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Value Addition to Natural Resources: Anglo American 2002 Results and Acquisitions

This presentation discusses Anglo American's 2002 key financial results, acquisitions, asset mix, and Social Responsibility initiatives. It covers the company's balanced asset mix across regions, major authorized projects, and operating margins over the years, along with details on financial growth, acquisitions, and internal growth projects.

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Value Addition to Natural Resources: Anglo American 2002 Results and Acquisitions

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  1. ANGLO AMERICAN ADDING VALUE TO NATURAL RESOURCES 28 February 2003 This presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (the “Order”) or (b) high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. 2002 Annual Results

  2. Headline EPS $1.25 $1.14 2001 2002 Key Financials • Record headline EPS of $1.25, up 10% on 2001 • Headline earnings for the year $1,759m • Cost & efficiency improvements of $279m • Total dividend increased to 51 US cents per share • Strong EBITDA of $4.8bn: EBITDA interest cover 20.0x* • Net Debt/Total Capital of 23.1% • Obtained strong, single “A” credit ratings * Annualised All prior year figures restated for FRS19

  3. SA Mining Legislation Update • Minerals & Petroleum Resources Development Act signed and promulgated, will be effective at a future date • Empowerment Charter & Scorecard finalised • Money Bill still to be published • Anglo making good progress towards 5 year target of 15% HDSA involvement • To date Anglo American has undertaken • Over $1.8bn of black empowerment transactions in SA • Over $800m of procurement from black-owned businesses

  4. Balanced Asset Mix Australasia 1% Australasia 6% Americas 16% Americas 21% South Africa 31% Europe 14% South Africa 67% Rest of Africa 2% Rest of Africa 7% Europe 35% 30 June 1999 31 December 2002 Net attributable operating assets, including investment in associates & JVs

  5. Headline Earnings Australasia 4% Australasia 4% Americas 3% Americas 9% Europe 15% South Africa Mining 42% Rest of Africa 6% South Africa Mining 54% Europe 22% SA Other 18% SA Other 12% Rest of Africa 11% 2001 2002

  6. Acquisitions Flexing Our Balance Sheet: $3.7bn in Acquisitions Durox & other UK $89m La Rochette $110m Key: Base Metals Ferrous Metals Forest Products Industrial Minerals Platinum Coal Gold Syktyvkar $252m Mavike & other Europe $101m Moly Cop $105m Cerrejón Moura & Jellinbah East Disputada $1.3bn Anglo Plat. $847m Gold Fields $252m Cerro Vanguardia $105m Kumba & Avmin $365m

  7. Acquisition Track Record • Industrial Minerals - Tarmac acquired in November 1999 • Fully integrated & delivering strong cash flows • EBITDA/Total Capital: 16%1 • Australian/South American Coal Acquisitions - since 2000 • Global coal asset base established • EBITDA/Total Capital: 21% • Syktyvkar - March 2002 • Low cost producer integrated into European marketing network • EBITDA/Total Capital: 33%2 • Disputada - 13 November 2002 • World class, low cost integrated copper producer • Corporate offices integrated 1 EBITDA/Total Capital shown for Industrial Minerals as calculation for original Tarmac acquisition is not possible due to integration with previously held Industrial Minerals assets in the UK. Total Capital adjusted for projects in progress. 2 Annualised.

  8. Key: Base Metals Diamonds Forest Products Industrial Minerals Platinum Coal Gold CC&V $194m Internal Growth A Well-balanced $5.8bn Project Portfolio Buxton $173m Goiás $147m RPM Tailings $186m Finsch $107m Polokwane $190m Twickenham $343m Collahuasi $286m Capcoal $107m HBMS 777 $276m RPM Ph 2 $444m Ruzomberok $233m Skorpion $454m Styldrift $344m ACP Project $250m RPM Ph 1 $203m Cerrejón $50m Moab Khot. $419m Modikwa $311m BRPM $317m Mponeng $152m 2003 2004 2005 2006 2007 2008 2009 Major authorised projects. Full project list included in appendix. 100% of subsidiaries and AA plc’s share of JV’s and associates. Full production dates.

