorifi c Value (CV) using kilo-calories per kilogram (kcal/kg) units on a Gross As Received (GAR) basis or Crucible Swell Number (CSN). Coal quality parameters for the Coal Reserves for Coking, Other Metallurgical and Export Thermal collieries meet the contractual specifi cations for coking coal, PCI, metallurgical coal, steam coal and domestic coal. Coal quality parameters for the Coal Reserves for Domestic Power and Domestic Synfuels collieries meet the specifi cations of the individual supply contracts.
CV is rounded to the nearest 10 kcal/kg and CSN to the nearest 0.5 index. (6) Coal Resources are quoted on a Mineable Tonnes In-Situ (MTIS) basis in million tonnes, which are in addition to those resources that have been modifi ed to produce the reported Coal Reserves. Coal Resources are on an in-situ moisture basis.
(7) The coal quality for the Coal Resources is quoted on an in-situ heat content as Calorifi c Value (CV) using kilo-calories per kilogram (kcal/kg) units on a Gross As Received (GAR) basis. CV is rounded to the nearest 10 kcal/kg.
(8) Inferred (in LOM Plan) refers to Inferred Coal Resources that are included in the life of mine extraction schedule of the respective collieries and are not reported as Coal Reserves. Inferred Coal Resources outside the Life of Mine Plan but within the mine lease area are not reported due to the uncertainty attached to such resources in that it cannot be assumed that all or part of the Inferred Resource will necessarily be upgraded to Indicated or Measured categories through continued exploration, such Inferred Resources do not necessarily meet the requirements of reasonable prospects for eventual economic extraction, particularly in respect of future mining and processing economics.

Jellinbah is not reported as Anglo American's shareholding is below the internal threshold for reporting.

Estimates for the following operations were updated by depletion and new geological models and revised Life of Mine Plans are scheduled for 2013: Callide, Capcoal OC, Capcoal UG, Foxleigh, Moranbah North and Trend.

Summary of material changes (±10%) in estimates at reporting level

Dawson: Coal Reserves – The increase is primarily due to the conversion of resources to reserves as a result of additional exploration drilling, a revised mine plan with an extended geographical area and extraction schedule as well as revised economic parameters .

Coal Resources The decrease is a result of the exploration programme and the subsequent resource model update. The increased resource confi dence enabled additional resources to be converted to reserves. The extended geographical area resulted in replacement of Inferred due to the additional drilling.
Drayton: Coal Reserves Estimates from fi rst principles using a revised mine plan results in a material decrease in reserves due to revised economic assumptions and additional exploration data.
Coal Resources The material decrease is due to conversion of Coal Reserves and revised economic assumptions.
Drayton South: Coal Resources The increase is primarily due to model refi nement (combination of plies into working sections for underground and open cut seams) as well as additional exploration drilling and changes in geotechnical, environmental and resource utilisation considerations.
Moranbah South: Coal Resources The increase is due to additional exploration drilling and changed resource classifi cation methodology to be consistent with Moranbah North and Grosvenor areas .

Roman Mountain: Coal Resources – The increase is due to reinterpretation of the geological model and model refi nement.

Assumption with respect to Mineral Tenure

Callide: A Mining Lease Application has been lodged for the southern and eastern part of the Boundary Hill area and Metallurgical Coal has reasonable expectation that it will be granted. Foxleigh: Mining Lease Applications have been submitted for part of the Plains and Eagles Nest areas, and Metallurgical Coal has reasonable expectation that they will be granted.

Audits related to the generation of the Coal Resource estimates were carried out by independent consultants during 2012 at the following operations and projects: Capcoal OC, Capcoal UG, Dawson and Foxleigh.

estimates as at 31 December 2012

THERMAL COAL

The Coal Reserve and Coal Resource estimates were compiled in accordance with The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves, (The SAMREC Code, 2007 Edition as amended July 2009) and the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004) as applicable. The fi gures reported represent 100% of the Coal Reserves and Coal Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of fi gures may cause computational discrepancies. Anglo American Thermal Coal comprises the dominantly export and domestic thermal coal operations, located in Colombia and South Africa.

Thermal Coal – Colombia Operations		Mine			ROM Tonnes (3)		Yield (4)		Saleable Tonnes (3)		Saleable Quality (5)
COAL RESERVES(1)	Attributable % (2)	Life	Classifi cation	2012	2011	2012	2011	2012	2011	2012	2011
Cerrejón (OC)	33.3	19		Mt	Mt	ROM %	ROM %	Mt	Mt	kcal/kg	kcal/kg
Thermal – Export			Proved	675.0	718.8	96.7	96.8	652.7	695.5	6,180	6,300
			Probable	93.2	86.0	97.0	96.8	90.4	83.2	6,110	6,240
			Total	768.2	804.8	96.7	96.8	743.1	778.7	6,170	6,290

					(3) ROM Tonnes		(4) Yield		(3) Saleable Tonnes		(5) Saleable Quality
Thermal Coal – South Africa Operations Mine	(2)
COAL RESERVES(1) Goedehoop (UG&OC)	Attributable % 100	Life 8	Classifi cation	2012	2011	2012	2011	2012	2011	2012	2011
Thermal – Export			Proved	Mt 30.0	Mt 37.4	ROM % 54.9	ROM % 53.0	Mt 16.8	Mt 20.2	kcal/kg 6,190	kcal/kg 6,230
			Probable	40.9	48.6	51.6	51.7	21.5	25.6	6,200	6,210
			Total	70.9	86.0	53.0	52.3	38.3	45.9	6,200	6,220
Greenside (UG)	100	11								kcal/kg	kcal/kg
Thermal – Export			Proved	21.3	25.8	57.4	58.1	12.7	15.5	6,200	6,200
			Probable	26.4	21.9	54.0	53.9	14.8	12.3	6,190	6,190
			Total	47.7	47.8	55.5	56.2	27.5	27.8	6,190	6,200
Isibonelo (OC)	100	15								kcal/kg	kcal/kg
Synfuel			Proved	70.5	69.9	100	100	70.5	69.9	4,520	4,590
			Probable	–	–	–	–	–	–	–	–
			Total	70.5	69.9	100	100	70.5	69.9	4,520	4,590
Kleinkopje (OC)	100	11								kcal/kg	kcal/kg
Thermal – Export			Proved	50.8	64.5	33.2	35.9	17.4	23.7	6,190	6,170
			Probable	–	12.0	–	45.9	–	5.6	–	6,180
			Total	50.8	76.4	33.2	37.5	17.4	29.3	6,190	6,170
										kcal/kg	kcal/kg
Thermal – Domestic			Proved			38.5	33.8	19.6	21.8	4,580	4,550
			Probable			–	–	–	–	–	–
			Total			38.5	28.5	19.6	21.8	4,580	4,550
Kriel (UG&OC)	73.0	13								kcal/kg	kcal/kg
Thermal – Domestic			Proved	40.3	46.0	100	100	40.3	46.0	4,830	4,790
			Probable	63.8	67.5	100	100	63.8	67.5	4,430	4,430
Landau (OC)	100	6	Total	104.1	113.5	100	100	104.1	113.5	4,580	4,580
Thermal – Export			Proved	29.6	36.4	48.4	48.5	14.5	17.8	kcal/kg 6,210	kcal/kg 6,240
			Probable	12.1	24.4	46.0	48.5	5.7	11.9	6,210	6,230
			Total	41.7	60.7	47.7	48.5	20.2	29.8	6,210	6,240
										kcal/kg	kcal/kg
Thermal – Domestic			Proved			12.3	8.8	3.7	3.2	4,040	4,550
			Probable			18.5	7.3	2.3	1.8	4,370	3,970
			Total			14.1	8.2	5.9	5.0	4,170	4,340
Mafube (OC)	50.0	14								kcal/kg	kcal/kg
Thermal – Export			Proved	12.1	24.8	47.5	46.5	5.8	11.6	6,270	6,220
			Probable	70.7	66.6	33.9	33.1	24.2	22.2	6,260	6,210
			Total	82.8	91.3	35.9	36.7	30.0	33.8	6,260	6,210
										kcal/kg	kcal/kg
Thermal – Domestic			Proved			19.7	27.1	2.4	6.8	5,360	5,460
			Probable			29.1	37.3	21.2	25.0	4,970	5,010
			Total			27.7	34.5	23.6	31.8	5,010	5,110
New Denmark (UG)	100	26								kcal/kg	kcal/kg
Thermal – Domestic			Proved Probable	30.8 81.2	30.2 80.9	100 100	100 100	30.8 81.2	30.2 80.9	4,950 5,020	4,880 5,120
			Total	112.0	111.1	100	100	112.0	111.1	5,000	5,050
New Vaal (OC)	100	19								kcal/kg	kcal/kg
Thermal – Domestic			Proved	348.1	371.8	89.6	93.4	323.8	359.8	3,560	3,490
			Probable	–	–	–	–	–	–	–	–
			Total	348.1	371.8	89.6	93.4	323.8	359.8	3,560	3,490
Zibulo (UG&OC)	73.0	18								kcal/kg	kcal/kg
Thermal – Export			Proved	91.3	86.1	49.4	49.4	45.6	43.0	6,100	6,090
			Probable	23.5	28.6	43.9	46.1	10.4	13.3	6,110	6,070
			Total	114.9	114.7	48.3	48.6	56.0	56.3	6,100	6,090
										kcal/kg	kcal/kg
Thermal – Domestic			Proved			26.6	29.8	25.1	26.4	4,930	4,820
			Probable			30.4	30.4	7.3	8.9	4,780	4,640
			Total			27.4	29.9	32.4	35.4	4,900	4,770

Footnotes appear at the end of the section.

estimates as at 31 December 2012

Thermal Coal – South Africa Operations			ROM Tonnes (3)		Yield (4)		Saleable Tonnes (3)		Saleable Quality (5)
continued	Mine
COAL RESERVES(1) Attributable % (2)	Life Classifi cation	2012	2011	2012	2011	2012	2011	2012	2011
South Africa Thermal – Export 84.1		Mt	Mt	Plant %	Plant %	Mt	Mt	kcal/kg	kcal/kg
	Proved	724.9	792.9	52.9	48.2	112.8	131.8	6,160	6,170
	Probable	318.7	350.5	45.6	45.9	76.5	90.9	6,210	6,190
	Total	1,043.6	1,143.3	49.9	47.0	189.3	222.7	6,180	6,180
South Africa Thermal – Domestic 92.2								kcal/kg	kcal/kg
	Proved			87.7	86.9	445.7	494.2	3,910	3,850
	Probable			88.2	87.2	175.7	184.1	4,780	4,820
	Total			87.8	86.8	621.4	678.4	4,150	4,110
South Africa Synfuel 100								kcal/kg	kcal/kg
	Proved			100	100	70.5	69.9	4,520	4,590
	Probable			–	–	–	–	–	–
	Total			100	100	70.5	69.9	4,520	4,590

Thermal Coal – Operations				(3) ROM Tonnes		(4) Yield		(3) Saleable Tonnes		(5) Saleable Quality
TOTAL COAL RESERVES(1) Attributable %	(2)	Classifi cation	2012	2011	2012	2011	2012	2011	2012	2011
Thermal – Export	43.6		Mt	Mt	Plant %	Plant %	Mt	Mt	kcal/kg	kcal/kg
		Proved	1,399.9	1,511.7	90.2	89.1	765.5	827.3	6,180	6,280
		Probable	411.9	436.5	73.4	70.2	166.9	174.2	6,160	6,210
		Total	1,811.8	1,948.2	87.2	85.7	932.4	1,001.4	6,170	6,270
Thermal – Domestic	92.2								kcal/kg	kcal/kg
		Proved			87.7	86.9	445.7	494.2	3,910	3,850
		Probable			88.2	87.2	175.7	184.1	4,780	4,820
		Total			87.8	86.8	621.4	678.4	4,150	4,110
Synfuel	100								kcal/kg	kcal/kg
		Proved			100	100	70.5	69.9	4,520	4,590
		Probable			–	–	–	–	–	–
		Total			100	100	70.5	69.9	4,520	4,590

Mining method: OC = Open Cut, UG = Underground. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.

For the multi-product operations, the ROM tonnage fi gures apply to each product.

Footnotes appear at the end of the section.

Thermal – Export refers to low- to high-volatile thermal coal primarily for export in the use of power generation; quality measured by calorifi c value (CV).

Thermal – Domestic refers to low- to high-volatile thermal coal primarily for domestic consumption for power generation; quality measured by calorifi c value (CV).

Synfuel refers to a coal specifi cally for the domestic production of synthetic fuel and chemicals; quality measured by calorifi c value (CV).

estimates as at 31 December 2012

Thermal Coal – Colombia Operations				Tonnes		Coal Quality
COAL RESOURCES(6)	Attributable % (2)	Classifi cation	2012	2011	2012	2011
Cerrejón (OC)	33.3		(6) MTIS	(6) MTIS	(7) kcal/kg	(7) kcal/kg
		Measured	903.6	907.2	6,450	6,460
		Indicated	160.0	173.9	6,360	6,370
		Measured and Indicated	1,063.6	1,081.1	6,440	6,450
		(8) Inferred (in LOM Plan)	73.8	69.2	6,720	6,750
COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.
				Tonnes		Coal Quality
Thermal Coal – South Africa Operations COAL RESOURCES(6)	(2) Attributable %	Classifi cation	2012	2011	2012	2011
Goedehoop (UG&OC)	100		MTIS (6)	MTIS (6)	kcal/kg (7)	kcal/kg (7)
		Measured	83.1	79.8	5,510	5,470
		Indicated	75.7	75.6	5,470	5,480
		Measured and Indicated	158.8	155.4	5,490	5,470
		Inferred (in LOM Plan) (8)	1.6	–	5,740	–
Greenside (UG)	100	Measured	18.2	11.4	5,590	5,700
		Indicated	1.4	2.8	5,610	5,430
		Measured and Indicated	19.6	14.2	5,590	5,650
		(8) Inferred (in LOM Plan)	8.3	–	5,790	–
Isibonelo (OC)	100	Measured	–	–	–	–
		Indicated	16.3	20.9	5,250	5,210
		Measured and Indicated	16.3	20.9	5,250	5,210
		Inferred (in LOM Plan) (8)	–	–	–	–
Kleinkopje (OC)	100	Measured	30.4	28.5	5,040	4,970
		Indicated	–	–	–	–
		Measured and Indicated	30.4	28.5	5,040	4,970
		Inferred (in LOM Plan) (8)	–	–	–	–
Kriel (UG&OC)	73.0	Measured	8.7	9.0	5,290	5,290
		Indicated	10.2	10.2	4,860	4,860
		Measured and Indicated	18.8	19.3	5,060	5,060
		(8) Inferred (in LOM Plan)	–	–	–	–
Landau (OC)	100	Measured	52.0	26.5	5,190	4,810
		Indicated	42.8	34.3	4,680	5,180
		Measured and Indicated	94.8	60.8	4,960	5,020
		Inferred (in LOM Plan) (8)	–	–	–	–
Mafube (OC)	50.0	Measured	56.5	2.5	5,300	5,090
		Indicated	13.2	7.4	4,530	5,250
		Measured and Indicated	69.7	9.9	5,150	5,210
		Inferred (in LOM Plan) (8)	7.3	17.0	5,150	5,170
New Denmark (UG)	100	Measured	–	–	–	–
		Indicated	–	–	–	–
		Measured and Indicated	–	–	–	–
		(8) Inferred (in LOM Plan)	16.2	17.0	5,270	5,310
New Vaal (OC)	100	Measured	–	–	–	–
		Indicated	–	–	–	–
		Measured and Indicated	–	–	–	–
		Inferred (in LOM Plan) (8)	–	–	–	–
Zibulo (UG&OC)	73.0	Measured	147.3	136.3	4,960	4,950
		Indicated	201.7	184.2	4,900	4,880
		Measured and Indicated (8)	349.0	320.6	4,920	4,910
		Inferred (in LOM Plan)	20.4	29.3	5,460	5,470
South Africa – Mine Leases	82.3	Measured	396.2	294.0	5,200	5,120
		Indicated	361.2	335.4	5,000	5,080
		Measured and Indicated (8)	757.4	629.4	5,100	5,100
		Inferred (in LOM Plan)	53.9	63.3	5,420	5,350

COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.

Thermal Coal – Operations				Tonnes		Coal Quality
COAL RESOURCES(6)	Attributable % (2)	Classifi cation	2012	2011	2012	2011
Total	53.7		MTIS (6)	MTIS (6)	kcal/kg (7)	kcal/kg (7)
		Measured	1,299.7	1,201.2	6,070	6,130
		Indicated	521.2	509.3	5,410	5,520
		Measured and Indicated	1,821.0	1,710.6	5,880	5,950
		(8) Inferred (in LOM Plan)	127.7	132.4	6,170	6,080

COAL RESOURCES ARE REPORTED AS ADDITIONAL TO COAL RESERVES.

Footnotes appear at the end of the section.

estimates as at 31 December 2012

Thermal Coal – South Africa Projects				Tonnes		Coal Quality
COAL RESOURCES(6)(8)	(2) Attributable %	Classifi cation	2012	2011	2012	2011
Elders	73.0		MTIS (6)	MTIS (6)	kcal/kg (7)	kcal/kg (7)
		Measured	224.3	218.1	5,140	5,110
		Indicated	107.6	107.9	5,410	5,400
		Measured and Indicated	331.8	326.0	5,230	5,210
Kriel Block F	100	Measured	36.1	–	5,270	–
		Indicated	27.3	62.8	5,410	5,310
		Measured and Indicated	63.4	62.8	5,330	5,310
Kriel East	73.0	Measured	100.1	81.5	4,940	4,940
		Indicated	31.4	36.0	4,890	4,950
		Measured and Indicated	131.5	117.5	4,930	4,940
New Largo	73.0	Measured	429.5	484.9	4,290	4,300
		Indicated	178.5	159.3	3,970	3,920
		Measured and Indicated	608.0	644.3	4,190	4,210
Nooitgedacht	100	Measured	36.4	35.8	5,360	5,310
		Indicated	10.6	10.6	5,450	5,450
		Measured and Indicated	46.9	46.4	5,380	5,340
South Rand	73.0	Measured	78.6	78.6	4,850	4,850
		Indicated	168.1	168.1	4,770	4,770
		Measured and Indicated	246.7	246.7	4,800	4,800
Vaal Basin	100	Measured	375.2	208.2	4,330	3,980
		Indicated	220.4	362.5	4,210	4,140
		Measured and Indicated	595.6	570.7	4,290	4,080
South Africa – Projects	82.4	Measured	1,280.2	1,107.1	4,590	4,520
		Indicated	743.8	907.2	4,540	4,500
		Measured and Indicated	2,024.0	2,014.3	4,570	4,510

Attributable percentages for country totals are weighted by Measured and Indicated MTIS.

(1) Coal Reserves are quoted on a Run Of Mine (ROM) reserve tonnes basis, which represents the tonnes delivered to the plant. Saleable reserve tonnes represents the product tonnes produced. Coal Reserves (ROM and Saleable) are on the applicable moisture basis.

(2) Attributable (%) refers to 2012 only. For the 2011 Reported and Attributable fi gures, please refer to the 2011 Annual Report.

(3) ROM tonnes quoted on an As Delivered moisture basis, and Saleable tonnes on a Product moisture basis.

(4) Yield – ROM % represents the ratio of Saleable reserve tonnes to ROM reserve tonnes and is quoted on a constant moisture basis or on an air dried to air dried basis whereas Plant % is based on the 'Feed to Plant' tonnes. The product yields (ROM %) for Proved, Probable and Total are calculated by dividing the individual Saleable reserves by the total ROM reserves per classifi cation. (5) The coal quality for the Coal Reserves is quoted as either Calorifi c Value (CV) using kilo-calories per kilogram (kcal/kg) units on a Gross As Received (GAR) basis.

Coal quality parameters for the Coal Reserves for Coking, Other Metallurgical and Export Thermal collieries meet the contractual specifi cations for coking coal, PCI, metallurgical coal, steam coal and domestic coal. Coal quality parameters for the Coal Reserves for Domestic Power and Domestic Synfuels collieries meet the specifi cations of the individual supply contracts in the short-term and studies are underway to ensure long term compliance.

CV is rounded to the nearest 10 kcal/kg.

(6) Coal Resources are quoted on a Mineable Tonnes In-Situ (MTIS) basis in million tonnes, which are in addition to those resources that have been modifi ed to produce the reported Coal Reserves. Coal Resources are on an in-situ moisture basis.

(7) The coal quality for the Coal Resources is quoted on an in-situ heat content as Calorifi c Value (CV) using kilo-calories per kilogram (kcal/kg) units on a Gross As Received (GAR) basis. CV is rounded to the nearest 10 kcal/kg.

(8) Inferred (in LOM Plan) refers to Inferred Coal Resources that are included in the life of mine extraction schedule of the respective collieries and are not reported as Coal Reserves. Inferred Coal Resources outside the Life of Mine Plan but within the mine lease area are not reported due to the uncertainty attached to such resources in that it cannot be assumed that all or part of the Inferred Resource will necessarily be upgraded to Indicated or Measured categories through continued exploration, such Inferred Resources do not necessarily meet the requirements of reasonable prospects for eventual economic extraction, particularly in respect of future mining and processing economics.

