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Publication of annual report 2016 and notice of annual general meeting 2017
Anglo American plc
(Incorporated in England and Wales)
(Registration number: 3564138)
Registered office: 20 Carlton House Terrace, London, SW1Y 5AN
ISIN: GBOOB1XZS820
JSE Share Code: AGL
NSX Share Code: ANM
13 March 2017
PUBLICATION OF ANNUAL REPORT 2016 AND NOTICE OF ANNUAL GENERAL MEETING 2017
In accordance with Listing Rule 9.6 and Disclosure Guidance and Transparency Rule (“DTR”) 4.1, the
Company announces that the following documents have been posted to shareholders and have today
been submitted to the UK Listing Authority via the National Storage Mechanism:
- Annual Report and Accounts for the year ended 31 December 2016
- Notice of the 2017 Annual General Meeting to be held on 24 April 2017
- Proxy form for the 2017 Annual General Meeting
The above mentioned documents (except for the Proxy form) are available on our website at
http://www.angloamerican.com/investors/annual-reporting.aspx and
http://www.angloamerican.com/investors/shareholder-information/agm/agm2017 respectively and will
shortly be made available for inspection at www.morningstar.co.uk/uk/NSM. Shareholders can obtain
additional copies of the Proxy form from our Registrar, Equiniti Limited at Aspect House, Spencer
Road, Lancing, West Sussex BN99 6DA or view online at www.shareview.co.uk.
This announcement should be read in conjunction with the Company’s announcement issued on 21
February 2017. Together these constitute the material required by DTR 6.3 to be communicated to
the media in full unedited text through a Regulatory Information Service. This material is not a
substitute for reading the Company’s 2016 Annual Report and Accounts. Page references below refer
to page numbers in the Annual Report and Accounts. References to notes to the financial statements
refer to notes in the Annual Report and Accounts.
An indication of the important events that occurred in 2016 and their impact on the consolidated
financial statements and the consolidated financial statements themselves were announced to the
London Stock Exchange on 21 February 2017, forming part of the Preliminary Results announcement
for the year ended 31 December 2016. Additional content forming part of the management report is
below.
PRINCIPAL RISKS
We define a principal risk as a risk or combination of risks that would threaten the business model,
future performance, solvency or liquidity of Anglo American. In addition to these principal risks we
continue to be exposed to other risks related to currency, inflation, information and cyber security,
community relations, environment, infrastructure and human resources. These risks are subject to our
normal procedures to identify, implement and oversee appropriate mitigation actions.
Principal risks 1-8 on pages 42-44
CATASTROPHIC RISKS
We also face certain risks that we deem catastrophic risks. These are very high severity, very low
likelihood events that could result in multiple fatalities or injuries, an unplanned fundamental change
to strategy or the way we operate, and have significant financial consequences. We do not consider
likelihood when assessing these risks as the potential impacts mean these risks must be treated as a
priority. Catastrophic risks are included as principal risks.
Catastrophic risks 9-12 on pages 44-45
RISK APPETITE
We define risk appetite as ‘the nature and extent of risk Anglo American is willing to accept in relation
to the pursuit of its objectives’. We look at risk appetite from the context of severity of the
consequences should the risk materialise, any relevant internal or external factors influencing the risk,
and the status of management actions to mitigate the risk. A scale is used to help determine the limit
of appetite for each risk, recognising that risk appetite will change over time.
If a risk exceeds appetite, it will threaten the achievement of objectives and may require a change to
strategy. Risks that are approaching the limit of the Group’s risk appetite may require management
actions to be accelerated or enhanced in order to ensure the risks remain within appetite levels.
Further details on the risk management and internal control systems and the review of their
effectiveness are provided on pages 82-83
1. COMMODITY PRICES
Global macro-economic Impact: Low commodity prices This risk has decreased since
conditions leading to can result in weakened levels 2015
sustained low commodity of cash flow, profitability and
prices and/or volatility. valuation. Debt costs may rise Risk appetite: Operating within
owing to rating agency the limits of our appetite.
Root cause: The most downgrades and the possibility
significant factors contributing of restricted access to funding. Commentary: The target of
to this risk at present are the The Group may be unable to reducing net debt to below
slowdown in growth in China complete its divestment $10billion by the end of 2016 was
and other emerging markets, programme within the desired achieved, which has improved our
low growth rates in developed timescales or achieve resilience to this risk.
economies and an oversupply expected values. The
of commodities into the market, capability to invest in growth
particularly the raw materials projects is limited during
such as iron ore and periods of low commodity
metallurgical coal used in steel prices – which may, in turn,
making. Other factors such as affect future performance.
weak regional economies and
conflict can also influence the Mitigation: High levels of
economic environment and liquidity will be maintained
contribute to weak commodity during the current cycle.
prices. An organisation change
programme incorporating cost
reductions has been
implemented, while the roll-out
of the Operating Model,
reductions in capital
expenditure and the
divestment of certain assets for
value is continuing. The Board
regularly monitors progress of
these actions.