  9. Operating Margins A Steady Performance 17.1% 16.9% 16.3% 11.1% 1999 2000 2001 2002 Total operating profit before exceptional items divided by turnover

  10. Social Responsibility • Leading the way in anti-retroviral treatment provision for HIV/AIDS employees • Strong focus on safety leading to 39% reduction in fatal injury frequency rate & 42% reduction in LTIFR • Launch of ‘Good Citizenship: Our Business Principles’ across managed operations • Group continues to maintain significant corporate social investments & has strengthened management of relations with communities • Participation in international policy debates - WSSD, Global Mining Initiative, Extractive Industries Review, Extractive Industries Transparency Initiative

  11. Review of FinancialsTony Lea 2002 Annual Results

  12. Highlights 2002 2002 2001 Headline EPS ($) 1.25 1.14 Headline earnings ($m) 1,759 1,681 Total dividend (US cents) 51 49 Average shares in issue 1,411m 1,474m EBITDA ($m) 4,792 4,647

  13. Headline Earnings $m 2002 2001 Profit for the financial year 1,563 3,085 Operating exceptional items 81 513 Non-operating exceptional items (64) (2,148) Profit for the year pre exceptionals 1,580 1,450 Amortisation of goodwill 189 167 Related tax & minority interests (10) 64 Headline earnings for the year 1,759 1,681

  14. Headline Earnings Variances

  15. Headline Variance: Price Group Total: -$36m

  16. Headline Variance: Volume Group Total: +$206m

  17. Rand/US$ Exchange Rate 11.96 R/$ 8.58 7.58 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan 2001 2002

  18. Headline Variance: Exchange $m Conversion of local currency costs 273 (weaker average rand – 10.48 vs 8.62) Exchange losses on non-rand monetary assets (263) (stronger closing rand – 8.58 vs 11.96) Net exchange variance 10

  19. $154m $21m $4m $33m $77m $3m $12m $96m $42m $20m Operating efficiencies Restructuring & synergies Pre-tax Cost Savings: $279m Maintenance Admin & Overhead Labour Materials & Supplies $48m $2m $1m $45m Procurement

  20. Balance Sheet $m 31/12/2002 31/12/2001 Shareholders’ Funds 16,261 12,856 Net Debt/(Funds): South Africa 12 (1,571) Rest of World 5,566 5,578 3,589 2,018 Minority Interests 2,304 1,607 Total Capital 24,143 16,481 Net Debt/Total Capital 23.1% 12.2% ROCE 17.5% 19.0% EBITDA/Total Capital 23.6% 25.0%

  21. Cash Flow Analysis 2002 2001 Net cash inflow from operating activities 3,618 3,539 Net interest & dividend income 335 321 Taxation (722) (637) Disposal of fixed assets 313 263 Available cash flow 3,544 3,486 Dividend paid - company & minorities (1,107) (1,168) Net acquisitions & disposals (3,717) 1,672 Capital expenditure (2,139) (1,787) Other (141) (631) Movements in net (debt)/funds (3,560) 1,572 Net debt at start of the period (2,018) (3,590) Net debt at end of the period (5,578) (2,018)

  22. Cash Flow Analysis Inflow Outflow $722m Taxation $732m AA plc Dividend $3,618m $810m SIB capital expenditure Expansionary capital expenditure $1,329m 1 Cash flow for subsidiaries, excludes associates & JVs Cash flow from operations1

  23. Effective Tax Rate • Effective tax rate (pre-exceptionals) decreased from 36.4% in 2001 to 33.0% in 2002 • Reduction in tax is primarily due to changes in the mix of contributions by divisions with differing effective tax rates • Adoption of FRS19 decreased headline earnings in 2002 by $166m (2001: $89m taken as a prior year adjustment)