Summary of material changes (±10%) in estimates at reporting level

Greenside:	Coal Resources – Increase due to the inclusion of boreholes from Landau in the geological model resulted in seam thickness changes. The AATC standard software package was also implemented. Increase in Inferred in Mine Plan resulting from the conversion of the Clydesdale Pan from Inferred in Mine Lease to Mine Plan after the environmental approval was granted.
Isibonelo:	Coal Resources – Decrease due to the transfer and conversion of underground resources to opencast reserves.
Kleinkopje:	Coal Reserves – Decrease due to the transfer between Kleinkopje and Greenside following a mining boundary rationalisation exercise. Coal Resources – Increase due to seam thickness adjustments resulting from additional drilling and interpretation, adjustments to 5 seam remnants, and reclassifi cation in Pit 2A layout following the reconfi guration exercise.
Landau:	Coal Reserves – Decrease due to the downgrade of Schoonie West S2S to resource as the Pre-Feasibility study is not yet approved. Coal Resources – Increase due to transfer of Greenside Resources into the Landau Lifex Project as well as an increase to the resource footprint as a result of Pre-Feasibility option analyses.
Mafube:	Coal Resources – Increase results from additional drilling, the upgrade of S4 due to the viability of a lower quality product, re-classifi cation of the Pan 2 area in Springboklaagte pending the granting of the environmental approvals and removal of the Rooipan area.
Nooitgedacht:	Coal Resources – Increase due to planned shaft closure and the re-allocation of the reserves to resources. Coal Resources for 2 + 4 Seam and 5 Seam have been combined and reported under South Africa Coal Projects.
Kriel East: Vaal Basin:	Coal Resources – Increase resulting from additional drilling information. Coal Resources – Increase resulting from additional drilling information offset by a decrease resulting from downgrade of all resources within the Wetland area.
	Assumption with respect to Mineral Tenure
Cerrejón:	Reserves are estimated for the area defi ned by the current approved Mining Right, which expires in 2033. In order to exploit the Coal Resources, a renewal will be applied for at the appropriate time, Anglo American Thermal Coal has reasonable expectation that such renewal will not be withheld.
Mafube:	Application for conversion to a Mining Right has been submitted in November 2011; in addition the environmental permitting applications have been submitted in 2012 as per legislative requirements. There is a reasonable expectation that such conversion will not be withheld.
New Largo:	The New Largo Mining Right Application was submitted in April 2011. The relevant South African Departments responsible for approvals, as well as key stakeholders, have been actively engaged with regards to the Colliery's potential impacts on wetlands. There is a reasonable expectation that such conversion will not be withheld.
Royalty Payment

South Africa: Royalty payments commenced in February 2010 in accordance with the Royalties Act (No. 28 of 2008) and have been taken into consideration in economic assessment of the reserves.

Audits related to the generation of the Coal Reserve and Coal Resource estimates were carried out by independent consultants during 2012 at the following operations and projects: Goedehoop, Greenside, Isibonelo, Kleinkopje, Mafube, Elders and Vaal Basin.

estimates as at 31 December 2012

COPPER

The Ore Reserve and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. The fi gures reported represent 100% of the Ore Reserves and Mineral Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of fi gures may cause computational discrepancies.

Copper – Operations		Mine			Tonnes		Grade		Contained Metal
ORE RESERVES(1)	Attributable %	Life	Classifi cation	2012	2011	2012	2011	2012	2011
Collahuasi (OP)(2)	44.0	70		Mt	Mt	%TCu	%TCu	kt	kt
Oxide and Mixed			Proved	31.0	0.0	0.58	0.60	181	0
Heap Leach	Copper		Probable	13.0	35.4	0.71	0.63	93	224
			Total	44.1	35.4	0.62	0.63	274	224
Sulphide			Proved	419.1	285.0	%TCu 1.00	%TCu 1.07	4,200	3,042
Flotation – direct feed	Copper		Probable	1,655.1	1,640.3	0.98	0.93	16,202	15,177
			Total	2,074.2	1,925.3	0.98	0.95	20,402	18,219
						%Mo	%Mo
			Proved			0.024	–	98	–
	Molybdenum		Probable			0.024	–	398	–
			Total			0.024	–	496	–
						%TCu	%TCu
Low Grade Sulphide			Proved	–	–	–	–	–	–
Flotation – stockpile	Copper		Probable	1,069.2	935.2	0.49	0.49	5,219	4,596
			Total	1,069.2	935.2	0.49	0.49	5,219	4,596
						%Mo	%Mo
			Proved Probable			– 0.010	– –	– 105	– –
	Molybdenum		Total			0.010	–	105	–
El Soldado (OP)	50.1	23				%TCu	%TCu
Sulphide			Proved	125.7	95.4	0.81	0.96	1,018	915
Flotation(3)			Probable	44.6	67.3	0.79	0.79	352	533
			Total	170.3	162.7	0.80	0.89	1,371	1,448
Oxide			Proved	–	–	–	–	–	–
Heap Leach			Probable	3.0	3.5	0.45	0.46	14	16
			Total	3.0	3.5	0.45	0.46	14	16
Los Bronces (OP)	50.1	36				%TCu	%TCu
Sulphide			Proved	729.9	899.6	0.70	0.69	5,109	6,208
Flotation	Copper		Probable	779.4	598.8	0.53	0.51	4,131	3,054
			Total	1,509.3	1,498.4	0.61 %Mo	0.62 %Mo	9,240	9,261
			Proved			0.016	–	117	–
	Molybdenum		Probable			0.013	–	101	–
			Total			0.014	–	218	–
						%TCu	%TCu
Sulphide			Proved	428.6	486.6	0.32	0.35	1,371	1,703
Dump Leach(4)	Copper		Probable	179.0	197.1	0.29	0.27	519	532
			Total	607.6	683.7	0.31	0.33	1,891	2,235
						%Mo	%Mo
			Proved			0.007	–	30	–
	Molybdenum		Probable			0.006	–	11	–
Mantos Blancos (OP)	100	8	Total			0.007	–	41	–
Sulphide			Proved	14.1	26.3	%ICu 0.82	%ICu 0.83	115	218
Flotation(5)			Probable	21.6	19.7	0.79	0.80	170	157
			Total	35.6	46.0	0.80	0.82	286	376
						%ASCu	%ASCu
Oxide			Proved	2.7	8.3	0.55	0.54	15	45
Vat and Heap Leach(6)			Probable	12.7	16.3	0.38	0.33	47	54
			Total	15.4	24.7	0.41	0.40	62	99
						%ASCu	%ASCu
Oxide			Proved	–	2.1	–	0.18	–	4
Dump Leach(7)			Probable	36.8	49.6	0.23	0.23	84	115
			Total	36.8	51.7	0.23	0.23	84	119
Mantoverde (OP) Oxide	100	5	Proved	22.2	33.3	%ASCu 0.56	%ASCu 0.59	124	196
Heap Leach(8)			Probable	20.2	9.5	0.52	0.55	105	52
			Total	42.3	42.7	0.54	0.58	229	248
						%ASCu	%ASCu
Oxide			Proved	18.4	27.2	0.23	0.24	42	65
Dump Leach(9)			Probable	25.7	18.2	0.27	0.28	70	51
			Total	44.2	45.4	0.25	0.26	112	116

Mining method: OP = Open Pit. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only. TCu = total copper, ICu = insoluble copper (total copper less acid soluble copper), ASCu = acid soluble copper.

estimates as at 31 December 2012

(1) Copper Reserves: A variable cut-off from 0.20% up to 0.50% (CuT, ICu or ASCu) is applied as cut-offs to determine Ore Reserves on operations.
(2) Collahuasi: The increases in Ore Reserves is due to the completion of a drilling campaign at Rosario Oeste enabling conversion of additional Mineral Resources to Ore Reserves. Ujina also has additional Ore Reserves due to a change in economic assumptions (increase in long term metal price) and an updated geological model.
(3) El Soldado Sulphide (Flotation): The decrease in Ore Reserves is due to production and a change in the block modelling methodology to take into account a change in the mine design (bench height) offset by increases due to a change in economic assumptions (increase in long term metal price) and new drilling information.
(4) Los Bronces Sulphide (Dump Leach): The decrease in Ore Reserves is due to a combination of production, changes to the mine plan, a new classifi cation methodology (which resulted in re-allocation of probable reserves to inferred resources) offset by an increase due to a change in economic assumptions (increase in long term metal price).
(5) Mantos Blancos Sulphide (Flotation): The decrease in Ore Reserves is primarily due to an updated mine planning schedule offset by a small increase due to new information from within the pit. (6) Mantos Blancos – Oxide (Vat and Heap Leach): The decrease in Ore Reserves is primarily due to transfer of material to the Dump Leaching process along with production.
(7) Mantos Blancos Oxide (Dump Leach): The decrease in Ore Reserves is primarily due to production along with transfer of material to the Vat Leach Process which is offset by Vat Leach Tailings which will now be put through the Dump Leach Process.
(8) Mantoverde Oxide (Heap Leach): The decrease in Ore Reserves is due to production offset by conversion of Mineral Resources to Ore Reserves enabled by new drilling information. (9) Mantoverde – Oxide (Dump Leach): The decrease in Ore Reserves is due to production offset by an increase of Dump Material within the Montecristo, Quisco and Pto 62 areas as a result of continued drilling.

Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2012 at the following operations: El Soldado, Los Bronces, Mantos Blanco and Mantoverde.

estimates as at 31 December 2012

Copper – Operations				Tonnes		Grade		Contained Metal
MINERAL RESOURCES(1)	Attributable %	Classifi cation	2012	2011	2012	2011	2012	2011
Collahuasi (OP)	44.0		Mt	Mt	%TCu	%TCu	kt	kt
Oxide and Mixed		Measured	–	–	–	–	–	–
Heap Leach		Indicated	0.5	15.1	0.70	0.60	3	90
	Copper	Measured and Indicated	0.5	15.1	0.70	0.60	3	90
		Inferred (in LOM Plan)	2.8	3.9	0.37	0.62	11	24
		Inferred (ex. LOM Plan)	8.5	0.3	0.62	0.61	53	2
		Total Inferred	11.3	4.2	0.56	0.62	63	26
					%TCu	%TCu
Sulphide(2)		Measured	4.6	1.2	0.75	0.78	35	9
Flotation – direct feed		Indicated	1,148.9	628.9	0.94	0.91	10,821	5,694
	Copper	Measured and Indicated	1,153.6	630.1	0.94	0.91	10,856	5,704
		Inferred (in LOM Plan)	486.1	660.6	1.03	0.99	5,017	6,532
		Inferred (ex. LOM Plan)	2,654.9	1,944.6	0.92	0.91	24,441	17,676
		Total Inferred	3,141.0	2,605.3	0.94	0.93	29,458	24,208
					%Mo	%Mo
		Measured			0.005	–	0	–
		Indicated			0.047	–	368	–
	Molybdenum	Measured and Indicated			0.047	–	368	–
		Inferred (in LOM Plan)			0.016	–	76	–
		Inferred (ex. LOM Plan)			0.022	–	584	–
		Total Inferred			0.021	–	660	–
					%TCu	%TCu
Low Grade Sulphide(2)		Measured	6.2	1.2	0.48	0.44	30	5
Flotation – stockpile		Indicated	265.9	152.5	0.46	0.46	1,233	698
	Copper	Measured and Indicated	272.1	153.7	0.46	0.46	1,263	704
		Inferred (in LOM Plan)	361.6	579.0	0.45	0.44	1,616	2,564
		Inferred (ex. LOM Plan)	945.4	736.8	0.47	0.46	4,419	3,414
		Total Inferred	1,307.0	1,315.8	0.46	0.45	6,036	5,978
					%Mo	%Mo
		Measured			0.012	–	1	–
		Indicated			0.021	–	25	–
	Molybdenum	Measured and Indicated			0.021	–	26	–
		Inferred (in LOM Plan)			0.004	–	14	–
		Inferred (ex. LOM Plan)			0.005	–	44	–
		Total Inferred			0.005	–	58	–
El Soldado (OP)	50.1				%TCu	%TCu
Sulphide		Measured	24.7	21.9	0.78	0.82	193	180
Flotation(3)		Indicated	7.7	18.8	0.72	0.72	55	135
		Measured and Indicated	32.4	40.7	0.77	0.77	248	315
		Inferred (in LOM Plan)	7.7	20.9	0.58	0.81	45	169
		Inferred (ex. LOM Plan)	6.4	12.7	0.53	0.71	34	90
		Total Inferred	14.1	33.6	0.56	0.77	79	260
Oxide		Measured	0.0	0.1	0.68	0.75	0	1
Heap Leach		Indicated	0.0	0.1	0.62	0.69	0	1
		Measured and Indicated	0.0	0.2	0.66	0.71	0	1
		Inferred (in LOM Plan)	–	–	–	–	–	–
		Inferred (ex. LOM Plan)	0.0	0.1	0.57	0.69	0	0
Los Bronces (OP)	50.1	Total Inferred	0.0	0.1	0.57 %TCu	0.69 %TCu	0	0
Sulphide		Measured	84.8	211.1	0.45	0.45	382	950
Flotation(4)		Indicated	897.6	922.9	0.40	0.43	3,590	3,968
	Copper	Measured and Indicated	982.4	1,133.9	0.40	0.43	3,972	4,918
		Inferred (in LOM Plan)	212.0	83.7	0.48	0.58	1,018	485
		Inferred (ex. LOM Plan)	3,311.1	3,115.6	0.36	0.39	11,920	12,151
		Total Inferred	3,523.1	3,199.3	0.37	0.39	12,938	12,636
					%Mo	%Mo
		Measured			0.005	–	4	–
		Indicated			0.009	–	81	–
	Molybdenum	Measured and Indicated			0.009	–	85	–
		Inferred (in LOM Plan)			0.013	–	28	–
		Inferred (ex. LOM Plan)			0.008	–	265	–
		Total Inferred			0.008	–	293	–
					%TCu	%TCu
Sulphide		Measured	–	–	–	–	–	–
Dump Leach(5)		Indicated	–	–	–	–	–	–
	Copper	Measured and Indicated	–	–	–	–	–	–
		Inferred (in LOM Plan)	173.2	114.4	0.28	0.26	485	298
		Inferred (ex. LOM Plan)	–	–	–	–	–	–
		Total Inferred	173.2	114.4	0.28	0.26	485	298
					%Mo	%Mo
		Measured			–	–	–	–
		Indicated			–	–	–	–
	Molybdenum	Measured and Indicated			–	–	–	–
		Inferred (in LOM Plan)			0.006	–	10	–
		Inferred (ex. LOM Plan)			–	–	–	–
		Total Inferred			0.006	–	10	–

estimates as at 31 December 2012

Copper – Operations continued				Tonnes		Grade		Contained Metal
MINERAL RESOURCES(1)	Attributable %	Classifi cation	2012	2011	2012	2011	2012	2011
Mantos Blancos (OP)	100		Mt	Mt	%ICu	%ICu	kt	kt
Sulphide		Measured	30.2	47.8	0.95	0.75	286	359
Flotation(6)		Indicated	64.8	68.1	0.69	0.56	447	379
		Measured and Indicated	95.0	116.0	0.77	0.64	734	738
		Inferred (in LOM Plan)	9.4	2.7	0.46	0.57	43	16
		Inferred (ex. LOM Plan)	23.8	27.8	0.66	0.55	157	153
		Total Inferred	33.2	30.5	0.60	0.55	201	168
					%ASCu	%ASCu
Oxide		Measured	3.5	14.1	0.50	0.47	17	66
Vat and Heap Leach(7)		Indicated	11.1	10.5	0.45	0.43	50	45
		Measured and Indicated	14.6	24.5	0.46	0.45	67	111
		Inferred (in LOM Plan)	17.6	1.9	0.26	0.53	46	10
		Inferred (ex. LOM Plan)	7.4	3.3	0.46	0.47	34	16
		Total Inferred	25.0	5.2	0.32	0.49	80	26
					%ASCu	%ASCu
Oxide		Measured	0.4	–	0.18	–	1	–
Dump Leach(8)		Indicated	8.4	8.3	0.17	0.20	14	17
		Measured and Indicated	8.8	8.3	0.17	0.20	15	17
		Inferred (in LOM Plan)	91.4	65.8	0.23	0.23	210	154
		Inferred (ex. LOM Plan)	4.3	–	0.17	–	7	–
		Total Inferred	95.7	65.8	0.23	0.23	218	154
Mantoverde (OP)	100				%ASCu	%ASCu
Oxide		Measured	5.1	21.1	0.42	0.36	22	76
Heap Leach(9)		Indicated	6.7	13.1	0.53	0.42	35	55
		Measured and Indicated	11.8	34.2	0.48	0.38	57	131
		Inferred (in LOM Plan)	3.3	0.6	0.69	0.53	23	3
		Inferred (ex. LOM Plan)	0.1	0.9	0.30	0.29	0	3
		Total Inferred	3.4	1.5	0.68	0.38	23	6
					%ASCu	%ASCu
Oxide		Measured	–	–	–	–	–	–
Dump Leach		Indicated	–	–	–	–	–	–
		Measured and Indicated	–	–	–	–	–	–
		Inferred (in LOM Plan)	0.6	0.9	0.24	0.22	1	2
		Inferred (ex. LOM Plan)	–	–	–	–	–	–
		Total Inferred	0.6	0.9	0.24	0.22	1	2

MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.

(1) Copper Resources: A test of reasonable eventual economic extraction is applied through consideration of an optimised pit shell. Materials outside the optimised shell that have potential of eventual economic extraction via underground means are not included in the Mineral Resource statement. Mineral Resources are quoted above a 0.2% TCu cut-off.

(2) Collahuasi – Sulphide and Low Grade Sulphide (Flotation): The increase in Mineral Resources is primarily due to Economic Assumptions (increase in long term metal price) and new drilling information which identifi ed and delineated new resources.

(3) El Soldado – Sulphide (Flotation): The decrease in Mineral Resources is primarily due to conversion of Mineral Resources to Ore Reserves (increase in long term metal price) and greater dilution effect as a result of a change in bench height and ore/waste contact modelling methodology.

(4) Los Bronces – Sulphide (Flotation): The decrease in Measured and Indicated Mineral Resources is due to a change in the estimation methodology and new classifi cation. The overall increase in Mineral Resources is due to a change in economic assumptions (increase in long term metal price).

(5) Los Bronces – Sulphide (Dump Leach): The Mineral Resources increase due to the re-allocation of Probable Reserves to Inferred Resources, which is offset by a decrease due to changes in the cut-off grade strategy applied to material sent to the fl otation plant.

(6) Mantos Blancos – Sulphide (Flotation): The increase in Mineral Resources is due to new drilling information which identifi ed and delineated new resources offset by a refi nement in the estimation methodology.

(7) Mantos Blancos – Oxide (Vat and Heap Leach): The increase in Mineral Resources is due to increased feed from the Mercedes Dump offset by a change in the estimation methodology.

(8) Mantos Blancos – Oxide (Dump Leach): The Mineral Resources increase due to additional material from Phase II of Mercedes Dump and Botadero B zones.

(9) Mantoverde – Oxide (Heap Leach): The decrease in Mineral Resources is due to conversion to Ore Reserves enabled by new drilling information.

estimates as at 31 December 2012

Copper – Projects					Tonnes		Grade		Contained Metal
ORE RESERVES	Attributable %	Mine Life	Classifi cation	2012	2011	2012	2011	2012	2011
Quellaveco (OP)(1)	81.9	28		Mt	Mt	%TCu	%TCu	kt	kt
Sulphide			Proved	701.8	701.8	0.65	0.65	4,562	4,562
Flotation	Copper		Probable	214.6	214.6	0.63	0.63	1,352	1,352
			Total	916.4	916.4	0.65	0.65	5,914	5,914
						%Mo	%Mo
			Proved			0.019	–	133	–
	Molybdenum		Probable			0.021	–	45	–
			Total			0.019	–	178	–
Copper – Projects					Tonnes		Grade		Contained Metal
MINERAL RESOURCES	Attributable %		Classifi cation	2012	2011	2012	2011	2012	2011
Quellaveco (OP)(1)	81.9			Mt	Mt	%TCu	%TCu	kt	kt
Sulphide			Measured	284.2	196.8	0.35	0.40	990	787
Flotation			Indicated	807.9	627.0	0.41	0.45	3,290	2,822
	Copper		Measured and Indicated	1,092.0	823.8	0.39	0.44	4,280	3,609
			Inferred (in LOM Plan)	6.9	8.1	0.79	0.72	54	58
			Inferred (ex. LOM Plan)	877.9	174.9	0.33	0.44	2,893	770
			Total Inferred	884.8	183.0	0.33	0.45	2,947	828
						%Mo	%Mo
			Measured			0.015	–	43	–
			Indicated			0.015	–	121	–
	Molybdenum		Measured and Indicated			0.015	–	164	–
			Inferred (in LOM Plan)			–	–	–	–
			Inferred (ex. LOM Plan)			0.015	–	132	–
			Total Inferred			0.015	–	132	–
Mantoverde Sulphide Project(2)	100					%TCu	%TCu
Sulphide			Measured	106.6	109.8	0.68	0.67	725	736
Flotation			Indicated	41.5	34.2	0.66	0.63	274	216
			Measured and Indicated	148.1	144.0	0.67	0.66	999	951
			Inferred	78.0	44.3	0.68	0.65	530	288
Pebble (OP/UG)(3)(4)(5)	50.0					%TCu	%TCu
Sulphide			Measured(4)	507.9	507.9	0.34	0.34	1,715	1,715
			Indicated(5)	4,761.0	4,761.0	0.46	0.46	21,739	21,739
			Measured and Indicated	5,268.8	5,268.8	0.45	0.45	23,454	23,454
			Inferred(6)	2,709.5	2,709.5	0.32	0.32	8,587	8,587
Los Sulfatos(6)	50.1					%TCu	%TCu
Sulphide			Inferred	1,200	1,200	1.46	1.46	17,520	17,520
San Enrique Monolito(7)	50.1					%TCu	%TCu
Sulphide			Inferred	900	900	0.81	0.81	7,290	7,290
West Wall(8)	50.0					%TCu	%TCu
Sulphide			Inferred	750	750	0.54	0.54	4,050	4,050

MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.

Mining method: OP = Open Pit, UG = Underground. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only. Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or Measured Resource after continued exploration.

(1) Quellaveco: Mineral Resources are quoted above a 0.2 %TCu cut-off. The increase in the Mineral Resources is due to a change in economic assumptions (increase in long term metal price), a change in the cut-off grade strategy and the addition of low-grade stockpile material.

(2) Mantoverde Sulphide Project: Mineral Resources are quoted above a 0.35 %TCu cut-off. The increase in Mineral Resources is primarily due to new drilling information.

There is a possibility to consider Oxides together with the Sulphides. Oxide Mineral Resource estimates are as follows:

Measured 53.2 Mt at 0.40 %ASCu; Indicated 4.0 Mt at 0.39 %ASCu; Inferred 10.1 Mt at 0.40 %ASCu. (3) Pebble: The Mineral Resources are based on drilling to May 2009 and a block model fi nalised in December 2009. Reported Mineral Resources fall within a volume defi ned by resource price estimates and are based on a cut-off grade of 0.40% CuEq. Calculation of copper equivalent (CuEq) is based on long term metal prices and takes into consideration the recovery of Copper, Gold and Molybdenum. At a cut-off of 0.60% CuEq the estimate of Measured Resources is 278 Mt at 0.40% Cu, 0.42 g/t Au, 0.020% Mo while the estimate of Indicated Resources is 3,319 Mt at 0.55% Cu, 0.42 g/t Au, 0.030% Mo.

(4) Pebble co-product estimated grades:

Measured – Gold 0.36g/t, Molybdenum 0.018%, CuEq average grade 0.66%

Indicated – Gold 0.37g/t, Molybdenum 0.027%, CuEq average grade 0.85%.

Inferred – Gold 0.31g/t, Molybdenum 0.026%, CuEq average grade 0.67%.

(5) Pebble: The property comprises 2,042 located Alaska State mineral claims which total 209,996 acres (84,982 hectares) and which are currently valid. (6) Los Sulfatos: The reported resources include mineralisation inside a 1% nominal copper grade cut-off envelope down to the current drillhole depths of 1,000 metres below surface. The test for reasonable prospects of eventual economic extraction is based on an underground operation.

(7) San Enrique Monolito: The test for reasonable prospects of eventual economic extraction is based on an underground operation.

(8) West Wall: The test for reasonable prospects of eventual economic extraction is based on an open pit operation to a depth of 600m below surface.

Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2012 at the following projects: Quellaveco and Mantoverde Sulphide Project.

NICKEL

estimates as at 31 December 2012

NICKEL

The Ore Reserve and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. The fi gures reported represent 100% of the Ore Reserves and Mineral Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of fi gures may cause computational discrepancies.

Nickel – Operations		Mine			Tonnes		Grade		Contained Metal
ORE RESERVES	Attributable %	Life	Classifi cation	2012	2011	2012	2011	2012	2011
Barro Alto (OP)(1)	100	17		Mt	Mt	%Ni	%Ni	kt	kt
Saprolite			Proved	23.4	21.2	1.71	1.66	401	352
			Probable	23.4	31.0	1.51	1.55	353	481
			Total	46.8	52.2	1.61	1.60	754	833
Niquelândia (OP)(2)	100	22				%Ni	%Ni
Saprolite			Proved	3.9	3.7	1.35	1.35	52	50
			Probable	1.0	0.9	1.32	1.33	14	12
			Total	4.9	4.6	1.34	1.35	66	63

Nickel – Operations				Tonnes		Grade		Contained Metal
MINERAL RESOURCES	Attributable %	Classifi cation	2012	2011	2012	2011	2012	2011
Barro Alto (OP)	100		Mt	Mt	%Ni	%Ni	kt	kt
Saprolite		Measured	9.0	5.5	1.43	1.47	129	80
Direct Feed(3)		Indicated	5.0	1.7	1.30	1.17	65	20
		Measured and Indicated	14.0	7.2	1.38	1.40	193	100
		Inferred (in LOM Plan)	36.6	45.4	1.52	1.51	556	686
		Inferred (ex. LOM Plan)	13.1	14.8	1.18	1.21	155	179
		Total Inferred	49.7	60.2	1.43	1.44	710	865
Ferruginous Laterite		Measured	3.3	2.4	1.28	1.31	42	31
Stockpile(4)		Indicated	3.8	3.6	1.10	1.09	42	40
		Measured and Indicated	7.1	6.0	1.19	1.18	85	71
		Inferred (in LOM Plan)	1.5	–	1.07	–	16	–
		Inferred (ex. LOM Plan)	0.0	1.5	1.00	1.05	0	16
		Total Inferred	1.6	1.5	1.07	1.05	17	16
Niquelândia (OP)(5)	100				%Ni	%Ni
Saprolite		Measured	2.8	2.9	1.25	1.26	35	37
		Indicated	2.9	3.1	1.23	1.24	35	39
		Measured and Indicated	5.7	6.0	1.24	1.25	70	75
		Inferred (in LOM Plan)	–	–	–	–	–	–
		Inferred (ex. LOM Plan)	–	–	–	–	–	–
		Total Inferred	–	–	–	–	–	–

MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.

Nickel – Projects				Tonnes		Grade	Contained Metal
MINERAL RESOURCES	Attributable %	Classifi cation	2012	2011	2012	2011	2012	2011
Jacaré(6)	100		Mt	Mt	%Ni	%Ni	kt	kt
Ferruginous Laterite		Measured	6.3	6.3	1.15	1.15	72	72
		Indicated	53.8	53.8	1.21	1.21	653	653
		Measured and Indicated	60.1	60.1	1.21	1.21	726	726
		Inferred	125.0	125.0	1.17	1.17	1,468	1,468
Saprolite		Measured	–	–	–	–	–	–
		Indicated	39.6	39.6	1.49	1.49	589	589
		Measured and Indicated	39.6	39.6	1.49	1.49	589	589
		Inferred	81.9	81.9	1.39	1.39	1,138	1,138

Mining method: OP = Open Pit. Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only. Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or Measured Resource after continued exploration.

Loma de Níquel is not reported as the mining concessions expired in November 2012 and have not been renewed.

(1) Barro Alto – Ore Reserves: The decrease is due to a change in evaluation methodology resulting in re-allocation to Mineral Resources. The decrease is partially offset by increases due to updated economic assumptions and new information enabling conversion of Mineral Resources to Ore Reserves. In 2011 the reported Mine Life considered reserves plus Inferred (in LOM Plan), however, in 2012 correctly considers only the scheduled Ore Reserves.

(2) Niquelândia – Ore Reserves: The increase is due to revised economic assumptions which are partially offset by a change in evaluation methodology resulting in re-allocation to Mineral Resources. Niquelândia Mine is adjacent to the Codemin Ferro-Nickel smelter which is fed with ore from Barro Alto which is blended with Niquelândia ore to achieve an appropriate smelter feed chemistry. (3) Barro Alto – Direct Feed: Mineral Resources are quoted above a 0.9 %Ni cut-off, below an iron content of 30 %Fe and between a SiO2/(MgO+CaO) ratio of 1.72 to 1.8. The decrease is due to

downgrading of Mineral Resources to Mineralised Inventory due to a change in resource classifi cation which is partially offset by the change in evaluation methodology resulting in re-allocation to Mineral Resource. A surface stockpile of 5.2 Mt at 1.48 %Ni is included in the Saprolite Mineral Resources. (4) Barro Alto – Stockpile: Material that is scheduled for stockpiling or has already been mined and stockpiled. A surface stockpile of 0.6 Mt at 1.19 %Ni is included in the Ferruginous Laterite Mineral

Resources.
(5) Niquelândia Mineral Resources: Mineral Resources are quoted above a 0.9 %Ni cut-off, below an Iron content of 30% Fe and between a SiO2/(MgO+CaO) ratio of 1.72 to 1.8. A change in the economic assumptions enabled conversion of Mineral Resources to Ore Reserves which was partially offset by a change in evaluation methodology resulting in re-allocation to Mineral Resources. (6) Jacaré: The Mineral Resources are reported within a pit shell developed for the Concept Study with a cut-off of 1.3 %Ni. A minimum mineralised width of 1m must be present to allow material to be categorised as higher-grade Saprolite Mineral Resource. The Saprolite Resources are a combination of higher-grade resources (>1.3 %Ni) that are expected to feed a pyrometallurgical treatment facility and lower-grade resources (1.3 – 0.9 %Ni) that could be used to neutralise the acid in the proposed hydrometallurgical treatment of the Ferruginous Laterite material while still recovering Nickel in the process. The Plano de Aproveitamento Economico (PAE) is under consideration by Brazil's Departamento Nacional de Produção Mineral (DNPM).

Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2012 at the following operations: Barro Alto and Niquelândia.

PLATINUM GROUP METALS

estimates as at 31 December 2012

PLATINUM

The Ore Reserve and Mineral Resource estimates were compiled in compliance with The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (The SAMREC Code, 2007 Edition as amended July 2009). Operations and Projects outside South Africa were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. Details of the individual operations appear in Anglo American Platinum's Annual Report. Merensky Reef and UG2 Reef Mineral Resources are reported over an economic and mineable cut appropriate to the specifi c reef. The fi gures reported represent 100% of the Mineral Resources and Ore Reserves attributable to Anglo American Platinum Limited unless otherwise noted. Rounding of fi gures may cause computational discrepancies.

The Mineral Resource and Ore Reserve tables refl ect estimates prior to the strategic announcement in January 2013. Changes associated with the strategic review will most probably result in a reallocation of reported Ore Reserves to Mineral Resources in the Rustenburg and Union areas and the impact thereof will only be refl ected in the 2013 Annual Report.

Anglo American plc's interest in Anglo American Platinum Limited is 79.9%.

		Tonnes (1)		Grade(2)		Contained Metal(3)		Contained Metal (3)
		2011	2012	2011	2012			2011
		Mt	4E PGE	4E PGE	4E tonnes	4E tonnes	2011 2012 4E Moz 322.7 9.2 253.4 3.2 576.2 12.5 1,600.7 50.8 1,194.1 18.4 69.2 1,532.3 52.0 34.3 1.5 539.9 35.6 89.1 3,490.1 113.4 1,987.4 57.3 170.8 – – 16.2 0.5 16.2 0.5	4E Moz
		63.9	4.79	5.05	286.5			10.4
		49.1	4.49	5.16	100.9			8.1
		113.0	4.71	5.10	387.4			18.5
Platinum – South Africa Operations ORE RESERVES Classifi cation 2012 Merensky Reef(4)(5) Mt Proved 59.8 Probable 22.5 Total 82.3 UG2 Reef(4)(6) Proved 389.8 Probable 128.6 Total 518.4 Platreef(7) Proved 587.5 Proved primary ore stockpile(8) 26.7 Probable 394.6 Total 1,008.9 All Reefs Proved 1,063.9 Probable 545.7 Total(9) 1,609.6 Tailings(10) Proved – Probable 15.9 Total 15.9	390.7	4.05	4.10	1,578.7			51.5
		250.0	4.46	4.78	573.6			38.4
		640.7	4.15	4.36	2,152.3	2,794.8		89.9
		538.8	2.75	2.84	1,617.3			49.3
		20.0	1.72	1.71	46.0			1.1
		166.5	2.81	3.24	1,108.2			17.4
		725.4	2.75	2.90	2,771.5	2,106.6		67.7
		1,013.4	3.32	3.44	3,528.5			112.2
		465.7	3.27	4.27	1,782.7			63.9
		1,479.1	3.30	3.70	5,311.2	5,477.5		176.1
		–	–	–	–			–
		18.9	1.02	0.86	16.1			0.5
		18.9	1.02	0.86	16.1			0.5

Platinum – Zimbabwe Operations		Tonnes (1)		Grade(2)	Contained Metal(3)			Contained Metal (3)
ORE RESERVES	Classifi cation	2012	2011	2012	2011	2012	2011	2012	2011
Main Sulphide Zone(11) (12) (13)		Mt	Mt	4E PGE	4E PGE	4E tonnes	4E tonnes	4E Moz	4E Moz
	Proved	13.9	15.0	3.85	3.68	53.4	55.2	1.7	1.8
	Probable	39.8	23.7	3.73	3.85	148.5	91.2	4.8	2.9
	Total	53.7	38.7	3.76	3.79	201.9	146.5	6.5	4.7

(1) Tonnes: Quoted as dry metric tonnes.

(2) Grade: 4E PGE is the sum of Platinum, Palladium, Rhodium and Gold grades in grammes per tonne (g/t). The reported grades are as delivered for treatment.

Concentrator recoveries for Merensky Reef range from 84% to 89%, UG2 Reef from 82% to 87%, Platreef from 64% to 74% and Main Sulphide Zone from 70% to 78%.

(3) Contained Metal: Contained Metal is presented in metric tonnes and million troy ounces (Moz).

(4) Merensky Reef and UG2 Reef: The pay limits built into the basic mining equation are directly linked to the 2013 Business plan prior to the strategic review announcement made in January 2013. The pay limit is based on Cost 4, which consists of 'Direct Cash Cost' (on and off mine), 'Other Indirect Costs' and 'Stay in Business Capital' (on and off mine). The reserve pay-limit varies across all operations between 2.0g/t and 5.6g/t (4E PGE). The range is a function of various factors including depth of the ore body, geological complexity, infrastructure and economic parameters.

(5) Merensky Reef: The global Ore Reserve tonnage and 4E ounce content decreased, mainly in response to economic assumptions resulting in reallocation of Ore Reserves to Mineral Resources at Tumela Mine and Siphumelele 1 Mine. These decreases were partially offset by the increase in Ore Reserves mainly from Khuseleka Mine and Union South Mine where additional Mineral Resources have been converted to Ore Reserves. The global Ore Reserve grade decreased following the increase of the minimum resource cut from 90cm to 110cm due to improved rock support measures. (6) UG2 Reef: The global Ore Reserve tonnage and 4E ounce content decreased largely due to economic assumptions and the resulting reallocation of Ore Reserves to Mineral Resources at Tumela

Mine, Twickenham Mine and Siphumelele 2 Mine. These decreases were partially offset by the increase in Ore Reserves from Union South Mine, Siphumelele 1 Mine, Kroondal Mine, Marikana Mine and Modikwa Mine where Mineral Resources have been converted to Ore Reserves. The global Ore Reserve grade decreased following the increase of the minimum resource cut from 90cm to 110cm due to an improved rock support measures.

(7) Platreef: The Ore Reserves tonnage and 4E ounce content increased as a result of a revised pit design. Geotechnical study will commence in 2013 to validate the optimum pit design and increased mining depth. For Mogalakwena North, Central and South the 4E pay limit is 1.0 g/t. For Sandsloot and Zwartfontein South the pay limit is 1.7 g/t.

(8) Platreef stockpiles: Mined ore retained for future treatment. These are reported separately as Proved Ore Reserves and aggregated into the summation tabulations.

(9) Alternative units – All Reefs Total: Tonnage in million short tons (Mton) and associated grade in troy ounces per short ton (oz/ton) for 2012 is: Total – 1,774.3 Mton (2011: 1,630.4 Mton)

Total – 0.096 oz/ton (2011: 0.108 oz/ton)

(10) Tailings: Operating tailings dams are not evaluated and therefore not reported as part of the Ore Reserves. At Rustenburg mines and at Union mines dormant tailings dams have been evaluated and are separately reported as tailings Ore Reserves.

(11) Main Sulphide Zone: The Ore Reserve tonnage and 4E ounce content increased after the conversion of Mineral Resources to Ore Reserves, which followed an increase in resource confi dence based on new drilling information.

(12) Main Sulphide Zone: Anglo American Platinum currently has an effective 100% interest in Unki Mine, subject to the fi nalisation of the indigenisation agreement. (13) Alternative units – Main Sulphide Zone: Tonnage in million short tons (Mton) and associated grade in troy ounces per short ton (oz/ton) for 2012 is:

Total – 59.2 Mton (2011: 42.6 Mton)

Total – 0.110 oz/ton (2011: 0.110 oz/ton)

PLATINUM GROUP METALS

estimates as at 31 December 2012

Platinum – South Africa Operations		Tonnes (1)			Grade(2)	Contained Metal(3)		Contained Metal (3)
MINERAL RESOURCES	Classifi cation	2012	2011	2012	2011	2012	2011	2012	2011
Merensky Reef(4)(5)		Mt	Mt	4E PGE	4E PGE	4E tonnes	4E tonnes	4E Moz	4E Moz
	Measured	189.3	162.1	5.63	5.57	1,065.1	903.7	34.2	29.1
	Indicated	290.6	273.5	5.51	5.54	1,600.1	1,515.4	51.4	48.7
	Measured and Indicated	479.9	435.6	5.55	5.55	2,665.2	2,419.1	85.7	77.8
	Inferred (in LOM Plan)	9.8	22.7	6.33	8.05	62.1	182.7	2.0	5.9
	Inferred (ex. LOM Plan)	563.8	547.1	5.11	5.08	2,879.5	2,778.8	92.6	89.3
	Total Inferred	573.6	569.8	5.13	5.20	2,941.6	2,961.5	94.6	95.2
UG2 Reef(4)(6)	Measured	475.2	391.9	5.14	5.33	2,441.0	2,090.5	78.5	67.2
	Indicated	656.4	547.2	5.13	5.21	3,367.8	2,849.6	108.3	91.6
	Measured and Indicated	1,131.6	939.1	5.13	5.26	5,808.8	4,940.1	186.8	158.8
	Inferred (in LOM Plan)	7.3	9.0	5.23	4.97	38.3	44.9	1.2	1.4
	Inferred (ex. LOM Plan)	604.8	660.1	5.36	5.23	3,239.5	3,449.4	104.2	110.9
	Total Inferred	612.1	669.1	5.35	5.22	3,277.8	3,494.3	105.4	112.3
Platreef(7)	Measured	151.2	219.1	2.59	2.38	391.3	522.0	12.6	16.8
	Indicated	740.7	980.9	2.11	2.20	1,560.9	2,158.3	50.2	69.4
	Measured and Indicated	891.8	1,199.9	2.19	2.23	1,952.2	2,680.3	62.8	86.2
	Inferred (in LOM Plan)	25.8	10.0	4.05	4.15	104.5	41.3	3.4	1.3
	Inferred (ex. LOM Plan)	1,560.5	1,575.5	2.10	2.12	3,284.1	3,344.8	105.6	107.5
	Total Inferred	1,586.3	1,585.5	2.14	2.14	3,388.6	3,386.0	108.9	108.9
All Reefs	Measured	815.7	773.1	4.78	4.55	3,897.4	3,516.2	125.3	113.0
	Indicated	1,687.7	1,801.5	3.87	3.62	6,528.8	6,523.3	209.9	209.7
	Measured and Indicated(8)	2,503.4	2,574.7	4.16	3.90	10,426.2	10,039.5	335.2	322.8
	Inferred (in LOM Plan)	43.0	41.7	4.77	6.45	204.9	268.9	6.6	8.6
	Inferred (ex. LOM Plan)	2,729.1	2,782.7	3.45	3.44	9,403.1	9,572.9	302.3	307.8
	Total Inferred	2,772.1	2,824.4	3.47	3.48	9,608.0	9,841.8	308.9	316.4
Tailings(9)	Measured	87.6	87.6	1.08	1.08	94.3	94.3	3.0	3.0
	Indicated	15.1	17.9	1.13	1.13	17.0	20.2	0.5	0.6
	Measured and Indicated	102.7	105.5	1.08	1.09	111.3	114.5	3.6	3.7
	Inferred (in LOM Plan)	–	–	–	–	–	–	–	–
	Inferred (ex. LOM Plan)	–	–	–	–	–	–	–	–
	Total Inferred	–	–	–	–	–	–	–	–

MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.

Platinum – Zimbabwe Operations		Tonnes (1)			Grade(2)		Contained Metal(3)	Contained Metal (3)
MINERAL RESOURCES	Classifi cation	2012	2011	2012	2011	2012	2011	2012	2011
Main Sulphide Zone(10) (11) (12)		Mt	Mt	4E PGE	4E PGE	4E tonnes	4E tonnes	4E Moz	4E Moz
	Measured	9.5	8.7	4.04	4.15	38.5	36.0	1.2	1.2
	Indicated	104.1	21.2	4.23	4.13	439.7	87.5	14.1	2.8
	Measured and Indicated	113.6	29.8	4.21	4.14	478.2	123.5	15.4	4.0
	Inferred (in LOM Plan)	0.3	14.2	3.32	4.19	1.0	59.5	0.0	1.9
	Inferred (ex. LOM Plan)	72.3	35.5	4.58	4.09	330.8	144.9	10.6	4.7
	Total Inferred	72.6	49.6	4.57	4.12	331.8	204.4	10.7	6.6

MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.

(1) Tonnes: Quoted as dry metric tonnes.

(2) Grade: 4E PGE is the sum of Platinum, Palladium, Rhodium and Gold grades in grammes per tonne (g/t).

(3) Contained Metal: Contained Metal is presented in metric tonnes and million troy ounces (Moz).

(4) Merensky Reef and UG2 Reef: The Mineral Resources are estimated over a practical minimum mining width suitable for the deposit known as the 'Resource Cut'. The minimum resource cut increased from 90cm to 110cm due to the introduction of an improved support system. As a result of the increased minimum resource cut the overall Merensky Reef and UG2 Reef tonnage increased

and the overall grade decreased. The 'Resource Cut' width takes cognisance of the mining method and geotechnical aspects in the hanging wall or footwall of the reef. (5) Merensky Reef: The Mineral Resource tonnage and 4E ounce content increased in response to the re-allocation of Ore Reserve back to Mineral Resources following economic assumptions at Tumela and Siphumelele mines. The increase in the minimum mining cut (change in mine layout) and new information contribute to the increase.

(6) UG2 Reef: The Mineral Resource tonnage and 4E ounce content increased due to re-allocation of Ore Reserve to Mineral Resources after application of revised economic assumptions at Tumela, Twickenham and Siphumelele mines. New information at Pandora Mine decreased the geological loss resulting in increased Mineral Resources. A decrease of Mineral Resource occurred at Union South mine where additional Mineral Resources were converted to Ore Reserves.