  24. Review of OperationsTony Trahar 2002 Annual Results

  25. Headline earnings down 27% $478m $351m 2001 2002 Highlights - Platinum • Headline earnings: $351m • Weaker results primarily due to lower palladium & rhodium prices • Refined Pt production up 7% to 2.25m ounces • Revised project suite on track to produce 3.5m refined platinum ounces per annum by end 2006 • 70.0% stake in Anglo Platinum; average cost of R371 per share since January 2001

  26. Headline earnings up 27% $205m $162m 2001 2002 Highlights - Gold • Headline earnings: $205m • Cash costs reduced by 10% to $161/oz • Stake in Cerro Vanguardia (Argentina) doubled to 92.5% • Hedge book reduced by 4.3m ounces to 10.3m ounces • Gold production down 15% to 5.9m ozs due to sale of Free State assets • Average realised price*: 2002: $303 /oz 2001: $287 /oz * Including realised non-hedge derivative gains

  27. Headline earnings up 38% $324m $234m 2001 2002 Highlights - Diamonds • Headline earnings: $324m • DTC sales of $5.2bn up 16% • Stocks reduced by nearly $1bn • Solid Thanksgiving/Christmas retail sales in the US • EU approves Supplier of Choice • Free cash flow of $1,549m; net debt reduced by 46% to $1,716m in 2002 • Further voluntary repayment of $355m in 2003

  28. Headline earnings down 31% $387m $266m 2001 2002 Highlights - Coal • Headline earnings: $266m • Lower export thermal coal prices offset by higher export coking coal prices (net impact -$41m) • Significantly impacted by stronger rand at 31 December 2002 • Sales volumes increased 9% to 84.5m tonnes

  29. Highlights - Base Metals $87m turnaround in performance • Headline earnings: $69m • Improved financial performance despite lower copper & zinc prices • Acquisition of Disputada for $1.3bn completed in November 2002 • Significant progress made in restructuring the business: • Disposal of KCM, Tati Nickel, BCL, Salobo and Kolwezi • Sale of stake in Anaconda Nickel in February 2003 • Skorpion to be commissioned in 2003 $69m ($18m) 2001 2002

  30. Headline earnings up 44% $231m $160m 2001 2002 Highlights - Industrial Minerals • Headline earnings: $231m • EBITDA up by $89m to $468m • Tarmac improved margins despite mixed market conditions. • Improved performance at Copebrás • Buxton cement ($173m) & Copebrás phosphates ($147m) commissioning in 2003

  31. Headline earnings up 38% $376m $272m 2001 2002 Highlights - Forest Products • Headline earnings: $376m • Strong performance in challenging markets • Successful integration of Syktyvkar and La Rochette acquisitions • Increased volumes from European and South African operations

  32. Highlights - Ferrous Metals Headline earnings up 83% • Headline earnings: $88m • Strong operating performances from Scaw, Highveld & Samancor • Memorandum of Understanding signed in December 2002 with SA Government on iron ore strategy • Stimela option over 10.5% of Kumba implemented • Accordingly, stake in Kumba increased to 20.1%, further 10% awaits SA Competition Tribunal approval $88m $48m 2001 2002

  33. Outlook • Outlook remains mixed • Current global political, economic and currency uncertainties • Possible military action in Iraq could see short term volatility • Anglo’s commodity & geographic asset mix and strong project pipeline will underpin performance in years ahead

  34. Strategy • Ongoing focus on efficiencies & cost savings • Seeking acquisitions that meet our investment criteria, including new markets • Developing the value chain in our businesses & to improve focus on marketing & customer relationships • Continuing with a balanced portfolio of greenfield & brownfield projects - project pipeline of $5.8bn

  35. ANGLO AMERICAN ADDING VALUE TO NATURAL RESOURCES 28 February 2003 2002 Annual Results

  36. Additional Information Handout Only 2002 Annual Results

  37. Currency Conversion Ex-dividend (JSE) Ex-dividend (LSE) AGM Payment of Final Dividend Forest Products Site Visit Interim Results 25 February 2003 10 March 2003 12 March 2003 25 April 2003 30 April 2003 18 - 20 June 2003 8 August 2003 Key Dates