(7) Platreef: A 1.0g/t (4E PGE) cut-off has been used to defi ne Mineral Resources. During 2012 pit design test work confi rmed that Mineral Resources reported in 2011 can be mined via open pit. Additional Mineral Resources were converted to Ore Reserves, decreasing the Platreef Resources. No Mineral Resources applicable to underground mining have been included. However, stockpile material is included which comprises calc-silicate and oxidised material with a cut-off grade of greater than 3g/t (5.5 Mt / 0.6 Moz).

(8) Alternative units – All Reefs Measured and Indicated: Tonnage in million short tons (Mton) and associated grade in troy ounces per short ton (oz/ton) for 2012 is:

Measured and Indicated – 2759.5 Mton (2011: 2,838.1 Mton)

Measured and Indicated – 0.121 oz/ton (2011: 0.114 oz/ton)

(9) Tailings: Operating tailings dams are not evaluated and therefore not reported as part of the Mineral Resources. At Rustenburg and Union mines dormant dams have been evaluated and the tailing forms part of the Mineral Resource statement.

(10) Main Sulphide Zone: A new resource evaluation was completed covering Unki South, Helvetia, Paarl, KV and SR projects (contained within the special mining lease held by Southridge Limited). All projects are now incorporated in the Mineral Resources. As a consequence the Mineral Resources tonnage and 4E ounce content increased signifi cantly. The bulk of the resources have been evaluated using a 120cm resource cut. Unki East and West have been evaluated on a 180cm resource cut to support trackless mining. The increase in tonnage and content is offset by the decrease of Mineral Resource due to additional conversion of Mineral Resources to Ore Reserves at the Unki East Mine. Oxidised material is not considered.

(11) Main Sulphide Zone: Anglo American Platinum currently has an effective 100% interest in Southridge Limited, subject to the fi nalisation of the indigenisation agreement.

(12) Alternative units – Main Sulphide Zone Measured and Indicated: Tonnage in million short tons (Mton) and associated grade in troy ounces per short ton (oz/ton) for 2012 is:

Total – 205.3 Mton (2011: 87.6 Mton) Total – 0.127 oz/ton (2011: 0.120 oz/ton)

PLATINUM GROUP METALS

estimates as at 31 December 2012

Platinum – Other Projects		Tonnes (1)		Grade(2)		Contained Metal(3)		Contained Metal (3)
MINERAL RESOURCES	Classifi cation	2012	2011	2012	2011	2012	2011	2012	2011
South Africa		Mt	Mt	3E PGE	3E PGE	3E tonnes	3E tonnes	3E Moz	3E Moz
Boikgantsho(4)	Measured	–	–	–	–	–	–	–	–
Platreef	Indicated	37.0	37.0	1.30	1.30	47.9	47.9	1.5	1.5
	Measured and Indicated	37.0	37.0	1.30	1.30	47.9	47.9	1.5	1.5
	Inferred	1.8	1.8	1.14	1.14	2.1	2.1	0.1	0.1
				3E PGE	3E PGE
Sheba's Ridge(5)	Measured	28.0	28.0	0.88	0.88	24.6	24.6	0.8	0.8
	Indicated	34.0	34.0	0.85	0.85	29.1	29.1	0.9	0.9
	Measured and Indicated	62.0	62.0	0.87	0.87	53.6	53.6	1.7	1.7
	Inferred	149.9	149.9	0.96	0.96	144.5	144.5	4.6	4.6
Brazil				3E PGE	3E PGE
Pedra Branca(6)	Inferred	6.6	6.6	2.27	2.27	15.0	15.0	0.5	0.5

(1) Tonnes: Quoted as dry metric tonnes.

(2) Grade: 3E PGE is the sum of Platinum, Palladium and Gold grades in grammes per tonne (g/t).

(3) Contained Metal: Contained Metal is presented in metric tonnes and million troy ounces (Moz).

(4) Boikgantsho: Anglo American Platinum holds an attributable interest of 49% of the Joint Venture between Anglo American Platinum and Atlatsa Resources. A cut-off grade of 1g/t (3E PGE) is applied for resource defi nition.

(5) Sheba's Ridge: Anglo American Platinum holds an attributable interest of 35% of the Joint Venture between Anglo American Platinum, Aquarius Platinum and the South African Industrial Development Corporation (IDC). A cut-off grade of 0.5g/t (3E PGE) is applied for resource defi nition.

(6) Pedra Branca: Anglo American Platinum holds an attributable interest of 51% of the Joint Venture between Anglo American Platinum and Solitario Resources & Royalty. A cut-off of 0.7g/t (3E PGE) is applied for resource defi nition.

The following operations and projects contributed to the combined 2012 Ore Reserve and Mineral Resource estimates stated per reef (excluding Other Projects):

Operations:	Resource Types	%	Mine Life
Bafokeng Rasimone Platinum Mine (BRPM)	MR/UG2	33%	24
Bathopele Mine	UG2	100%	14
Bokoni Platinum Mine	MR/UG2	49%	30
Dishaba Mine	MR/UG2	100%	30
Khomanani Mine	MR/UG2	100%	15
Khuseleka Mine	MR/UG2	100%	24
Kroondal Platinum Mine	UG2	50%	6
Marikana Platinum Mine	UG2	50%	6
Modikwa Platinum Mine	MR/UG2	50%	29
Mogalakwena Mine	PR	100%	30
Mototolo Platinum Mine	UG2	50%	5*
Pandora	UG2	42.5%	26
Siphumelele 1 Mine	MR/UG2	100%	18
Siphumelele 2 Mine (School of Mines)	MR/UG2	100%	3
Thembelani Mine	MR/UG2	100%	25
Tumela Mine	MR/UG2	100%	22
Twickenham Platinum Mine	MR/UG2	100%	30
Union North Mine	MR/UG2	85%	18
Union South Mine	MR/UG2	85%	22
Unki Mine	MSZ	100%	30
Projects:		%
Der Brochen Project	MR/UG2	100%
Ga-Phasha PGM Project	MR/UG2	49%

Ga-Phasha PGM Project	MR/UG2	49%
Magazynskraal Project	MR/UG2	20%
Other Exploration Projects (portions of Driekop/Rustenburg)	MR/UG2	37.5% to 100%
Rustenburg – Non-Mine Projects	MR/UG2	100%

MR = Merensky Reef, UG2 = UG2 Reef, PR = Platreef, MSZ = Main Sulphide Zone;

% = Anglo American Platinum Limited attributable interest;

Mine Life = The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only considering the combined MR and UG2 production where applicable; * Only 5 years of Ore Reserves are declared as per Xstrata policy.

Information was provided by the Joint Venture partners for the following operations and projects:

Operations – BRPM, Bokoni, Kroondal, Marikana, Modikwa, Mototolo, Pandora (only Ore Reserve information for BRPM and Modikwa)

3E Projects – Pedra Branca, Sheba's Ridge

4E Projects – Ga-Phasha, Magazynskraal

Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2012 at the following operations: Dishaba, Mogalakwena, Tumela, Union North, Union South and Unki.

estimates as at 31 December 2012

DE BEERS CANADA

The Diamond Reserve and Diamond Resource estimates were compiled in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101). The fi gures reported represent 100% of the Diamond Reserves and Diamond Resources. Diamond Resources are quoted as inclusive of those used to calculate Diamond Reserves and must not be added to the Diamond Reserves. Rounding of fi gures may cause computational discrepancies.

De Beers Canada – Operations BCO			Tonnes		Grade	Saleable Carats
DIAMOND RESERVES	Attributable %	LOM	(mm)	Classifi cation	2012	2011	2012	2011	2012	2011
Snap Lake (UG)(1)	85.0	18	1.14		Mt	Mt	cpht	cpht	M¢	M¢
Kimberlite				Proved	–	–	–	–	–	–
				Probable	1.6	–	123.07	–	2.0	–
				Total	1.6	–	123.07	–	2.0	–
Victor (OP)	85.0	6	1.50				cpht	cpht
Kimberlite				Proved	–	–	–	–	–	–
				Probable	12.1	–	19.42	–	2.3	–
				Total	12.1	–	19.42	–	2.3	–
De Beers Canada Inc.	85.0		multiple				cpht	cpht
TOTAL				Proved	–	–	–	–	–	–
				Probable	13.7	–	31.68	–	4.3	–
				Total	13.7	–	31.68	–	4.3	–

De Beers Canada – Operations DIAMOND RESOURCES Attributable %		BCO	Tonnes			Grade		Carats
		(mm) Classifi cation	2012	2011	2012	2011	2012	2011
Snap Lake (UG)(1)	85.0	1.14	Mt	Mt	cpht	cpht	M¢	M¢
Kimberlite		Measured	–	–	–	–	–	–
		Indicated	2.5	–	189.27	–	4.7	–
		Measured and Indicated	2.5	–	189.27	–	4.7	–
		Inferred	23.1	–	176.54	–	40.9	–
Victor (OP)	85.0	1.50			cpht	cpht
Kimberlite		Measured	–	–	–	–	–	–
		Indicated	12.9	–	19.34	–	2.5	–
		Measured and Indicated	12.9	–	19.34	–	2.5	–
		Inferred	17.9	–	22.17	–	4.0	–
De Beers Canada Inc.	85.0	multiple			cpht	cpht
TOTAL		Measured	–	–	–	–	–	–
		Indicated	15.4	–	46.87	–	7.2	–
		Measured and Indicated	15.4	–	46.87	–	7.2	–
		Inferred	41.1	–	109.16	–	44.8	–

DIAMOND RESOURCES INCLUDE DIAMOND RESERVES

De Beers Canada – Projects						Tonnes		Grade		Saleable Carats
DIAMOND RESERVES	Attributable %	LOM	BCO (mm)	Classifi cation	2012	2011	2012	2011	2012	2011
Gahcho Kué (OP)(2)	43.4	11	1.00		Mt	Mt	cpht	cpht	M¢	M¢
Kimberlite				Proved	–	–	–	–	–	–
				Probable	31.0	–	153.71	–	47.6	–
				Total	31.0	–	153.71	–	47.6	–

De Beers Canada – Projects		BCO			Tonnes		Grade
DIAMOND RESOURCES	Attributable %	(mm)	Classifi cation	2012	2011	2012	2011	2012	2011
Gahcho Kué (OP)(2)	43.4	1.00		Mt	Mt	cpht	cpht	M¢	M¢
Kimberlite			Measured	–	–	–	–	–	–
			Indicated	30.2	–	163.87	–	49.6	–
		Measured and Indicated		30.2	–	163.87	–	49.6	–
			Inferred	6.0	–	168.86	–	10.1	–

DIAMOND RESOURCES INCLUDE DIAMOND RESERVES

Mining method: OP = Open Pit, UG = Underground.

LOM = Life of Mine (years) is based on scheduled Probable Reserves including Indicated and some Inferred Resources considered for Life of Mine planning.

Unless stated otherwise tonnage is quoted as dry metric tonnes. Estimates of Diamond Reserve tonnes refl ect the tonnage to be treated. Reported Diamond Reserves/Resources are based on a Bottom Cut Off (BCO) which refers to the bottom screen size aperture and varies between 1.00mm and 3.00mm (nominal square mesh).

Grade is quoted as carats per hundred metric tonnes (cpht). Due to the uncertainty that may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated

or Measured Resource after continued exploration.

(1) Snap Lake: Due to the high costs associated with resource development, Indicated Resources are continuously developed from underground infrastructure ahead of the mining face, resulting in an 18 month rolling reserve.

(2) Gahcho Kué: The project approval is subject to the successful conclusion of permitting and regulatory approvals. Gahcho Kué is a Joint Venture between De Beers Canada Inc. and Mountain Province Diamonds Inc.

Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2012 at the following operations: Snap Lake and Victor.

estimates as at 31 December 2012

DE BEERS CONSOLIDATED MINES

The Diamond Reserve and Diamond Resource estimates were compiled in accordance with The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (The SAMREC Code, 2007 Edition as amended July 2009). The fi gures reported represent 100% of the Diamond Reserves and Diamond Resources. Diamond Resources are quoted as inclusive of those used to calculate Diamond Reserves and must not be added to the Diamond Reserves. Rounding of fi gures may cause computational discrepancies. De Beers Consolidated Mines is a Joint Venture with Ponahalo Investments (Pty) Ltd.

De Beers Consolidated Mines – Operations			BCO			Tonnes		Grade	Saleable Carats
DIAMOND RESERVES	Attributable %	LOM	(mm)	Classifi cation	2012	2011	2012	2011	2012	2011
Venetia (OP)	62.9	9	1.00		Mt	Mt	cpht	cpht	M¢	M¢
Kimberlite				Proved	–	–	–	–	–	–
				Probable	33.6	–	97.50	–	32.8	–
				Total	33.6	–	97.50	–	32.8	–
Venetia (UG)(1)	62.9	27	1.00				cpht	cpht
Kimberlite				Proved	–	–	–	–	–	–
				Probable	91.4	–	76.53	–	70.0	–
				Total	91.4	–	76.53	–	70.0	–
De Beers Consolidated Mines	62.9		1.00				cpht	cpht
TOTAL				Proved	–	–	–	–	–	–
				Probable	125.0	–	82.17	–	102.7	–
				Total	125.0	–	82.17	–	102.7	–

De Beers Consolidated Mines – Operations		BCO			Tonnes		Grade	Carats
DIAMOND RESOURCES	Attributable %	(mm)	Classifi cation	2012	2011	2012	2011	2012	2011
Kimberley (OC)(2)	62.9	1.15		Mt	Mt	cpht	cpht	M¢	M¢
Tailings			Measured	–	–	–	–	–	–
			Indicated	–	–	–	–	–	–
		Measured and Indicated		–	–	–	–	–	–
			Inferred	38.2	–	12.16	–	4.7	–
Namaqualand (OC)( 3)	62.9	multiple( 3)				cpht	cpht
Beach and Fluvial Placers			Measured	–	–	–	–	–	–
			Indicated	19.3	–	10.87	–	2.1	–
		Measured and Indicated		19.3	–	10.87	–	2.1	–
			Inferred	70.8	–	4.79	–	3.4	–
Venetia (OP)(4)	62.9	1.00				cpht	cpht
Kimberlite			Measured	–	–	–	–	–	–
			Indicated	34.2	–	103.46	–	35.4	–
		Measured and Indicated		34.2	–	103.46	–	35.4	–
			Inferred	29.6	–	18.12	–	5.4	–
Venetia (UG)	62.9	1.00				cpht	cpht
Kimberlite			Measured	–	–	–	–	–	–
			Indicated	109.9	–	86.93	–	95.5	–
		Measured and Indicated		109.9	–	86.93	–	95.5	–
			Inferred	70.1	–	88.10	–	61.8	–
Voorspoed (OP)(5)	62.9	1.47				cpht	cpht
Kimberlite			Measured	–	–	–	–	–	–
			Indicated	–	–	–	–	–	–
		Measured and Indicated		–	–	–	–	–	–
			Inferred	37.9	–	21.58	–	8.2	–
De Beers Consolidated Mines	62.9	multiple				cpht	cpht
TOTAL			Measured	–	–	–	–	–	–
			Indicated	163.3	–	81.40	–	133.0	–
		Measured and Indicated		163.3	–	81.40	–	133.0	–
			Inferred	246.7	–	33.79	–	83.4	–

DIAMOND RESOURCES INCLUDE DIAMOND RESERVES

Mining method: OP = Open Pit, UG = Underground.

LOM = Life of Mine (years) is based on scheduled Probable Reserves including Indicated and some Inferred Resources considered for Life of Mine planning.

Unless stated otherwise tonnage is quoted as dry metric tonnes. Estimates of Diamond Reserve tonnes refl ect the tonnage to be treated.

Reported Diamond Reserves/Resources are based on a Bottom Cut Off (BCO) which refers to the bottom screen size aperture and varies between 1.00mm and 3.00mm (nominal square mesh). Grade is quoted as carats per hundred metric tonnes (cpht).

(1) Venetia (UG): The LOM is stated as 27 years which refl ects the extent of the current Mining Right at Venetia.

(2) Kimberley: Kimberley Mines Central Treatment Plant (CTP) was initially established to treat ore from both tailings resources and underground mines. Subsequent to the conclusion of the sale of the underground operations to Petra Diamonds in May 2010, only tailings resources from various locations are being treated.

(3) Namaqualand: Bottom screen cut off details for Indicated and Inferred Resource estimates are as follows:

1.00 mm BCO: Indicated: 5.3 Mt, 20.86 cpht, 1.1 M¢; Inferred: 28.7 Mt, 7.56 cpht, 2.2 M¢;

1.15 mm BCO: Indicated: 13.9 Mt, 7.04 cpht, 1.0 M¢; Inferred: 41.6 Mt, 2.26 cpht, 0.9 M¢

1.47 mm BCO: Indicated: 0.2 Mt, 13.03 cpht, 20 k¢. Inferred: 0.5 Mt, 60.22 cpht, 0.3 M¢. The sale of the Namaqualand Mines to the Trans Hex Group is in progress and expected to conclude in 2013.

(4) Venetia (OP): The Old Recovery Tailings Inferred Resource estimate at 1.00mm BCO, consisting of 0.1 Mt, 3844.62 cpht, 2.5 M¢ is excluded from the table.

(5) Voorspoed: The Mining License was approved on 10 October 2006 and construction commenced in the same month after the mine being dormant for 9 decades. Mining is entirely based on Inferred Resources due to the uncertainty associated with current geoscientifi c knowledge. Studies are in progress to improve resource confi dence and upgrade some Inferred Resources to Indicated Resources.

Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2012 at the following operations: Venetia (OP) and Voorspoed.

estimates as at 31 December 2012

DEBSWANA DIAMOND COMPANY

The Diamond Reserve and Diamond Resource estimates were compiled in accordance with The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (The SAMREC Code, 2007 Edition as amended July 2009). The fi gures reported represent 100% of the Diamond Reserves and Diamond Resources. Diamond Resources are quoted as inclusive of those used to calculate Diamond Reserves and must not be added to the Diamond Reserves. Rounding of fi gures may cause computational discrepancies. Debswana Diamond Company is a Joint Venture with the government of the Republic of Botswana.

Debswana – Operations						Tonnes		Grade		Saleable Carats
DIAMOND RESERVES	Attributable %	LOM	BCO (mm)	Classifi cation	2012	2011	2012	2011	2012	2011
Damtshaa (OP)(1)	42.5	17	1.65		Mt	Mt	cpht	cpht	M¢	M¢
Kimberlite				Proved	–	–	–	–	–	–
				Probable	25.0	–	16.60	–	4.1	–
				Total	25.0	–	16.60	–	4.1	–
Jwaneng (OP)	42.5	20	1.47				cpht	cpht
Kimberlite				Proved	–	–	–	–	–	–
				Probable	70.1	–	126.05	–	88.3	–
				Total	70.1	–	126.05	–	88.3	–
Letlhakane (OP)	42.5	4	1.65				cpht	cpht
Kimberlite				Proved	–	–	–	–	–	–
				Probable	4.7	–	16.93	–	0.8	–
				Total	4.7	–	16.93	–	0.8	–
Orapa (OP)	42.5	21	1.65				cpht	cpht
Kimberlite				Proved	–	–	–	–	–	–
				Probable	146.1	–	58.69	–	85.7	–
				Total	146.1	–	58.69	–	85.7	–
Debswana Diamond Company	42.5		multiple				cpht	cpht
TOTAL				Proved	–	–	–	–	–	–
				Probable	245.8	–	72.81	–	179.0	–
				Total	245.8	–	72.81	–	179.0	–

Debswana – Operations			BCO			Tonnes		Grade		Carats

DIAMOND RESOURCES	Attributable %		(mm)	Classifi cation	2012	2011	2012	2011	2012	2011
Damtshaa (OP)(1)	42.5		1.65		Mt	Mt	cpht	cpht	M¢	M¢
Kimberlite				Measured	–	–	–	–	–	–
				Indicated	29.3	–	21.46	–	6.3	–
				Measured and Indicated	29.3	–	21.46	–	6.3	–
				Inferred	20.5	–	23.60	–	4.8	–
Jwaneng (OP)(2)	42.5		1.47				cpht	cpht
Kimberlite				Measured	–	–	–	–	–	–
				Indicated	70.1	–	120.35	–	84.3	–
				Measured and Indicated	70.1	–	120.35	–	84.3	–
				Inferred	259.9	–	103.55	–	269.1	–
Letlhakane (OP)(3)	42.5		1.65				cpht	cpht
Kimberlite				Measured	–	–	–	–	–	–
				Indicated	27.4	–	28.62	–	7.8	–
				Measured and Indicated	27.4	–	28.62	–	7.8	–
				Inferred	8.3	–	27.17	–	2.2	–
Orapa (OP)(4)	42.5		1.65				cpht	cpht
Kimberlite				Measured	–	–	–	–	–	–
				Indicated	167.3	–	71.20	–	119.1	–

		Inferred	349.8	–	72.48	–	253.5	–
Debswana Diamond Company	42.5	multiple			cpht	cpht
TOTAL		Measured	–	–	–	–	–	–
		Indicated	294.1	–	74.00	–	217.6	–
		Measured and Indicated	294.1	–	74.00	–	217.6	–
		Inferred	638.5	–	82.97	–	529.7	–

DIAMOND RESOURCES INCLUDE DIAMOND RESERVES

Mining method: OP = Open Pit, UG = Underground.

LOM = Life of Mine (years) is based on scheduled Probable Reserves including Indicated and some Inferred Resources considered for Life of Mine planning.

Unless stated otherwise tonnage is quoted as dry metric tonnes. Estimates of Diamond Reserve tonnes refl ect the tonnage to be treated.

(1) Damtshaa: Higher grade Inferred Resources from the B/K 12 Kimberlite is mined for the fi rst fi ve years before including Probable Reserves from BK/9. The B/K 9 and B/K 12 Stockpile Inferred Resource estimates at 1.65mm BCO consisting of 2.0 Mt, 13.10 cpht, 0.3 M¢, are excluded from the table.

(2) Jwaneng: The Jwaneng Resource Extension Project scheduled to conclude in 2014 is expected to increase the resource confi dence at depth and upgrade a signifi cant portion of Inferred Resources to Indicated. The D/K2 Stockpile Inferred Mineral Resource estimates at 1.47mm BCO, consisting of 8.5 Mt, 46.74 cpht, 4.0 M¢ as well as the Tailings Inferred Mineral Resource estimates at 1.47mm BCO, consisting of 36.9 Mt, 45.90 cpht, 17.0 M¢, are excluded from the table.

(3) Letlhakane: Mining studies are underway to investigate the conversion of resources to reserves at depth. D/K1 and DK/2 Stockpile Inferred Resource estimates at 1.65mm BCO, consisting of 4.2 Mt, 18.34 cpht, 0.8 M¢ as well as the Tailings Inferred Mineral Resource estimates at 1.72mm BCO, consisting of 77.7 Mt, 16.00 cpht, 12.4 M¢, are excluded from the table.

(4) Orapa: The A/K1 Stockpile Inferred Resource estimates at 1.65mm BCO, consisting of 12.4 Mt, 45.39 cpht, 5.6 M¢ as well as the Tailings Inferred Mineral Resource estimates at 1.47mm BCO, consisting of 155.4 Mt, 52.83 cpht, 82.1 M¢, are excluded from the table.

Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2012 at the following operations: Jwaneng and Orapa.

estimates as at 31 December 2012

NAMDEB HOLDINGS

The Diamond Reserve and Diamond Resource estimates were compiled in accordance with The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (The SAMREC Code, 2007 Edition as amended July 2009). The fi gures reported represent 100% of the Diamond Reserves and Diamond Resources. Diamond Resources are quoted as inclusive of those used to calculate Diamond Reserves and must not be added to the Diamond Reserves. Rounding of fi gures may cause computational discrepancies. Namdeb Holdings is a Joint Venture with the government of the Republic of Namibia.

Namdeb Holdings – Operations (Terrestrial)			BCO			Tonnes		Grade		Saleable Carats
DIAMOND RESERVES	Attributable %	LOM	(mm)	Classifi cation	2012	2011	2012	2011	2012	2011
Elizabeth Bay (OC)	42.5	7	1.40		kt	kt	cpht	cpht	k¢	k¢
Aeolian and Marine				Proved	–	–	–	–	–	–
				Probable	1,808	–	12.78	–	231	–
				Total	1,808	–	12.78	–	231	–
Mining Area 1 (OC)	42.5	7	2.00				cpht	cpht
Beaches				Proved	–	–	–	–	–	–
				Probable	1,023	–	7.26	–	74	–
				Total	1,023	–	7.26	–	74	–
Orange River (OC)(1)	42.5	7	3.00				cpht	cpht
Fluvial Placers				Proved	–	–	–	–	–	–

				Probable	34,994	–	1.03	–	359	–
				Total	34,994	–	1.03	–	359	–
Namdeb Holdings (Terrestrial)	42.5		multiple				cpht	cpht
TOTAL				Proved	–	–	–	–	–	–
				Probable	37,825	–	1.76	–	664	–
				Total	37,825	–	1.76	–	664	–
						Area		Grade		Saleable Carats
Namdeb Holdings – Operations (Offshore)			BCO
DIAMOND RESERVES	Attributable %	LOM	(mm)	Classifi cation	2012	2011	2012	2011	2012	2011
Atlantic 1 (MM)(2)	42.5	15	1.47		k m²	k m²	cpm²	cpm²	k¢	k¢
Marine Placer				Proved	–	–	–	–	–	–
				Probable	57,033	–	0.09	–	4,935	–
				Total	57,033	–	0.09	–	4,935	–

Namdeb Holdings – Operations (Terrestrial)			BCO			Tonnes		Grade		Carats
DIAMOND RESOURCES	Attributable %		(mm)	Classifi cation	2012	2011	2012	2011	2012	2011
Bogenfels (OC)(3)	42.5		multiple( 2)		kt	kt	cpht	cpht	k¢	k¢
Pocket Beach and Defl ation				Measured	–	–	–	–	–	–
				Indicated	–	–	–	–	–	–
				Measured and Indicated	–	–	–	–	–	–
				Inferred	10,955	–	6.75	–	740	–
Douglas Bay (OC)	42.5		1.40				cpht	cpht
Aeolian and Defl ation				Measured	–	–	–	–	–	–
				Indicated	1,502	–	7.39	–	111	–
				Measured and Indicated	1,502	–	7.39	–	111	–
				Inferred	1,959	–	2.40	–	47	–
Elizabeth Bay (OC)	42.5		1.40				cpht	cpht
Aeolian, Marine and Defl ation				Measured	–	–	–	–	–	–
				Indicated	4,718	–	11.62	–	548	–
				Measured and Indicated	4,718	–	11.62	–	548	–
				Inferred	54,034	–	4.12	–	2,224	–
Mining Area 1 (OC)( 4)	42.5		2.00				cpht	cpht
Beaches				Measured	–	–	–	–	–	–
				Indicated	17,597	–	1.01	–	178	–
				Measured and Indicated	17,597	–	1.01	–	178	–
				Inferred	281,564	–	1.09	–	3,082	–
Orange River (OC)	42.5		3.00				cpht	cpht
Fluvial Placers				Measured	–	–	–	–	–	–
				Indicated	109,725	–	0.50	–	544	–
				Measured and Indicated	109,725	–	0.50	–	544	–

				Inferred	44,997	–	0.35	–	157	–
Namdeb Holdings (Terrestrial)	42.5		multiple				cpht	cpht
TOTAL				Measured	–	–	–	–	–	–
				Indicated	133,542	–	1.03	–	1,381	–
				Measured and Indicated	133,542	–	1.03	–	1,381	–
				Inferred	393,509	–	1.59	–	6,250	–

DIAMOND RESOURCES INCLUDE DIAMOND RESERVES

Footnotes appear at the end of the section.

Namdeb Holdings – Operations (Offshore)		BCO		Area		Grade		Carats
DIAMOND RESOURCES	Attributable %	(mm) Classifi cation	2012	2011	2012	2011	2012	2011
Atlantic 1 (MM)(2)	42.5	1.47	k m²	k m²	cpm²	cpm²	k¢	k¢
Marine		Measured	–	–	–	–	–	–
		Indicated	114,190	–	0.09	–	10,773	–
		Measured and Indicated	114,190	–	0.09	–	10,773	–
		Inferred	1,028,119	–	0.09	–	89,637	–
Midwater (MM)(5)	42.5	2.00			cpm²	cpm²
Aeolian, Fluvial and Marine		Measured	–	–	–	–	–	–
		Indicated	1,339	–	0.25	–	330	–
		Measured and Indicated	1,339	–	0.25	–	330	–
		Inferred	11,336	–	0.09	–	1,031	–
Namdeb Holdings (Offshore)	42.5	multiple			cpm²	cpm²
TOTAL		Measured	–	–	–	–	–	–
		Indicated	115,529	–	0.10	–	11,103	–
		Measured and Indicated	115,529	–	0.10	–	11,103	–
		Inferred	1,039,455	–	0.09	–	90,668	–

DIAMOND RESOURCES INCLUDE DIAMOND RESERVES

LOM = Life of Mine (years) is based on scheduled Probable Reserves including Indicated and some Inferred Resources considered for Life of Mine planning.

Unless stated otherwise tonnage is quoted as dry metric tonnes. Estimates of Diamond Reserve tonnes refl ect the tonnage to be treated.

(1) Orange River: The mining transition from Daberas to Sendelingsdrif will be completed within the next 3 years.

(2) Atlantic 1: Due to the high costs associated with resource development, Indicated Resources are developed on an annual basis, resulting in a 24 month rolling reserve.

(3) Bogenfels: Bottom screen cut off details for Inferred Resource estimates are as follows:

1.40 mm BCO: Inferred: 7,910 kt, 6.47 cpht, 510 k¢;

2.00 mm BCO: Inferred: 3,040 kt, 7.50 cpht, 230 k¢.

(4) Mining Area 1: Incremental Inferred Resource development is dependent on operations and dredging creating beach accretion for drilling and sampling. Beach accretion is a process through which an existing beach is built seaward to extend into areas previously submerged by sea water. The accretion is accomplished by sand buildup derived from current mining activities. The Overburden Stockpile Inferred Resource estimates at 2.00mm BCO, consisting of 24,750 kt, 0.41 cpht, 100 k¢ and the DMS Tailings Inferred Resource estimates at 2.00mm BCO, consisting of 6,6830 kt, 1.10 cpht, 740 k¢, as well as the Recovery Tailings Inferred Resource estimates at 1.40mm BCO, consisting of 340 kt, 13.26 cpht, 50 k¢, are excluded from the table. (5) Midwater: That part of the offshore component of the Diamond Area No. 1 (DA1) mining license covered by water depths of 30m and more below mean sea-level.

Audits related to the generation of the Ore Reserve and Mineral Resource estimates were carried out by independent consultants during 2012 at the following operations: Elizabeth Bay and Atlantic 1.

Mining method: OC = Open Cast, MM = Marine Mining.

PHOSPHATE PRODUCTS

estimates as at 31 December 2012

ANGLO AMERICAN FOSFATOS BRASIL LIMITADA

The Ore Reserve and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. The fi gures reported represent 100% of the Ore Reserves and Mineral Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of fi gures may cause computational discrepancies.

Phosphates – Operations		Mine			Tonnes		Grade
ORE RESERVES	Attributable %	Life	Classifi cation	2012	2011	2012	2011
Ouvidor (OP)(1)	100	40		Mt	Mt	%P2O5	%P2O5
Carbonatite Complex			Proved	83.1	87.9	14.1	14.0
Oxide			Probable	151.0	151.3	13.0	13.0
			Total	234.0	239.2	13.4	13.4

Phosphates – Operations					Tonnes		Grade
MINERAL RESOURCES	Attributable %		Classifi cation	2012	2011	2012	2011
Ouvidor (OP)(2)	100			Mt	Mt	%P2O5	%P2O5
Carbonatite Complex			Measured	3.9	3.9	13.4	13.4
Oxide			Indicated	60.2	60.2	11.8	11.8
			Measured and Indicated	64.1	64.2	11.9	11.9
			Inferred (in LOM Plan)	7.5	7.6	13.2	13.2
			Inferred (ex. LOM Plan)	50.4	50.7	10.9	10.9
			Total Inferred	57.9	58.2	11.2	11.2

Phosphates – Projects					Tonnes		Grade
MINERAL RESOURCES	Attributable %		Classifi cation	2012	2011	2012	2011
Coqueiros (OP)(3)	100			Mt	Mt	%P2O5	%P2O5
Carbonatite Complex			Measured	1.8	1.8	10.5	10.5
Oxide			Indicated	16.5	16.5	12.9	12.9
			Measured and Indicated	18.3	18.3	12.6	12.6
			Inferred	26.2	26.2	11.2	11.2
Carbonatite Complex			Measured	1.2	1.2	7.3	7.3
Fresh Rock			Indicated	34.0	34.0	8.5	8.5
			Measured and Indicated	35.2	35.2	8.5	8.5
			Inferred	16.2	16.2	7.6	7.6

MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.

Mining method: OP = Open Pit. Mine Life = the extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.

(1) Ouvidor – Oxide Ore Reserves: The decrease is due to production. Reported as Copebrás in 2011.

(2) Ouvidor – Oxide Mineral Resources: Mineral Resources are quoted above a 7% P2O5 cut-off and a CaO/P2O5 ratio between 1 and 1.4. Inferred (ex. LOM Plan) material includes 29.8Mt at 11.64% P2O5 Oxide in the MCG01 tenement. Currently Anglo American owns the mineral rights but not the surface rights for the area within MCG01 overlying the Inferred (ex. LOM Plan) material. Reported as Copebrás in 2011.

(3) Coqueiros: The Oxide mineralisation is defi ned by a cut-off grade of 7% P2O5 and a CaO/ P2O5 ratio between 1 and 1.4. The Fresh Rock resources are defi ned by a cut-off grade of 5% P2O5. An updated exploration drilling report has been submitted to Brazil's Departamento Nacional de Produção Mineral (DNPM) and is awaiting approval.

NIOBIUM

estimates as at 31 December 2012

ANGLO AMERICAN NIÓBIO BRASIL LIMITADA

The Ore Reserve and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. The fi gures reported represent 100% of the Ore Reserves and Mineral Resources, the percentage attributable to Anglo American plc is stated separately. Rounding of fi gures may cause computational discrepancies.

Niobium – Operations		Mine			Tonnes		Grade		Contained Product
ORE RESERVES	Attributable %	Life	Classifi cation	2012	2011	2012	2011	2012	2011
Boa Vista (OP)	100	4		Mt	Mt	%Nb2O5	%Nb2O5	kt	kt
Carbonatite Complex			Proved	2.9	3.4	0.98	1.03	29	35
Oxide(1)			Probable	1.0	1.0	1.18	1.04	11	10
			Total	3.9	4.3	1.03	1.03	40	45
Carbonatite Complex			Proved	–	–	–	–	–	–
Phosphate Tailings(2)			Probable	2.0	–	0.73	–	14	–
			Total	2.0	–	0.73	–	14	–

Niobium – Operations				Tonnes		Grade	Contained Product
MINERAL RESOURCES	Attributable %	Classifi cation	2012	2011	2012	2011	2012	2011
Boa Vista (OP)	100		Mt	Mt	%Nb2O5	%Nb2O5	kt	kt
Carbonatite Complex		Measured	2.6	2.0	1.29	1.30	34	26
Oxide(3)		Indicated	0.8	0.8	1.02	1.04	8	8
		Measured and Indicated	3.4	2.8	1.22	1.22	42	35
		Inferred (in LOM Plan)	0.2	0.3	0.90	0.95	2	3
		Inferred (ex. LOM Plan)	0.7	0.8	0.82	0.87	5	7
		Total Inferred	0.8	1.1	0.83	0.89	7	9

Niobium – Projects				Tonnes		Grade		Contained Product
MINERAL RESOURCES	Attributable %	Classifi cation	2012	2011	2012	2011	2012	2011
Catalão I & II Complex (OP)	100		Mt	Mt	%Nb2O5	%Nb2O5	kt	kt
Carbonatite Complex		Measured	14.3	13.7	1.23	1.24	175	170
Fresh Rock(4)		Indicated	36.8	19.5	1.01	1.24	373	243
		Measured and Indicated	51.1	33.2	1.07	1.24	548	413
		Inferred	20.2	18.1	1.27	1.37	255	248

MINERAL RESOURCES ARE REPORTED AS ADDITIONAL TO ORE RESERVES.

Mining method: OP = Open Pit. Mine Life = the extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.

(1) Boa Vista – Oxide Ore Reserves: The decrease is primarily due to production. Reported as Catalão in 2011.

(2) Boa Vista – Phosphate Tailings Ore Reserves: The fi nes portion of the Phosphate tailings from Ouvidor are processed in the Niobium Tailings Plant to recover Niobium.

(3) Boa Vista – Oxide Mineral Resources: The Oxide Resources are reported above a 0.5% Nb2O5 cut-off. The Mineral Resources are split into Oxide and Fresh Rock due to the recognition of distinct differences in mineralogical characteristics. The increase is due to improved grade control and new drilling information. Reported as Catalão in 2011.

(4) Catalão I & II Complex – Fresh Rock Mineral Resources: The Fresh Rock Resources are reported above a 0.5 %Nb2O5 cut-off for Boa Vista Mine. For Area Leste, Mina II and Morro do Padre the cut-off grade is 0.7 %Nb2O5. The increase is a result of the completion of a drilling campaign enabling the geological model to be updated along with a lowering in the cut-off grade. Studies are in progress to convert resources to reserves. The Fresh Rock Resources are a combination of 4 project areas:

Area Leste: Measured 8.2 Mt at 1.24 %Nb2O5 ; Indicated 4.7 Mt at 1.20 %Nb2O5 ; Inferred 1.3 Mt at 1.12 %Nb2O5

Boa Vista: Measured 0.6 Mt at 0.97 %Nb2O5 ; Indicated 28.6 Mt at 0.95 %Nb2O5 ; Inferred 9.2 Mt at 1.03 %Nb2O5

Mina II: Measured 5.5 Mt at 1.24 %Nb2O5 ; Indicated 0.9 Mt at 1.17 %Nb2O5 ; Inferred 0.8 Mt at 1.19 %Nb2O5

Morro do Padre: Indicated 2.6 Mt at 1.27 %Nb2O5 ; Inferred 8.9 Mt at 1.54 %Nb2O5

RESERVE AND RESOURCE RECONCILIATION OVERVIEW(1)(2)

2011–2012

Detailed 2011 and 2012 information appears pages 196–223

1,000

2011–2012 Metallurgical Coal Resources reconciliation Tonnes (MTIS) – Operations (100% basis)

2011–2012 Kumba Iron Ore Mineral Resources reconciliation

Tonnes (Mt) – Operations (100% basis)

2011–2012 Nickel Ore Reserves reconciliation

– +

2011–2012 Thermal Coal Resources reconciliation

2011–2012 Copper Mineral Resources reconciliation Contained Copper (kt) – Operations (100% basis)

2011–2012 Nickel Mineral Resources reconciliation Contained Nickel (kt) – Operations (100% basis)

RESERVE AND RESOURCE RECONCILIATION OVERVIEW(1)(2)

2011–2012

Detailed 2011 and 2012 information appears on pages 196–223

– +

54.7 44.7

2011–2012 Platinum Mineral Resources reconciliation

Contained PGE (Moz) – All Reefs (South Africa)

2011–2012 Niobium Mineral Resources reconciliation Contained Product (kt) – Operations (100% basis)

(1) Ore Reserve and Mineral Resource reconciliation categories

Tonnage and content change categories	Defi nition and explanation
Opening Balance	as at 31 December – previous reporting year
Production* (from Reserve Model)	The amount of material (expressed in terms of tonnage or content as applicable) removed by planned mining from the scheduled Ore Reserves i.e. the areas actually mined during the reporting period which are removed from the reserve model/s.
Depletion* (from Resource Model)	The amount of material (expressed in terms of tonnage or content as applicable) removed by mining from the Mineral Resources i.e. the areas actually mined during the reporting period which are removed from the resource model/s. Material removed from the 'Inferred in Mine Plan' category should be reported as Depletion.
Conversion	The effect of applying updated 'Modifying Factors' to Ore Reserves and Mineral Resources which include geo-technical, mining, metallurgical, marketing, legal, environmental, social and governmental considerations including infrastructure. Includes changes to the mining method, mine plan and/or layout changes e.g. changes in pit slope angles or mineable cut due to geo-technical reasons. The change can be positive or negative year-on-year.
	Sub-Categories:
	• Conversion is the process of up-grading Mineral Resources to Ore Reserves based on a change in confi dence levels and/or modifying factors.
	• Re-allocation is the process of down-grading of Ore Reserves to Mineral Resources or Mineral Resources to Mineralised Inventory based on a change in confi dence levels and/or modifying factors.
	• Sterilisation is the process of removing material from Ore Reserves and/or Mineral Resources that no longer has reasonable and realistic prospects for eventual economic extraction.
Economic Assumptions	The effect of assumptions based on the current or future price of a commodity and exchange rate estimates as determined by the corporate centre (Global Assumptions) which has a direct impact on the Mineral Resources or Ore Reserves particularly the cut-off grade (which can be affected by changes in costs).
New Information	The effect of additional resource defi nition information (with QA/QC information) which initiates an update to the geological models (facies, structural, grade, geo-technical) and results in an updated (re-classifi ed) resource model and subsequent determination of new Ore Reserve estimates. Includes ore bodies (or portions of current orebodies) within the same project/operation not previously reported.
Other	Model Refi nement	No additional resource defi nition drilling has been undertaken but the interpretation (geometry) of the orebody has been refi ned or internal mine/lease boundaries changed e.g. based on mapping information obtained during mining or a different structural model being applied. Changes to in-situ tonnages as a result of new geological losses being applied or a change to the defi nition of the boundary of the Mineral Resources due to an updated 'economically mineable cut' being applied.
	Methodology	Only valid for changes in the estimation or classifi cation methodologies applied to the resource model evaluation i.e. no new information available or model refi nement taken place.
	Transfer	Movement of Mineral Resources and/or Ore Reserves from one type of product/ore type to another or from one mining/project area to another.
	Stockpiles	Changes to stockpiles.
	New Technology	Changes to Mineral Resources or Ore Reserves in response to the application of new or improved mining and/or processing methods.
	Reconciliation Adjustment	Changes which cannot be allocated to a defi ned category or an adjustment necessary to mitigate inaccurate production/depletion estimates of the previous year.*
Acquisitions	Additional Mineral Resources and Ore Reserves due to acquisitions of assets or increased attributable interests in JV agreements/associate companies.
Disposals	Reduction in Mineral Resources and Ore Reserves due to disposals of assets or reduced attributable interests in JV agreements/associate companies, refusal/withdrawal of Mining/Prospecting Rights or related permits e.g. due to environmental issues, changes in policy.
Closing Balance	as at 31 December – current reporting year

* The Production/Depletion fi gures may be estimated for these last three months of the reporting period based on the monthly average of the previous nine months.

(2) Ore Reserves: Includes Proved and Probable

Mineral Resources: Includes Measured, Indicated and Inferred [for Coal only Inferred (in LOM Plan) is considered]

Rounding of fi gures may cause computational discrepancies.

DEFINITIONS

ORE RESERVES

An 'Ore Reserve' is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modifi cation by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justifi ed. Ore Reserves are sub-divided in order of increasing confi dence into Probable Ore Reserves and Proved Ore Reserves.

A 'Proved Ore Reserve' is the economically mineable part of a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modifi cation by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justifi ed.

A 'Probable Ore Reserve' is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modifi cation by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justifi ed.

MINERAL RESOURCES

A 'Mineral Resource' is a concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specifi c geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confi dence, into Inferred, Indicated and Measured categories.

A 'Measured Mineral Resource' is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confi dence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confi rm geological and grade continuity.