  38. MarketPrices 2002 2001 Gold 310 272 Platinum 541 531 Palladium 336 597 Rhodium 838 1,606 Copper 71 72 Nickel 307 267 Zinc 35 41 Coal: thermal (RSA)* 26 30 Coal: coking (Aus)* 45 40 *Thermal & metallurgical coal prices are strictly indicative as wide variations occur in relation to region, product quality, contract volume and timing.

  39. Headline Earnings Sensitivities US$m 10% change in gold price ± 34 10% change in platinum price ± 51 10% change in palladium price ± 15 10% change in coal price ± 98 10% change in copper price ± 65 10% change in nickel price ± 16 10% change in zinc price ± 16 10% change in pulp price ± 6 10% movement in SA rand/US$ ± 124 10% movement in AUD/US$ ± 26 10% movement in Euro/US$ ± 44 Excludes the impact of translation of monetary assets & liabilities and the effect of any hedging activities. Stated after tax at marginal rate. Pulp sensitivity depends on recoveries.

  40. Projects Gold Total additional Production Full Approved Approved production1 commences prod. capex $m Mponeng 2.8m oz 2004 2005 152 TauTona 2.7m oz 2004 2005 48 Cripple Creek & Victor 2.8m oz 2002 2003 194 Moab Khotsong 4.5m oz 2003 2008 419 Total 12.8m oz 813 Industrial Minerals Total additional Production Full Approved Approved production2 commences prod. capex $m Goiás (completed under budget) 455,000 t 2002 2003 147 Buxton Cement Plant 425,000 t 2003 2004 173 Total 320 1 Gold incremental production is total additional capacity over life of project. Capex converted to US$ on date of project approval. 2 Incremental production is a per year amount once full production is reached. Capex converted at date of project approval.

  41. Platinum Total additional Production Full Approved Approved production1 commences prod. capex $m ACP Project Meet 2003 2004 250 PMR Plant Expansion expansion 2002 2006 97 Slag Cleaning Furnace requirements 2002 2003 30 Rustenburg UG2 Phase 1 395,000 oz 2002 2005 203 Rustenburg UG2 Phase 2 260,000 oz 2003 2007 444 RPM Tailings Treatment2 110,000 oz 2004 2005 186 Styldrift Mine 245,000 oz 2006 2008 344 Bafokeng Rasimone Mine (BRPM) 254,000 oz 1999 2004 317 Modikwa Mine 162,000 oz 2002 2003 311 Twickenham Mine 160,000 oz 2005 2005 343 Total 2,525 Polokwane Smelter 650,000 t 2003 2003 190 concentrate Total 2,715 Projects 1 Incremental production is a per year amount once full production is reached. Capex converted at date of project approval. 2 RPM - Rustenburg Platinum Mines

  42. Projects Coal Total additional Production Full Approved Approved production1 commences prod. capex $m SACE Expansion 1.3m tpa 2003 2004 50 Greenside Expansion 1.0m tpa 2001 2003 17 Cerrejón Sur feasibility 8 Cerrejón 2.0m tpa 2004 2007 50 Kriel South Project 5.1m tpa 2002 2007 70 Capcoal 5.5m tpa 2005 2007 107 Total 14.9m tpa 302 Base Metals Total additional Production Full Approved Approved production commences prod. capex $m HBMS 777 Project2 2003 2004 276 Black Mountain Deeps 45,000 t Zn 2004 2005 110 Collahuasi Rosario Project 2002 2004 286 Skorpion 150,000 t Zn 2003 2003 454 Total 1,126 1 Incremental production is a per year amount once full production is reached. Capex converted at date of project approval. Capcoal project to maintain current production levels. 2 Extends HBMS life to 2018