An 'Indicated Mineral Resource' is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confi dence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confi rm geological and/or grade continuity but are spaced closely enough for continuity to be assumed.

An 'Inferred Mineral Resource' is that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confi dence. It is inferred from geological evidence and assumed but not verifi ed geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability.

COMMON TERMINOLOGY

Deposit

A deposit is a concentration (or occurrence) of material of possible economic interest, in or on the earth's crust, that may include mineralized material that cannot be estimated with suffi cient confi dence to be classifi ed in the Inferred category. Portions of a deposit that do not have reasonable and realistic prospects for eventual economic extraction are not included in a Mineral Resource.

Grade

The relative quantity, percentage or quality, of a metal or mineral/diamond content estimated to be contained within a deposit.

Cut-off (grade)

A grade (see grade units) above which the Mineral Resource or Ore Reserve is reported as being potentially economic.

Run of Mine (ROM)

The mined material delivered from the mine to the processing plant is called run-of-mine, or ROM. This is the raw unprocessed mineralised material and includes mineralised rock and varying amounts of internal and external contamination (either unmineralised rock or mineralised material below the cut-off grade). Contamination is usually introduced by the mining process to ensure all the mineralised material is mined or to provide a minimum mining height. ROM material can have highly variable moisture content and maximum particle size.

Inferred (in LOM Plan)/Inferred (ex. LOM Plan)

Inferred (in LOM Plan): Inferred Resources within the scheduled Life of Mine Plan (LOM Plan).

Inferred (ex. LOM Plan): The portion of Inferred Resources with reasonable prospects for eventual economic extraction not considered in the Life of Mine Plan (LOM Plan).

Mine Life

The extraction period in years for scheduled Ore Reserves comprising Proved and Probable Reserves only.

This is the current view of the period of production based on current Ore Reserve tonnes and average annual planned production rate.

Life of Mine Plan

A design and costing study of an existing operation in which appropriate assessments have been made of realistically assumed geological, mining, metallurgical, economic, marketing, legal, environmental, social, governmental, engineering, operational and all other modifying factors, which are considered in suffi cient detail to demonstrate at the time of reporting that extraction is reasonably justifi ed.

GLOSSARY

MASS UNITS

carat:	carat is a unit of mass equal to 0.2g
kt:	kilotonne; metric system unit of mass equal to 1,000 metric tonnes
Moz:	million troy ounces (a kilogram is equal to 32.1507 ounces; a troy ounce is equal to 31.1035 grams)
Mt:	million tonnes, metric system unit of mass equal to 1,000 kilotonnes
MTIS:	Mineable Tonnage In-Situ; quoted in million tonnes
mtpa:	million tonnes per annum
Tonnes:	metric system unit of mass equal to 1,000 kilograms

GRADE UNITS (expressed on a moisture-free basis)

ASCu:	Acid soluble copper (%)
Au:	Gold (g/t)
cpht:	carats per hundred metric tonnes
cpm²:	carats per square metre
CSN:	Crucible Swell Number (CSN is rounded to the nearest 0.5 index)
CuEq:	Copper equivalent based on long term metal prices taking into consideration the recovery of Copper, Gold and Molybdenum (%)
CV:	Calorifi c Value (CV is rounded to the nearest 10 kcal/kg)
ICu:	Insoluble copper, total copper less acid soluble copper (%)
kcal/kg:	kilocalories per kilogram
g/t:	grams per tonne
k¢:	Thousand carats
M¢:	Million carats
TCu:	Total Copper (%)
4E PGE:	The sum of Platinum, Palladium, Rhodium and Gold grades in grammes per tonne (g/t)
3E PGE:	The sum of Platinum, Palladium and Gold grades in grammes per tonne (g/t)
% Cu:	weight percent Copper
% Fe:	weight percent Iron
% Mn:	weight percent Manganese
% Mo:	weight percent Molybdenum
% Ni:	weight percent Nickel
% Nb2O5 :	weight percent Niobium pentoxide
% P2O5 :	weight percent Phosphorus pentoxide

MINING TERMINOLOGY

MM:	Marine Mining – Mining diamonds deposited on the continental shelf using mining vessels equipped with specialised underwater mining tools
	such as suction drills and crawlers.

OC: Open Cut A surface mining method performed on orebodies with shallow-dipping tabular geometries.
OP: Open Pit A surface mining method in which both ore and waste are removed during the excavation of a pit. The pit geometry is related to the orebody shape, but tends to have a conical form, closing with depth.
UG: Underground A class of subsurface mining methods, where the ore is accessed either through a vertical shaft or decline. Ore and waste are moved within subsurface excavations, which may be located on several different elevations. The nature of the underground excavations is dependent on the geometry and size of the mineralisation.

PROCESSING TERMINOLOGY

Dump Leach: A process similar to Heap Leaching, but usually applied to lower grade material. Rather than constructing a heap of material with a controlled grain size, the material grain sizes are as mined, similar to the situation found within a waste rock dump. This material is then irrigated with a leach solution that dissolves the valuable minerals, allowing recovery from the drained leach solution.

Flotation: A process for concentrating minerals based on their surface properties. Finely ground mineral is slurried with water and specifi c reagents that increase the water repellent nature of the valuable mineral and agitated with air. The water repellent mineral grains cling to froth bubbles that concentrate the mineral at the top of the fl otation cell, from where it is mechanically removed.

Heap Leach: A process in which mineral-bearing rock is crushed and built into a designed heap. The heap is irrigated with a leach solution that dissolves the desirable mineral and carries it into a drain system from which solution is pumped and the mineral/elements of interest are recovered.

Vat Leach: A process whereby crushed rock containing valuable minerals is placed within vats. The vats are fi lled with a leach solution and the valuable mineral(s) dissolve. The leach solution is pumped to a recovery circuit and the vats are drained and emptied of the spent ore and recharged.

GLOSSARY

RESOURCE TYPES

Aeolian:	Diamond deposits created and enriched during transport of sediment through wind action (aeolian processes) resulting in the
	formation of wind blown dunes, ripples and sand sheets within which localised enrichment of diamonds may occur.
Banded Iron Formation:	A chemical sedimentary rock consisting of silica and iron oxide. The rock texture is characteristically laminated or banded.
Beaches:	Diamond deposits enriched through marine processes and preserved along the marine shoreline within a series of fossil terraces.
Canga:	An iron rich rock formed where material weathered from an original iron ore deposit has been cemented by iron minerals.
Carbonatite Complex:	A group of overlapping igneous intrusions of alkaline rocks including magmatic carbonate (sövite) rock. These complexes are frequently host to phosphate, niobium and rare-earth element deposits.
Colluvium:	Loose, unconsolidated material that accumulates above the weathering iron ore bodies.
Defl ation:	Diamond deposits enriched through wind driven removal of light particles resulting in concentration of diamonds.
Ferruginous Laterite:	An especially iron-rich laterite.
Fluvial Placer:	Diamond deposits formed and preserved within fossil sand and gravel terraces located adjacent to contemporary fl uvial (river) systems.
Fresh Rock:	Mineable material that has not been signifi cantly modifi ed by surface weathering processes.
Hematite:	An iron oxide mineral with the chemical formula Fe2O3.
	Itabirite (Friable/Compact): Itabirite is a banded quartz hematite schist, very similar to banded iron formation in appearance and composition.
	Friable Itabirite is extensively weathered leading to disaggregation of the individual mineral grains comprising the rock.
	Compact Itabirite, previously known as Hard Itabirite, is the unweathered equivalent.
Kimberlite:	A potassic ultrabasic volcanic rock, emplaced as either pipes, dykes or sills, which sometimes contain diamonds.
Laterite:	A claylike soil horizon rich in iron and aluminium oxides that formed by weathering of igneous rocks under tropical conditions.
Magnetite:	An iron oxide mineral with the chemical formula Fe3O4.
	Main Sulphide Zone (MSZ): The Main Sulphide Zone is the principal host of Platinum Group Metals within the Great Dyke of Zimbabwe. The Main Sulphide
	Zone is a tabular zone of sulphide-bearing rock within the uppermost P1 Pyroxenite.
Marine:	Submerged diamond deposits enriched through fl uvial (river), beach and marine reworking processes.
Merensky Reef (MR):	One of the three major Platinum Group Metals bearing units within the Bushveld Complex. The Merensky Reef is located within
	the Upper Critical Zone of the Bushveld Complex and ranges in width from 0.8m to 4m. The Merensky Reef occurs at the
	interface between the Merensky Pyroxenite and the underlying anorthosite to norite. The Merensky Reef is characterised by the
	occurrence of one or more narrow chromitite stringers and frequently includes a coarse-grained pegmatoidal pyroxenite.
Oxide:	Oxide ores are those found within close proximity to surface and whose mineralogy is dominated by oxidised species, including
	oxides and sulphates. Frequently, silicate minerals have broken down partially or completely to clay-rich species.
Platreef (PR):	The Platreef is only present within the Northern Limb of the Bushveld Complex, in the vicinity of Polokwane, South Africa.
	The Platreef is a heterogenous unit dominated by felspathic pyroxenite, but including serpentinised pyroxenites and xenoliths
	of footwall rock. The Platreef dips steeply to the west and ranges in thickness between 60m and 200m. Platinum Group Metal
	mineralisation occurs disseminated within the Platreef and in frequent association with base-metal sulphides.
Pocket Beach:	Diamond deposits formed due to interactions of ocean (longshore) currents with specifi c shoreline topographic features that
	facilitate the concentration of diamonds.
Porphyry (Copper):	Large copper deposits hosted by intermediate felsic rocks. These deposits form close to large-scale subduction zones.
Saprolite:	Clay-rich rock formed by decomposition of pre-existing rocks within a surface weathering environment.
Stockpile:	Stockpiles resources comprise material that is mined together with the principal ore, but for economic or technical reasons is not processed. This material is stockpiled in preparation for processing when economic or technical conditions are more favourable.
Sulphide:	Sulphide ores contain sulphide minerals that have not been subjected to surface oxidation.
Tailings:	Material left over after the process of separating the valuable fraction of the mineralised material from the uneconomic fraction
	(gangue) of the run-of-mine. In some cases tailings can be re-treated to extract by-products.
UG2 Reef (UG2):	The UG2 Reef is located between 20m and 400m below the Merensky Reef and is the second chromitite unit within the Upper
	Group. The UG2 is typically a massive chromitite unit ranging in thickness from 0.6m to 1.2m. The hangingwall of the UG2 is a
	felspathic pyroxenite unit that may include several narrow chromitite stringers. The footwall of the UG2 is a coarse-grained
	pegmatoidal pyroxenite.
COAL PRODUCTS
Metallurgical – Coking:	High-, medium- or low-volatile semi-soft, soft or hard coking coal primarily for blending and use in the steel industry; quality
	measured as Crucible Swell Number (CSN).
Metallurgical – Other:	Semi-soft, soft, hard, semi-hard or anthracite coal, other than Coking Coal, such as pulverized coal injection (PCI) or other
	general metallurgical coal for the export or domestic market with a wider range of properties than Coking Coal; quality measured
	by calorifi c value (CV).
Thermal – Export:	Low- to high-volatile thermal coal primarily for export in the use of power generation; quality measured by calorifi c value (CV).
Thermal – Domestic:	Low- to high-volatile thermal coal primarily for domestic consumption for power generation; quality measured by calorifi c
	value (CV).
Synfuel:	Coal specifi cally for the domestic production of synthetic fuel and chemicals; quality measured by calorifi c value (CV).

PRODUCTION STATISTICS

The fi gures below include the entire output of consolidated entities and the Group's attributable share of joint ventures, joint arrangements and associates where applicable, except for Collahuasi in the Copper segment and De Beers which are quoted on a 100% basis.

	2012	2011
Iron Ore and Manganese segment (tonnes)
Kumba Iron Ore(1)(2)
Lump	26,580,500	25,445,100
Fines	16,484,600	15,822,500
Total iron ore production	43,065,100	41,267,600
Samancor(3)
Manganese ore	3,347,800	2,786,800
Manganese alloys(4)	198,400	300,500
Coal (tonnes)
Metallurgical Coal segment
Australia
Metallurgical – Coking	10,484,700	9,290,400
Metallurgical – Other (PCI)	5,802,700	3,963,000
Thermal	12,970,500	13,426,500
	29,257,900	26,679,900
Canada
Metallurgical – Coking	1,376,900	936,300
Total Metallurgical Coal segment coal production	30,634,800	27,616,200
Thermal Coal segment
South Africa
Thermal – Export	17,132,100	16,328,400
Thermal – Domestic (Eskom)	33,706,400	35,296,000
Thermal – Domestic (non-Eskom)	6,219,100	5,059,700
Metallurgical – Domestic	74,100	323,400
	57,131,700	57,007,500
Colombia
Thermal – Export	11,548,800	10,751,700
Total Thermal Coal segment coal production	68,680,500	67,759,200
Total coal production Coal (tonnes)	99,315,300	95,375,400
Metallurgical Coal segment
Australia
Callide	7,464,000	8,038,700
Capcoal	6,022,400	5,047,900
Dawson	4,593,500	3,904,600
Drayton	3,663,300	3,991,900
Foxleigh	1,896,000	1,417,100
Jellinbah	2,073,200	1,829,600
Moranbah North	3,545,500	2,450,100
	29,257,900	26,679,900
Canada
Peace River Coal	1,376,900	936,300
Total Metallurgical Coal segment coal production	30,634,800	27,616,200
Thermal Coal segment
South Africa
Greenside	2,883,200	2,853,100
Goedehoop	4,859,900	5,200,800
Isibonelo	5,399,200	4,338,200
Kriel	8,096,900	8,151,700
Kleinkopje	3,765,500	4,400,600
Landau	4,272,300	4,171,200
New Denmark New Vaal	3,401,200 17,623,300	4,812,600 17,399,700
Mafube	1,804,100	2,313,100
Zibulo(5)	5,026,100	3,366,500
	57,131,700	57,007,500

(1) Kolomela commenced commercial production on 1 December 2011. Revenue and related costs associated with 984,700 tonnes of production were capitalised for the year ended 31 December 2011.

(2) In 2012 Amapá has been reclassifi ed from Iron Ore and Manganese to Other Mining and Industrial to align with internal management reporting. Comparatives have been reclassifi ed to align with current presentation.

(3) Saleable production.

(4) Production includes Medium Carbon Ferro Manganese.

(5) Zibulo commenced commercial production on 1 October 2011. Revenue and related costs associated with 2,155,200 tonnes of production were capitalised before commercial production was reached in 2011. This included Eskom coal production of 633,400 tonnes and export thermal coal production of 1,521,800 tonnes.

			2012	2011
Coal (tonnes) (continued)
Thermal Coal segment (continued)
Colombia
Carbones del Cerrejón Total Thermal Coal segment coal production			11,548,800 68,680,500	10,751,700
Total coal production			99,315,300	67,759,200 95,375,400
Total coal production by commodity (tonnes)
Metallurgical
South Africa			74,100	323,400
Australia – Export			16,287,400	13,253,400
Canada – Export			1,376,900	936,300
Total metallurgical coal production			17,738,400	14,513,100
Thermal
South Africa – Thermal (non-Eskom)			23,351,200	21,388,100
South Africa – Eskom			33,706,400	35,296,000
Australia			12,970,500	13,426,500
South America			11,548,800	10,751,700
Total thermal coal production Total coal production			81,576,900 99,315,300	80,862,300 95,375,400

Copper segment
Collahuasi
100% basis (Anglo American share 44%)
Ore mined	Oxide	tonnes	2,733,600	906,800
	Sulphide	tonnes	17,293,800	32,535,900
Marginal ore mined		tonnes	54,370,100	11,797,300
Ore processed	Oxide	tonnes	8,081,400	8,075,800
	Sulphide	tonnes	43,618,600	47,747,400
Ore grade processed	Oxide	% Cu	0.88	0.72
	Sulphide	% Cu	0.76	1.02
Production	Copper concentrate	dry metric tonnes	934,800	1,535,800
	Copper cathode Copper in concentrate	tonnes tonnes	36,800 245,300	36,000 417,300
Total copper production for Collahuasi		tonnes	282,100	453,300
Anglo American's share of copper production for Collahuasi		tonnes	124,100	199,500
Anglo American Sur
Los Bronces mine
Ore mined		tonnes	49,766,500	26,587,500
Marginal ore mined		tonnes	17,854,200	30,515,600
Las Tortolas concentrator	Ore processed	tonnes	17,970,600	20,595,700
	Ore grade processed	% Cu	0.83	0.90
	Average recovery	%	84.0	85.8
Confl uencia concentrator	Ore processed	tonnes	27,884,300	3,329,400
	Ore grade processed Average recovery	% Cu %	0.84 84.0	0.74 84.3
Production	Copper concentrate	dry metric tonnes	1,195,500	658,300
	Copper cathode	tonnes	40,800	38,400
	Copper in sulphate	tonnes	2,500	4,600
	Copper in concentrate	tonnes	322,000	178,800
	Total	tonnes	365,300	221,800
El Soldado mine
Ore mined	Open pit – ore mined	tonnes	8,544,500	10,197,700
Ore processed	Oxide	tonnes	1,091,900	1,887,000
	Sulphide	tonnes	7,782,300	7,209,100
Ore grade processed	Oxide	% Cu	0.46	0.68
	Sulphide	% Cu	0.83	0.82
Production	Copper concentrate Copper cathode	dry metric tonnes tonnes	190,400 2,000	171,900 5,000
	Copper in concentrate	tonnes	51,800	41,900
	Total	tonnes	53,800	46,900
Chagres smelter
	Copper concentrate smelted	tonnes	142,900	143,000
Production	Copper blister/anode	tonnes	138,700	138,200
	Acid	tonnes	461,400	487,500
Total copper production for Anglo American Sur(1)		tonnes	419,100	268,700

(1) Includes copper cathode, copper in sulphate and copper in concentrate production.

			2012	2011
Copper segment (continued) Anglo American Norte
Mantos Blancos mine
Ore mined		tonnes	6,527,100	7,624,300
Ore processed	Oxide	tonnes	4,512,100	4,563,400
	Sulphide	tonnes	4,393,200	4,186,600
	Marginal ore	tonnes	5,900,200	5,109,400
Ore grade processed	Oxide	% Cu (soluble)	0.40	0.59
	Sulphide	% Cu (insoluble)	0.64	0.95
	Marginal ore	% Cu (soluble)	0.23	0.23
Production	Copper concentrate	dry metric tonnes	83,000	119,000
	Copper cathode	tonnes	29,200	36,000
	Copper in concentrate	tonnes	25,000	36,100
	Total	tonnes	54,200	72,100
Mantoverde mine
Ore mined		tonnes	10,642,500	10,060,100
Ore processed	Oxide	tonnes	10,460,400	10,012,200
	Marginal ore	tonnes	8,671,700	8,025,300
Ore grade processed	Oxide	% Cu (soluble)	0.63	0.62
Production	Marginal ore Copper cathode	% Cu (soluble) tonnes	0.25 62,300	0.27 58,700
Total copper production for Anglo American Norte(1)		tonnes	116,500	130,800
Total Copper segment copper production(1)		tonnes	659,700	599,000
Platinum copper production		tonnes	11,400	12,800
Black Mountain copper production		tonnes	–	300
Total attributable copper production(1)		tonnes	671,100	612,100

Nickel segment
Codemin
Ore mined(2)		tonnes	612,600	549,900
Ore processed		tonnes	581,100	562,900
Ore grade processed		% Ni	1.81	1.89
Production		tonnes	9,600	9,500
Loma de Níquel
Ore mined		tonnes	432,900	1,302,600
Ore processed		tonnes	767,400	1,014,200
Ore grade processed		% Ni	1.40	1.45
Production		tonnes	8,100	13,400
Barro Alto(3)
Ore mined		tonnes	1,231,700	978,000
Ore processed		tonnes	1,422,100	456,500
Ore grade processed		% Ni	1.94	1.96
Production Total Nickel segment nickel production		tonnes tonnes	21,600 39,300	6,200 29,100
Platinum nickel production		tonnes	17,700	20,300
Total attributable nickel production		tonnes	57,000	49,400

Platinum segment(4)
Platinum		troy ounces	2,378,600	2,530,100
Palladium		troy ounces	1,395,900	1,430,700
Rhodium		troy ounces	310,700	337,600
Copper(5)		tonnes	11,400	12,800
Nickel(5)		tonnes	17,700	20,300
Gold		troy ounces	105,200	105,100
Equivalent refi ned platinum		troy ounces	2,219,100	2,410,100
4E Built-up head grade		g/tonne milled	3.20	3.24
Diamonds segment (De Beers) (diamonds recovered – carats)(6)
100% basis
Debswana			20,216,000	22,890,000
Namdeb			1,667,000	1,335,000
De Beers Consolidated Mines			4,432,000	5,443,000
De Beers Canada			1,560,000	1,660,000
Total diamonds production for De Beers			27,875,000	31,328,000

(1) Includes copper cathode, copper in sulphate and copper in concentrate production.

(2) Represents ore mined at Barro Alto for processing at Codemin.

(3) Barro Alto is currently not in commercial production and therefore all revenue and related costs associated with 21,600 tonnes (2011: 6,200 tonnes) of production have been capitalised.

(4) See the published results of Anglo American Platinum Limited for further analysis of production information.

(5) Also disclosed within total attributable copper and nickel production.

(6) On 16 August 2012 Anglo American completed its acquisition of an additional 40% interest in De Beers increasing Anglo American's total shareholding to 85%. Production data is disclosed on a 100% basis. Post completion of the acquisition, De Beers Consolidated Mines and De Beers Canada are fully consolidated subsidiaries and Debswana and Namdeb are joint ventures proportionately consolidated at 19.2% and 50% respectively. Global Sightholder Sales sells a signifi cant portion of total production on behalf of operations based on contractual agreements in place.

			2012	2011
Other Mining and Industrial segment(1)
Phosphates
Fertilisers produced		tonnes	1,113,000	1,060,900

Niobium
Ore mined		tonnes	933,200	866,600
Ore processed		tonnes	973,500	902,600
Ore grade processed		Kg Nb/tonne	8.5	8.1
Production		tonnes	4,400	3,900

Amapá
Sinter feed		tonnes	2,100,000	1,401,000
Pellet feed		tonnes	2,223,200	1,948,300
Spiral concentrates		tonnes	1,749,100	1,472,200
			6,072,300	4,821,500

Tarmac
Aggregates		tonnes	37,570,800	42,878,400
Lime products		tonnes	1,316,900	1,264,000
Concrete		m3	3,119,300	3,285,700

Scaw Metals(2)
South Africa Steel Products		tonnes	611,600	677,400

Zinc and lead
Lisheen(3)
Ore mined		tonnes	–	152,800
Ore processed		tonnes	–	156,200
Ore grade processed	Zinc	% Zn	–	13.4
	Lead	% Pb	–	2.7
Production	Zinc in concentrate	tonnes	–	19,200
	Lead in concentrate	tonnes	–	2,900
Black Mountain(3)
Ore mined		tonnes	–	132,800
Ore processed		tonnes	–	126,200
Ore grade processed	Zinc	% Zn	–	3.4
	Lead	% Pb	–	4.5
	Copper	% Cu	–	0.4
Production	Zinc in concentrate	tonnes	–	3,300
	Lead in concentrate	tonnes	–	5,400
	Copper in concentrate	tonnes	–	300
Total attributable zinc production		tonnes	–	22,500
Total attributable lead production		tonnes	–	8,300

(2) The Group sold its interest in Scaw Metals in November 2012.

(3) The Group sold its interest in Lisheen and Black Mountain in February 2011.

QUARTERLY PRODUCTION STATISTICS

				Quarter ended		% Change (Quarter ended)
	31 December 2012	30 September 2012	30 June 2012	31 March 2012	31 December 2011	31 December 2012 v 30 September 2012	31 December 2012 v 31 December 2011
Iron Ore and Manganese segment
(tonnes)
Iron ore(1)(2)	9,012,500	12,496,900	11,449,200	10,106,500	11,160,200	(28)%	(19)%
Manganese ore(3)	846,800	858,400	826,400	816,200	722,500	(1)%	17%
Manganese alloys(3)(4)	61,200	52,000	30,200	55,000	78,000	18%	(22)%
Metallurgical Coal segment (tonnes)
Metallurgical – Export	4,580,000	4,495,700	4,845,600	3,743,000	4,060,600	2%	13%
Thermal	3,714,700	3,398,900	3,286,300	2,570,600	3,358,700	9%	11%

Thermal Coal segment (tonnes)(5)
Thermal – Export (RSA)	4,659,100	4,555,300	4,223,500	3,694,200	4,455,900	2%	5%
Thermal – Domestic (Eskom)	8,560,600	9,056,900	8,326,200	7,762,700	9,487,000	(5)%	(10)%
Thermal – Domestic (non-Eskom)	1,594,500	1,530,500	1,560,900	1,533,200	1,390,100	4%	15%
Metallurgical – Domestic	–	–	15,700	58,400	84,500	–	(100)%
Thermal – Export (Colombia)	2,661,700	2,829,400	3,104,700	2,953,000	2,752,700	(6)%	(3)%

Copper segment (tonnes)(6)	172,900	157,300	161,100	168,400	170,000	10%	2%
Nickel segment (tonnes)(7)(8)	7,400	9,000	10,900	12,000	9,900	(18)%	(25)%

Platinum segment
Platinum (troy ounces)	703,800	649,000	623,000	402,800	710,000	8%	(1)%
Palladium (troy ounces)	413,300	392,100	355,500	235,000	392,700	5%	5%

Rhodium (troy ounces)	91,200	90,500	75,100	53,900	96,800	1%	(6)%
Copper (tonnes)	2,500	2,700	3,300	2,900	2,900	(7)%	(14)%
Nickel (tonnes)	3,900	3,700	5,400	4,700	5,100	5%	(24)%
Gold (troy ounces)	18,600	38,500	24,100	24,000	28,000	(52)%	(34)%
Equivalent refi ned platinum (troy ounces)	416,000	626,300	583,600	593,200	583,200	(34)%	(29)%
Diamonds segment (De Beers)
(diamonds recovered – carats)
100% basis
Diamonds(9)	8,051,000	6,375,000	7,241,000	6,208,000	6,491,000	26%	24%

Other Mining and Industrial segment
(tonnes)(10)
Phosphates	302,300	292,300	271,500	246,900	274,900	3%	10%
Niobium	1,000	1,100	1,200	1,100	1,000	(9)%	–
Iron ore(2)	1,498,000	1,534,300	1,468,000	1,572,000	1,267,100	(2)%	18%
Coal production by commodity (tonnes)
Metallurgical	4,580,000	4,495,700	4,861,300	3,801,400	4,145,100	2%	10%
Thermal (excluding RSA domestic)	11,035,500	10,783,600	10,614,500	9,217,800	10,567,300	2%	4%
RSA domestic thermal	10,155,100	10,587,400	9,887,100	9,295,900	10,877,100	(4)%	(7)%

(1) Kolomela commenced commercial production on 1 December 2011. Revenue and related costs associated with 984,700 tonnes of production were capitalised for the year ended 31 December 2011.

(3) Saleable production.

(4) Production includes Medium Carbon Ferro Manganese.

(6) Excludes Platinum copper production.

(7) Excludes Platinum nickel production.

(8) Includes Barro Alto which is currently not in commercial production and therefore all revenue and related costs associated with 21,600 tonnes (2011: 6,200 tonnes) of production have been capitalised.

(9) On 16 August 2012 Anglo American completed its acquisition of an additional 40% interest in De Beers increasing Anglo American's total shareholding to 85%. Production data is disclosed on a 100% basis. Post completion of the acquisition, De Beers Consolidated Mines and De Beers Canada are fully consolidated subsidiaries and Debswana and Namdeb are joint ventures proportionately consolidated at 19.2% and 50% respectively. Global Sightholder Sales sells a signifi cant portion of total production on behalf of operations based on contractual agreements in place.

(10) Excludes Tarmac and Scaw Metals.

EXCHANGE RATES AND COMMODITY PRICES

US\$ exchange rates		2012	2011
Year end spot prices
Rand		8.47	8.11
Brazilian real		2.05	1.87
Sterling		0.62	0.65
Australian dollar		0.96	0.98
Euro		0.76	0.77
Chilean peso		479	520
Botswana pula		7.79	7.49
Average prices for the year
Rand		8.21	7.26
Brazilian real		1.95	1.67
Sterling		0.63	0.62
Australian dollar		0.97	0.97
Euro		0.78	0.72
Chilean peso		486	484
Botswana pula		7.61	6.82

Commodity prices		2012	2011
Year end spot prices
Iron ore (FOB Australia)(1)	US\$/tonne	138	127
Thermal coal (FOB South Africa)(2) Thermal coal (FOB Australia)(2)	US\$/tonne	89	105
Hard coking coal (FOB Australia)(3)	US\$/tonne US\$/tonne	91 170	112 285
Copper(4)	US cents/lb	359	343
Nickel(4)	US cents/lb	771	829
Platinum(5)	US\$/oz	1,533	1,388
Palladium(5)	US\$/oz	705	636
Rhodium(5)	US\$/oz	1,080	1,400

Average market prices for the year
Iron ore (FOB Australia)(1)	US\$/tonne	122	160
Thermal coal (FOB South Africa)(2)	US\$/tonne	93	116
Thermal coal (FOB Australia)(2)	US\$/tonne	94	121
Hard coking coal (FOB Australia)(6)	US\$/tonne	210	289
Copper(4)	US cents/lb	361	400
Nickel(4)	US cents/lb	794	1,035
Platinum(5)	US\$/oz	1,555	1,725
Palladium(5)	US\$/oz	647	736
Rhodium(5)	US\$/oz	1,275	2,022

(1) Source: Platts.

(2) Source: McCloskey.

(3) Source: Represents the quarter four benchmark.

(4) Source: LME daily prices.

(5) Source: Johnson Matthey.

(6) Source: Represents the average quarterly benchmark.

SUMMARY BY BUSINESS OPERATION

		Revenue(1)		Underlying EBITDA(2)		Underlying operating profi t/(loss)(3)	Underlying earnings
US\$ million	2012	2011	2012	2011(4)	2012	2011(4)	2012	2011(4)
Iron Ore and Manganese	6,403	7,643	3,198	4,586	2,949	4,400	1,037	1,457
Kumba Iron Ore	5,572	6,717	3,175	4,640	2,980	4,491	1,085 (6)	(6) 1,534
Iron Ore Brazil(5)	–	–	(1)	(137)	(5)	(141)	(30)	(130)
Samancor	831	926	153	198	103	165	83	144
Projects and corporate	–	–	(129)	(115)	(129)	(115)	(101) (6)	(6) (91)

Metallurgical Coal	3,889	4,347	877	1,577	405	1,189	275	844
Australia	3,657	4,068	940	1,553	519	1,188	365	850
Canada	232	279	13	85	(38)	62	(27)	46
Projects and corporate	–	–	(76)	(61)	(76)	(61)	(63)	(52)
Thermal Coal	3,447	3,722	972	1,410	793	1,230	523	902
South Africa	2,477	2,642	607	906	482	779	312	613
Colombia	970	1,080	412	535	358	482	251	318
Projects and corporate	–	–	(47)	(31)	(47)	(31)	(40)	(29)
Copper	5,122	5,144	2,179	2,750	1,687	2,461	908	1,610
Anglo American Sur	3,186	2,320	1,686	1,283	1,369	1,126	675	784
Anglo American Norte	934	1,136	336	665	288	629	237	470
Collahuasi	1,002	1,688	451	1,071	324	975	230	601
Projects and corporate	–	–	(294)	(269)	(294)	(269)	(234)	(245)

Nickel	336	488	50	84	26	57	11	23
Codemin	176	203	53	46	47	40	31	35
Loma de Níquel	160	285	46	86	29	66	18	29
Barro Alto	–	–	(7)	(12)	(8)	(13)	(5)	(8)
Projects and corporate	–	–	(42)	(36)	(42)	(36)	(33)	(33)
Platinum	5,489	7,359	580	1,672	(120)	890	(225)	410
Operations	5,489	7,359	656	1,734	(44)	952	(155)	469
Projects and corporate	–	–	(76)	(62)	(76)	(62)	(70)	(59)
Diamonds(7)	4,028	3,320	711	794	496	659	312	443

Other Mining and Industrial	4,066	4,520	485	540	337	315	229	175
Core	770	720	196	211	169	184	108	109
Phosphates	597	571	114	158	91	134	64	78
Niobium	173	149	85	55	81	52	47	33
Projects and corporate Non-core	– 3,296	– 3,800	(3) 289	(2) 329	(3) 168	(2) 131	(3) 121	(2) 66
Amapá(5)	327	481	89	147	54	120	27	68
Tarmac(8)	2,171	2,347	148	103	73	(38)	65	(34)
Scaw Metals(9)	798	931	60	67	49	37	37	25
Lisheen(10)	–	36	–	17	–	17	–	14
Black Mountain(10)	–	5	–	3	–	3	–	1
Projects and corporate	–	–	(8)	(8)	(8)	(8)	(8)	(8)

Exploration	–	–	(206)	(121)	(206)	(121)	(195)	(118)
Corporate Activities and Unallocated Costs	5	5	(160)	56	(203)	15	(36)	374
	32,785	36,548	8,686	13,348	6,164	11,095	2,839	6,120

(1) Revenue includes the Group's attributable share of revenue of joint ventures and associates. Revenue for copper and zinc operations is shown after deduction of treatment and refi ning charges (TC/RCs).

(2) Earnings before interest, tax, depreciation and amortisation (underlying EBITDA) is operating profi t/(loss) before special items, remeasurements, depreciation and amortisation in subsidiaries and joint ventures and includes attributable share of underlying EBITDA of associates.

(3) Underlying operating profi t/(loss) is revenue less operating costs before special items and remeasurements, and includes the Group's attributable share of associates' operating profi t before special items and remeasurements.

(4) Projects and corporate has been revised to align with internal management reporting. Comparatives have been reclassifi ed to align with current presentation.

(5) In 2012 Amapá has been reclassifi ed from Iron Ore and Manganese to Other Mining and Industrial to align with internal management reporting. Comparatives have been reclassifi ed to align with current presentation.

(6) Of the projects and corporate expense, \$67 million (2011: \$72 million) relates to Kumba Iron Ore. The total contribution from Kumba Iron Ore to the Group's underlying earnings is \$1,018 million (2011: \$1,462 million) as reported in the external earnings reconciliation, see page 240.

(7) On 16 August 2012 the Group acquired a controlling interest in De Beers (Diamonds segment). Until this date De Beers was accounted for as an associate of the Group. From 16 August 2012 De Beers ceased to be an associate and has been accounted for as a subsidiary of the Group.

(8) In 2011 the Group sold Tarmac's businesses in China, Turkey and Romania.

(9) In November 2012, the Group sold its interest in Scaw Metals.

(10) In 2011 the Group sold its interests in Lisheen and Black Mountain, which comprised the remainder of the Group's portfolio of zinc operations.

KEY FINANCIAL DATA

US\$ million (unless otherwise stated)	2012	2011	2010	2009	2008	2007	2006(1)	2005(1)	2004(1)
Group revenue including associates	32,785	36,548	32,929	24,637	32,964	30,559	29,404	24,872	22,610
Less: Share of associates' revenue	(4,024)	(5,968)	(4,969)	(3,779)	(6,653)	(5,089)	(4,413)	(4,740)	(5,429)
Group revenue	28,761	30,580	27,960	20,858	26,311	25,470	24,991	20,132	17,181
Underlying operating profi t including associates before
special items and remeasurements	6,164	11,095	9,763	4,957	10,085	9,590	8,888	5,549	3,832
Special items and remeasurements (excluding fi nancing and tax
special items and remeasurements)	(5,757)	(44)	1,727	(208)	(330)	(227)	24	16	556
Net fi nance costs (including fi nancing special items and
remeasurements), tax and non-controlling interests of associates	(269)	(452)	(423)	(313)	(783)	(434)	(398)	(315)	(391)
Total profi t from operations and associates	138	10,599	11,067	4,436	8,972	8,929	8,514	5,250	3,997
Net fi nance (costs)/income (including fi nancing special items
and remeasurements)	(377)	183	(139)	(407)	(401)	(108)	(71)	(220)	(385)
(Loss)/profi t before tax	(239)	10,782	10,928	4,029	8,571	8,821	8,443	5,030	3,612
Income tax expense (including special items and remeasurements)	(375)	(2,860)	(2,809)	(1,117)	(2,451)	(2,693)	(2,518)	(1,208)	(765)
(Loss)/profi t for the fi nancial year – continuing operations	(614)	7,922	8,119	2,912	6,120	6,128	5,925	3,822	2,847
Profi t for the fi nancial year – discontinued operations	–	–	–	–	–	2,044	997	111	1,094
(Loss)/profi t for the fi nancial year – total Group	(614)	7,922	8,119	2,912	6,120	8,172	6,922	3,933	3,941
Non-controlling interests	(879)	(1,753)	(1,575)	(487)	(905)	(868)	(736)	(412)	(440)
(Loss)/profi t attributable to equity shareholders of
the Company Underlying earnings(2) – continuing operations	(1,493) 2,839	6,169 6,120	6,544 4,976	2,425 2,569	5,215 5,237	7,304 5,477	6,186 5,019	3,521 3,335	3,501 2,178
Underlying earnings(2) – discontinued operations	–	–	–	–	–	284	452	401	506
Underlying earnings(2) – total Group	2,839	6,120	4,976	2,569	5,237	5,761	5,471	3,736	2,684
(Loss)/earnings per share (US\$) – continuing operations	(1.19)	5.10	5.43	2.02	4.34	4.04	3.51	2.35	1.84
Earnings per share (US\$) – discontinued operations	–	–	–	–	–	1.54	0.70	0.08	0.60
(Loss)/earnings per share (US\$) – total Group	(1.19)	5.10	5.43	2.02	4.34	5.58	4.21	2.43	2.44
Underlying earnings per share (US\$) – continuing operations	2.26	5.06	4.13	2.14	4.36	4.18	3.42	2.30	1.52
Underlying earnings per share (US\$) – discontinued operations	–	–	–	–	–	0.22	0.31	0.28	0.35
Underlying earnings per share (US\$) – total Group	2.26	5.06	4.13	2.14	4.36	4.40	3.73	2.58	1.87
Ordinary dividend per share (US cents)	85.0	74.0	65.0	–	44.0	124.0	108.0	90.0	70.0
Special dividend per share (US cents)	–	–	–	–	–	–	67.0	33.0	–
Weighted average basic number of shares outstanding (million)	1,254	1,210	1,206	1,202	1,202	1,309	1,468	1,447	1,434
Underlying EBITDA(3) – continuing operations	8,686	13,348	11,983	6,930	11,847	11,171	10,431	7,172	5,359
Underlying EBITDA(3) – discontinued operations	–	–	–	–	–	961	1,766	1,787	1,672
Underlying EBITDA(3) – total Group	8,686	13,348	11,983	6,930	11,847	12,132	12,197	8,959	7,031
Underlying EBITDA interest cover(4)– total Group	61.2	n/a	42.0	27.4	28.3	42.0	45.5	20.0	18.5
Operating margin (before special items and remeasurements) –
total Group	18.8%	30.4%	29.6%	20.1%	30.6%	28.4%	25.4%	18.5%	14.7%
Ordinary dividend cover (based on underlying earnings per share) – total Group	2.7	6.8	6.4	–	9.9	3.5	3.5	2.9	2.7
Balance sheet
Intangible assets and property, plant and equipment	49,660	42,871	42,126	37,974	32,551	25,090	25,632	33,368	35,816
Other non-current assets and investments(5)	8,512	10,269	9,852	7,303	7,607	9,271	8,258	5,585	5,547
Working capital	3,744	2,093	2,385	2,168	861	1,966	3,096	3,538	3,543
Other net current liabilities(5)	(990)	(1,683)	(785)	(272)	(840)	(911)	(1,430)	(1,429)	(611)
Other non-current liabilities and obligations(5)	(10,710)	(9,220)	(8,757)	(8,487)	(7,567)	(6,387)	(5,826)	(8,491)	(8,339)
Cash and cash equivalents and borrowings(6)	(8,660)	(1,141)		(7,038) (11,046) (11,051)		(5,170)	(3,244)	(4,993)	(8,243)
Net assets classifi ed as held for sale	2,231	–	188	429	195	471	641	–	–
Net assets	43,787	43,189	37,971	28,069	21,756	24,330	27,127	27,578	27,713
Non-controlling interests	(6,130)	(4,097)	(3,732)	(1,948)	(1,535)	(1,869)	(2,856)	(3,957)	(4,588)
Equity attributable to equity shareholders of the Company	37,657	39,092	34,239	26,121	20,221	22,461	24,271	23,621	23,125
Total capital(7)	52,402	44,563	45,355	39,349	33,096	29,181	30,258	32,558	35,806
Cash fl ows from operations – continuing operations	7,021	11,498	9,924	4,904	9,579	9,375	9,012	5,963	3,857
Cash fl ows from operations – discontinued operations	–	–	–	–	–	470	1,045	1,302	1,434
Cash fl ows from operations – total Group	7,021	11,498	9,924	4,904	9,579	9,845	10,057	7,265	5,291
Dividends received from associates and fi nancial asset
investments – continuing operations	340	403	285	639	659	311	251	468	380
Dividends received from associates and fi nancial asset
investments – discontinued operations	–	–	–	–	–	52	37	2	16
Dividends received from associates and fi nancial asset investments – total Group	340	403	285	639	659	363	288	470	396
Return on capital employed(8) – total Group	13.3%	26.5%	24.8%	14.4%	36.9%	38.0%	32.6%	18.8%	16.9%
EBITDA/average total capital(7) – total Group	17.9%	29.7%	28.3%	19.1%	38.0%	40.8%	38.8%	26.2%	21.3%
Net debt to total capital (gearing)(9)	16.4%	3.1%	16.3%	28.7%	34.3%	16.6%	10.3%	15.3%	22.6%

(1) Comparatives for 2006, 2005 and 2004 were adjusted in the 2007 Annual Report to reclassify amounts relating to discontinued operations where applicable.

(2) Underlying earnings is profi t attributable to equity shareholders of the Company before special items and remeasurements and is therefore presented after net fi nance costs, income tax and non-controlling interests.

(3) Underlying EBITDA is operating profi t before special items and remeasurements, depreciation and amortisation in subsidiaries and joint ventures and includes attributable share of EBITDA of associates.

(4) Underlying EBITDA interest cover is underlying EBITDA divided by net fi nance costs, excluding other net fi nancial income, exchange gains and losses on monetary assets and liabilities, unwinding of discount relating to provisions and other liabilities, fi nancing special items and remeasurements, and including attributable share of associates' net interest expense, which in 2011 resulted in a net fi nance income and therefore the ratio is not applicable.

(5) Comparatives for 2008, 2007, 2006 and 2005 were adjusted in the 2009 Annual Report in accordance with IAS 1 Presentation of Financial Statements – Improvements to reclassify non-hedge derivatives whose expected settlement date was more than one year from the period end from current to non-current.

(6) This differs from the Group's measure of net debt as it excludes the net cash/(debt) of disposal groups (2012: \$213 million; 2011: nil; 2010: \$59 million; 2009: \$48 million; 2008: \$8 million; 2007: \$(69) million; 2006: \$(80) million; 2005: nil; 2004: nil) and excludes related hedges (2012: net liabilities of \$168 million; 2011: net liabilities of \$233 million; 2010: net liabilities of \$405 million; 2009: net liabilities of \$285 million; 2008: net liabilities of \$297 million; 2007: net assets of \$388 million; 2006: net assets of \$193 million; 2005: nil; 2004: nil). See note 31 to the fi nancial statements.