  43. Projects Forest Products Total additional Production Full Approved Approved production1 commences prod. capex $m Frantschach: Evap. Plant 8,000 t 2002 2003 10 Frantschach: Steti PM3 20,000 t 2002 2003 20 Ruzomberok: Mill Reconstruct. 105,000 t 2004 2005 129 Ruzomberok: PM18 Expansion 100,000 t 2003 2004 104 Neusiedler: PM4 5,000 t 2002 2003 8 Merebank PM2 Rebuild 40,000 t 2003 2003 26 Total 297 Total converting Production Full Approved Approved capacity commences prod. capex $m Frantschach: Inncoat Foils 2003 2003 11 Neusiedler: Sykt. Cutter 150,000 t 2003 2003 15 Merebank A4 Cutter 92,000 t 2002 2003 12 Total 38 1 Incremental production is a per year amount once full production is reached. Capex converted at date of project approval.

  44. Projects Diamonds Total additional Production Full Approved Current projects production1 commences prod. capex $m2 CTP Kimberley 20m carats 2002 2003 44 !Gariep 3m carats 2004 2004 27 Finsch Block 4 16m carats 2003 2006 107 Venetia Upgrade 1.5m carats pa 2003 2004 3 BB1E Premier 3m carats 2004 2007 10 Total 42m carats 191 +1.5m pa Venetia Under review C-Cut Premier 110m carats 2007 2011 632 Elizabeth Bay Upgrade 2m carats 2004 2004 21 Finsch Tailings 6m carats 2004 2005 12 Snap Lake 19m carats 2007 2008 207 Victor 6m carats 2007 2008 272 Total 143m carats 1,144 1 Total additional production shown for the life of the project. Shown on a 100% basis. 2 Approved capex is AA plc’s effective attributable share (48.65%), converted to US$ at R9.15=US$1, C$1=US$0.68

  45. Analysis of Headline Earnings $m 2002 2001 Platinum 351 478 Gold 205 162 Diamonds 324 234 Coal 266 387 Base Metals 69 (18) Industrial Minerals 231 160 Forest Products 376 272 Ferrous Metals 88 48 Industries 38 38 Exploration (77) (85) Corporate Activities1 (112) (60) DB Investments - 65 Headline Earnings 1,759 1,681 1 Includes Gold Fields earnings in 2002 of $27m. Prior to equity accounting dividends were included in Corporate

  46. Headline Variance: Exchange Conversion of local currency results/costs Translation of monetary assets/liabilities $m Platinum 99 (131) (32) Gold 49 - 49 Coal 28 (109) (81) Base Metals 21 (23) (2) Industrial Minerals 5 - 5 Forest Products - 14 14 Ferrous Metals 73 - 73 Industries (4) (14) (18) Corporate Activities 2 - 2 273 (263) 10 Actual variance

  47. Analysis of Operating Profit $m 2002 2001 Platinum 802 1,345 Gold 463 443 Diamonds 541 373 Coal 427 493 Base Metals 82 (510) Industrial Minerals 277 201 Forest Products 649 520 Ferrous Metals 150 77 Industries 114 114 Exploration (93) (101) Corporate Activities1 (161) (170) Operating Profit 3,251 2,785 1 Includes Gold Fields $41m in 2002 & Financial Services $2m in 2001. Operating profit after operating exceptional items

  48. Capital Expenditure $m 2002 2001 Platinum 586 391 Gold 246 243 Coal 142 93 Base Metals 346 446 Industrial Minerals 363 205 Forest Products 365 283 Ferrous Metals 32 28 Industries 53 65 Other 6 33 Total 2,139 1,787

  49. Operating Profit Variance Operating profit before operating exceptional items

  50. Regional Analysis Operating Profit $m 2002 2001 South Africa 1,790 2,269 Rest of Africa 439 (121) Europe 583 371 Americas 301 137 Australasia 138 129 3,251 2,785 Operating profit after operating exceptional items

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