(7) Total capital is net assets excluding net debt.

(8) Return on capital employed is calculated as total operating profi t before impairments for the year divided by the average of total capital less other investments and adjusted for impairments. (9) Net debt to total capital is calculated as net debt (including related hedges) divided by total capital. Comparatives are presented on a consistent basis.

NON-FINANCIAL DATA

	2012	2011	2010	2009	2008
Safety(1)
Work-related fatalities	13	17	15	20	28
Fatal-injury frequency rate (FIFR)(2)	0.008	0.009	0.008	0.010	0.015
Total recordable case frequency rate (TRCFR)(3)	1.29	2.01	1.44	1.81	2.27
Lost time injury frequency rate (LTIFR)(4)	0.60	0.64	0.64	0.76	1.04
Lost time injury severity rate (LTISR)(5)	223	220	229	226	240
Occupational health(1)
New cases of occupational disease (NCOD)(6)	170	197	268	489	132
Occupational disease incidence rate (per 200,000 hours) (ODIR)	0.189	0.205	0.284	0.483	0.126
Environment(1)
Total CO2 emissions (Mt CO2 e)	18	19	20	19	19
Total energy consumed (million GJ)(7)	108	102	100	106	102
Water used for primary activities (million m3 )(8)	122	115	115	125	124
Human Resources(1)(9)
Women in management (%)(10)	23	22	21	19	17
Historically Disadvantaged South Africans in management (%)(11)	62	51	46	46	45
Resignations (%)(12)	2.4	2.7	2.4	2.4	3.8
Redundancies (%)(13)	0.6	1.4	2.1	3.8	0.6
Dismissals (%)(14)	1.4	1.1	1.3	2.0	2.6
Other reasons for leaving (%)(15)	2.4	0.3	2.8	4.9	2.0
Social(1)
CSI spend (total in US\$ million)(16)	154	129	112	83	76
CSI spend (% of pre-tax profi t)	3	1	1	2	1
Procurement: BEE spend (rand billion)	25.8	23.3	20.9	23.5	24.6
Businesses supported through enterprise development initiatives	17,598	38,681	9,392	3,720	3,012
Jobs created/maintained through enterprise development programmes	64,927	47,070	17,200	12,982	13,431

(1) With the exception of Social, which includes the results of De Beers from the date of acquisition, the data includes wholly owned subsidiaries and joint ventures over which Anglo American has management control, and does not include De Beers or other non-managed operations such as Collahuasi, Carbones del Cerrejón and Samancor.

(2) FIFR is calculated as the number of fatal injuries to employees or contractors per 200,000 hours worked.

(3) TRCFR is the number of fatal injuries, lost time injuries and medical treatment cases for employees or contractors per 200,000 hours. (4) LTIFR is the number of lost time injuries (LTIs) per 200,000 hours worked. An LTI is an occupational injury which renders the person unable to perform his/her regular duties for one full shift or

more, the day after the injury was incurred, whether a scheduled workday or not.

(5) LTISR is the number of lost days and restricted workdays per 200,000 hours worked.

(6) NCOD is the sum of occupational diseases due to asbestosis, NIHL, silicosis, coal-workers' pneumoconiosis, pneumoconiosis due to other fi brogenic diseases, chronic obstructive airways disease, occupational tuberculosis, occupational asthma, HAVs, musculoskeletal disorders, dermatitis, occupational cancers and other occupational diseases.

(7) Total amount of energy consumed is the sum of total energy from electricity purchased, total energy from fossil fuels and total energy from renewable fuels.

(8) Total amount of water used for primary activities is the total new or make-up water entering the operation and used for the operation's primary operational activities.

(9) Excludes Other Mining and Industrial Non-core operations.

(10) Women in management is the percentage of female managers as a percentage of all females in the workforce excluding contractors.

(11) Historically Disadvantaged South Africans in management is the percentage of managers at Anglo American in South Africa who are 'Historically Disadvantaged South Africans'.

(12) The number of people who resigned as a percentage of the total workforce excluding contractors.

(13) The number of people who have been retrenched as a percentage of total workforce excluding contractors.

(14) The number of people who have been dismissed or have resigned to avoid dismissal, as a percentage of total workforce excluding contractors.

(15) The number of people who left for reasons other than those shown above, for example retirement, ill health and death, as a percentage of total workforce excluding contractors.

(16) CSI spend is the sum of donations for charitable purposes and community investment (which includes cash and in-kind donations and staff time) as well as investments in commercial initiatives with public benefi t (such as enterprise development).

RECONCILIATION OF SUBSIDIARIES' REPORTED EARNINGS TO THE UNDERLYING EARNINGS INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended 31 December 2012

Note only key reported lines are reconciled.

Kumba Iron Ore Limited

US\$ million	2012	2011
IFRS headline earnings	1,499	2,366
Exploration	16	4
Kumba Envision Trust(1)	53	–
Other adjustments	3	3
	1,571	2,373
Non-controlling interests(2)	(500)	(826)
Elimination of intercompany interest	4	(27)
Depreciation on assets fair valued on acquisition (net of tax)	(8)	(9)
Corporate cost allocation	(49)	(49)
Contribution to Anglo American underlying earnings	1,018	1,462

(1) The Kumba Envision Trust charge is included in IFRS headline earnings but is an operating special item so is excluded from underlying earnings.

(2) On 20 July 2012 Anglo American increased its shareholding in Kumba Iron Ore Limited by 4.5% through the exercise of options acquired in 2011 and 2012, thereby increasing its shareholding from 65.2% to 69.7% for a total cost of \$948 million.

Anglo American Platinum Limited

US\$ million	2012	2011
IFRS headline (loss)/earnings	(170)	527
Exploration	4	5
Operating and fi nancing remeasurements (net of tax)	2	(27)
Restructuring costs included in headline earnings (net of tax)	–	6
BEE transactions and related charges	–	141
	(164)	652
Non-controlling interests	33	(132)
Elimination of intercompany interest	10	(1)
Depreciation on assets fair valued on acquisition (net of tax)	(41)	(55)
Corporate cost allocation	(63)	(54)
Contribution to Anglo American underlying earnings	(225)	410

RECONCILIATION OF DE BEERS' REPORTED EARNINGS TO THE AMOUNTS INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended 31 December 2012

On 16 August 2012 the Group acquired an additional 40% interest in De Beers, increasing its shareholding to 85%, and has consolidated 100% of the assets and liabilities of De Beers from this date. In accordance with IFRS the Group is required to fair value 100% of the assets and liabilities acquired based on the purchase consideration for the 40% acquired. As a result the Group has:

Recognised a fair value uplift of \$2,017 million relating to its existing 45% shareholding, with a corresponding special item (remeasurement) gain in the income statement. The additional depreciation arising as a result of the fair value uplifts on the Group's existing 45% shareholding has also been recognised as a special item (remeasurement) and amounted to \$41 million in 2012 and is estimated to be \$125 million in 2013.
Recognised fair value uplifts associated with the additional 55% to be consolidated, including the Government of Botswana's 15% non-controlling interest. The additional depreciation and amortisation charge reduced operating profi t by \$50 million in 2012 and is estimated to be \$150 million in 2013. The additional depreciation and amortisation charge reduced underlying earnings by \$32 million in 2012 and is estimated to reduce underlying earnings by \$100 million in 2013.

The following tables reconcile the earnings and capital expenditure of De Beers to the amounts included in the Group's Consolidated fi nancial statements and illustrate the earnings impact of the requirement to fair value assets and liabilities acquired.

		2012		2011
		Anglo		Anglo
	De Beers	American	De Beers	American
US\$ million	(100%)	share(1)	(100%)	share(1)
Underlying EBITDA (including associates)	1,075	711	1,763	794
Underlying operating profi t	815	496	1,491	659
Underlying earnings(2)	506	312	993	443
Capital expenditure	249	94	260	–

(1) Amounts based on the Group's 45% shareholding to 16 August 2012 and a 100% basis thereafter. Underlying earnings from 16 August 2012 excludes the 15% non-controlling interest. (2) See reconciliation below.

US\$ million	2012	2011

De Beers underlying earnings
Anglo American share (45% prior to 16 August 2012)










Contribution to Anglo American underlying earnings


Depreciation of fair value uplifts on existing assets(4)	41	–

Depreciation of fair value uplifts on existing assets(4)	41	–
Reversal of uplift on inventory(5)	421	–

(1) Debswana is a joint venture between De Beers and the Government of Botswana in which each shareholder has a 50% equity share. The joint venture arrangements provide De Beers with an economic interest in Debswana that is based on 19.2% of profi ts before deducting taxes and royalties paid by the joint venture. Consistent with these arrangements, De Beers proportionately consolidates 19.2% of Debswana's earnings (before taxes and royalties) in line with the Group's policy on accounting for joint ventures. As De Beers' share of earnings is based on profi ts before taxes and royalties, an effective tax rate of nil arises on the earnings of the joint venture in the Group's Consolidated fi nancial statements.

(2) Relates to assets fair valued on acquisition where the treatment in De Beers' underlying fi nancial statements post-acquisition is already refl ected in the Group's fi nancial statements.

(3) Excludes the depreciation of fair value uplifts on the Group's previously held 45% equity interest.

(4) Relates to the depreciation of fair value uplifts on the Group's previously held 45% equity interest upon obtaining a controlling interest.

(5) Inventory held by De Beers at the date of the acquisition is required to be recognised at fair value under IFRS. This results in negligible margins upon the subsequent sale of inventory held at the date of the acquisition. The impact of fair value uplifts on inventory has been excluded from the Group's underlying earnings so as not to distort the operating margins of De Beers and to provide more useful information about the performance of the Group.

THE BUSINESS – AN OVERVIEW

as at 31 December 2012

Iron Ore and Manganese

69.7%
100%
49%
40%

Metallurgical Coal Overall ownership: 100%

100% owned	Other interests
Australia	Australia
Callide	Drayton	88.2%
	Moranbah North	88%
Australia – other	Dartbrook	83.3%
Monash Energy Holdings Ltd	German Creek(2)	70%
	Foxleigh	70%
Canada	Dawson	51%
Peace River Coal	Jellinbah	23.3%
	Australia – other

Australia – other
Dalrymple Bay Coal Terminal Pty Ltd	25.4%
Newcastle Coal Shippers Pty Ltd	17.6%
MBD Energy Ltd	19.2%

Thermal Coal Overall ownership: 100%

50%
50%
73%
73%


24.2%

Colombia Carbones del Cerrejón 33.3%

Copper Overall ownership: 100%

100% owned	Other interests
Peru	Chile
Michiquillay	Chagres	50.1%
	El Soldado	50.1%
Chile	Los Bronces	50.1%
Mantos Blancos(4)	Collahuasi	44%
Mantoverde(4)
	South Africa
	Palabora	16.8%
	Peru

Quellaveco	81.9%

US
Pebble	50%

Nickel	Overall ownership:	100%
100% owned	Other interests
Brazil	Venezuela

Codemin Loma de Níquel 91.4%

(1) Owns the port of Açu (currently under construction).

(2) The German Creek operation includes both Capcoal Open Cut and Underground operations.

(3) Kriel and Zibulo form part of the Anglo American Inyosi Coal black economic empowerment (BEE) company of which Anglo American owns 73%.

(4) Non-controlling interest of 0.018%.

Barro Alto

100% owned	Other interests
South Africa	South Africa
Bathopele Mine	Union Section	85%
Khomanani Mine	Masa Chrome Company	74%
Thembelani Mine
Khuseleka Mine	Joint ventures or sharing agreements
Siphumelele Mine	Modikwa Platinum Joint Venture	50%
Tumela Mine	Kroondal Pooling and Sharing Agreement	50%
Dishaba Mine	Marikana Pooling and Sharing Agreement	50%
Mogalakwena Mine	Mototolo Joint Venture	50%
Western Limb Tailings Retreatment
Waterval Smelter (including converting process)	Associates
Mortimer Smelter	Bokoni	49%
Polokwane Smelter	Pandora	42.5%
Rustenburg Base Metals Refi nery	Bafokeng-Rasimone	33%
Precious Metals Refi nery	Atlatsa Resources Corporation(1)	27%
Twickenham Mine	Johnson Matthey Fuel Cells	17.5%
Zimbabwe	South Africa – other
Unki Mine	Wesizwe Platinum Limited	13%

De Beers

De Beers				Overall ownership:	85%
100% owned		Other interests
South Africa	Canada	South Africa		Namibia
De Beers Group Services	De Beers Canada	De Beers Consolidated		Namdeb Holdings(4)	50%
(Exploration and Services)	Snap Lake	Mines	74%(2)	Namdeb Diamond Corporation
De Beers Marine	Victor	Venetia		Mining Area 1
		Voorspoed		Orange River
Synthetic Diamond Supermaterials	Sales	Namaqualand Mines(3)		Elizabeth Bay
Element Six Technologies	Global Sightholder Sales	Kimberley Mines		Alluvial Contractors
	Auction Sales			Debmarine Namibia
		Botswana		Atlantic 1
	Brands	Debswana	50%
	Forevermark	Damtshaa		Sales
		Jwaneng		DTC Botswana	50%
		Orapa		Namibia DTC	50%

Letlhakane

Brands

Element Six Abrasives	60%
Synthetic Diamond Supermaterials

Namibia DTC	50%

De Beers Diamond Jewellers 50%

Other Mining and Industrial

100% owned	Other interests
Phosphates	Iron ore
Anglo American Fosfatos Brasil Limitada	Amapá (Brazil)	70%
Niobium	Aggregates and Building Materials
Anglo American Nióbio Brasil Limitada	Tarmac Middle East	50%
Aggregates and Building Materials
Tarmac Quarry Materials
Tarmac Building Products

Other interests
Iron ore
Amapá (Brazil)	70%

Aggregates and Building Materials
Tarmac Middle East	50%

Royal Bafokeng Platinum Limited 12.6%

Other(5)

100% owned	Other interests
Vergelegen (South Africa)	Exxaro Resources (southern Africa and Australia)	9.8%

(1) Anooraq Resources Corporation changed its name to Atlatsa Resources Corporation in 2012.

(2) De Beers' 74% interest represents its legal ownership share in De Beers Consolidated Mines (DBCM). For accounting purposes De Beers consolidates 100% of DBCM as it is deemed to control the BEE entity which holds the remaining 26% after providing certain fi nancial guarantees on its behalf during 2010.

(3) In May 2011 De Beers announced that it had entered into an agreement to sell Namaqualand Mines.

(4) In November 2011 the Government of the Republic of Namibia and De Beers restructured their mining partnership, creating a 50:50 holding company, Namdeb Holdings (Pty) Limited, with full ownership of Namdeb Diamond Corporation (Pty) Limited and De Beers Marine Namibia (Pty) Limited (now trading as Debmarine Namibia). All mining licences were transferred to the newly formed company.

(5) Included within Corporate Activities and Unallocated Costs segment.

SHAREHOLDER INFORMATION

Annual General Meeting

Will be held at 2:00pm on Friday 19 April 2013, at The Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE.

Shareholders' diary 2013/14

Interim results announcement	July 2013
Annual results announcement	February 2014
Annual Report	March 2014
Annual General Meeting	April 2014

Shareholding enquiries

Enquiries relating to shareholdings should be made to the Company's UK Registrars, Equiniti, or the South African Transfer Secretaries, Link Market Services South Africa (Pty) Limited, at the relevant address below:

UK Registrars

Equiniti Aspect House Spencer Road Lancing West Sussex BN99 6DA England Telephone: In the UK: 0871 384 2026*

From outside the UK: +44 121 415 7558 Transfer Secretaries in South Africa

Link Market Services South Africa (Pty) Limited 13th Floor, Rennie House 19 Ameshoff Street Braamfontein 2001, South Africa (PO Box 4844, Johannesburg, 2000) Telephone: +27 (0) 11 713 0800

Enquiries on other matters should be addressed to the Company Secretary at the following address:

Registered and Head Offi ce

Anglo American plc 20 Carlton House Terrace London SW1Y 5AN England

Telephone: +44 (0) 20 7968 8888 Fax: +44 (0) 20 7968 8500 Registered number: 3564138 www.angloamerican.com

Additional information on a wide range of shareholder services can be found in the Shareholder Information section of the Notice of AGM and on the Group's website.

* Calls to all 0871 numbers stated in this notice are charged at 8p per minute plus network extras. Lines are open 8:30am to 5:30pm Monday to Friday.

OTHER ANGLO AMERICAN PUBLICATIONS

2012/13 Fact Book
Notice of 2013 AGM and Shareholder Information Booklet
Sustainable Development Report 2012
Business Unit Sustainable Development Reports (2012)
Optima Anglo American's current affairs journal
Good Citizenship: Business Principles
The Environment Way
The Occupational Health Way
The Projects Way
The Safety Way
The Social Way
The People Development Way
www.facebook.com/angloamerican
https://twitter.com/angloamerican
www.youtube.com/angloamerican
www.fl ickr.com/angloamerican
www.slideshare.com/angloamerican

The Company implemented electronic communications in 2008 in order to reduce the fi nancial and environmental costs of producing the Annual Report. More information about this can be found in the attached Notice of AGM. In this regard we would encourage downloading of reports from our website.

Financial and sustainable development reports may be found at: www.angloamerican.com/reportingcentre

However, the 2012 Annual Report and the booklet containing the Notice of AGM and other shareholder information are available free of charge from the Company, its UK Registrars and the South African Transfer Secretaries.

If you would like to receive paper copies of Anglo American's publications, please write to:

Investor Relations

Anglo American plc 20 Carlton House Terrace London SW1Y 5AN England

Alternatively, publications can be ordered online at: www.angloamerican.com/siteservices/requestreport

Charitable partners

This is just a selection of the charities which Anglo American, Anglo American Chairman's Fund and the Anglo American Group Foundation have worked with in 2012:

Designed and produced by Salterbaxter.

This document is printed on Amadeus 50 Silk and Amadeus 50 Offset which has been independently certifi ed according to the rules of the Forest Stewardship Council® (FSC). All the paper in this report contains 50% recycled and 50% virgin fi bre.The recycled fi bre is bleached in a Process Chlorine Free (PCF) process and the virgin fi bre is Elemental Chlorine Free (ECF) bleached.

Printed in the UK by Pureprint using its alcofree® and pureprint® environmental printing technology, and vegetable inks were used throughout. Pureprint is a CarbonNeutral® company.

Both manufacturing paper mill and the printer are registered to the Environmental Management System ISO 14001 and are Forest Stewardship Council® (FSC) chain-of-custody certifi ed.

Anglo American plc

20 Carlton House Terrace London SW1Y 5AN England

Tel +44 (0)20 7968 8888 Fax +44 (0)20 7968 8500 Registered number 3564138

www.angloamerican.com

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Anglo American PLC — Annual Report 2012

4786_10-k_2012-12-31_2385572c-c1de-43e5-a41d-89e938bc1940.pdf

A BALANCED PORTFOLIO WITH THE FUTURE IN MIND

SUBHEAD WITH THE FUTURE IN MIND

A UNIQUE TRANSACTION

Cover

Other sources of information

AT A GLANCE

SAFEGUARDING VALUE WITH THE FUTURE IN MIND

2011 2012 1,374

Overview

Operating and fi nancial review

Governance

Financial statements

Ore Reserves and Mineral Resources

Other information

CHAIRMAN'S STATEMENT

OUR PERFORMANCE

DIVIDENDS AND CAPITAL ALLOCATION

DELIVERING VALUE

SAFETY AND SUSTAINABLE DEVELOPMENT

AN EVALUATION OF THE BOARD BY AN EXTERNAL FACILITATOR, WITH NO PRIOR RELATIONSHIP WITH ANGLO AMERICAN, WAS COMPLETED IN FEBRUARY 2012.

GOVERNANCE

REPRESENTATION OF WOMEN ON THE BOARD

OUTLOOK

A BRIGHTER OUTLOOK FOR OUR KEY COMMODITIES

THE ECONOMY

ECONOMIC SLOWDOWN

World trade and industrial production

PROSPECTS

Indexed 2012 commodity prices(1)

COMMODITY MARKETS

WELL PLACED FOR ALL STAGES OF THE ECONOMIC CYCLE

EARLY STAGE

MID STAGE

The rise of the consuming class

LATE STAGE

Aspiring to an affl uent lifestyle

OUR STRATEGY AND BUSINESS MODEL

OPERATING

INVESTING

OPERATING

cargo deliveries, we offer effi cient and effective transport of our commodities.

OPERATING

CHIEF EXECUTIVE'S STATEMENT

UNDERLYING OPERATING PROFIT (2011: \$11.1 bn) \$6.2 bn

MEASUREMENT AND TARGETS

Strategic elements KPI targets

INVESTING

ORGANISING

OPERATING(1) Safely, sustainably and responsibly Turn to page 22

Total shareholder return (TSR)

Return on capital employed (ROCE)

Work-related fatal injury frequency rate (FIFR)

Lost-time injury frequency rate (LTIFR)

Energy consumption

Greenhouse gas (GHG) emissions

Capital projects and investment

Underlying earnings per share

Total water use

Corporate social investment

Enterprise development

Voluntary HIV counselling and testing (VCT)(2)

Voluntary labour turnover

Gender diversity

EXCEEDING EXPECTATIONS

718

IRON ORE PRODUCTION FOR KUMBA (MT) 70 Mtpa

PROJECT DELIVERY TO CONTINUE TO DRIVE HIGH QUALITY PRODUCTION GROWTH

IN BRIEF

SELECTED MAJOR PROJECTS

Unapproved

LIFTING PERFORMANCE WITH THE FUTURE IN MIND

DRIVING VALUE THROUGH COMMERCIAL EXCELLENCE

2012 REVENUE GENERATED BY CUSTOMERS IN CHINA(1)

EMBEDDING OPERATIONAL EXCELLENCE GROUPWIDE

ASSET OPTIMISATION

SUPPLY CHAIN

Supplier partnerships

Anglo American PLC Annual Report 2012