This risk has improved over the
course of 2016, owing to
improving commodity prices
and progress in implementing
management actions.
2. POLITICAL AND REGULATORY
Uncertainty and adverse Impact: Uncertainty over No change in risk
changes to mining industry future business conditions
regulation, legislation or tax leads to a lack of confidence in Risk appetite: Operating within
rates can occur in any making investment decisions, the limits of our appetite.
country in which we operate. which can influence future
financial performance. Commentary: Current global
Root cause: The Group has Increased costs can be economic conditions have a
no control over political acts or incurred through additional significant impact on countries
changes in local tax rates. Our regulations or resource taxes, whose economies are exposed to
licence to operate through while the ability to execute the downturn in commodities,
mining rights is dependent on a strategic initiatives that reduce placing greater pressure on
number of factors including costs or divest assets may also governments to find alternative
compliance with regulations. be restricted; all of which may means of raising revenues, and
reduce profitability and affect increase the risk of social and
future performance. Political labour unrest. These factors could
stability can also result in civil increase the political risks faced by
unrest or nullification of the Group.
existing agreements, mining
permits or leases. These may
adversely affect the Group’s
operations or results of those
operations.
Mitigation: Anglo American
has an active engagement
strategy with the governments
and regulators within the
countries in which we operate
or plan to operate. We assess
portfolio capital investments
against political risks and avoid
or minimise exposure to
jurisdictions with unacceptable
risk levels. We actively monitor
regulatory and political
developments on a continuous
basis.
3. FUTURE DEMAND FOR DIAMONDS
Demand for diamonds Impact: Potential loss of A new principal risk
reduces as a result of polished and rough diamond
developments in the sales leading to a negative
synthetics industry. impact on revenue, cash flow,
profitability and value.
Root cause: Technological
developments are making the Mitigation: De Beers has a
production of man-made gem mitigation strategy based on a
synthetics commercially viable number of measures, including
and there are increased differentiation of diamonds
distribution sources. The from synthetics, and the
marketing of synthetics seeks technology to detect all
to place them as being synthetics.
environmentally or socially
superior.
Risk appetite: Operating within
the limits of our appetite.
Commentary: This is a new
principal risk.
4. FUTURE DEMAND FOR PGMs
Demand for PGMs is Impact: A negative impact on A new principal risk
impacted by fundamental revenue, cash flow, profitability
shifts in market forces. and valuation. Risk appetite: Operating within
the limits of our appetite.
Root cause: Future demand is Mitigation: Anglo American
at risk from declining Platinum has a strategy to Commentary: While this is a new
combustion engine grow PGMs demand in principal risk, we see this as a
manufacturing and a switch to industrial and jewellery sectors longer term threat to the business.
battery operated vehicles through marketing and
instead of fuel cell electric investment initiatives in
vehicles, which continue to use research, product development
higher volumes of PGMs. and market development
initiatives.
5. MINAS-RIO
Delay in obtaining the Impact: Inability to achieve No change in risk
operating licence extension. planned production and
revenues and/or reductions in Risk appetite: Operating within
Root cause: Increased the cost of production. This the limits of our appetite
regulatory scrutiny for the may also result in loss of
licence extension can be investor confidence and Commentary: An extension to the
expected as a result of a major reputational damage. operating licence has been
tailings dam incident involving granted which takes projected
loss of life at a competitor Mitigation: A comprehensive production to the second half of
facility in Brazil in 2015. There stakeholder engagement plan 2018. The process to obtain the
is also the continuing need to is in place to manage the Step 3 licences to allow the mine
manage community issues. licence extension and actions to reach its nameplate capacity of
This may delay completion of are being taken to address the 26.5 Mtpa (wet basis) has also
the civil works associated with ramp-up risks identified. started and is expected to be
the mine’s development, while secured in late 2018.
delays in obtaining licences
would cause operational
constraints. The licence
process is complex, with
multiple stakeholders involved
in the approval process at
federal, state and local
community levels.
6. SOUTH AFRICA POWER
Electricity supply not able to Impact: Unplanned and short- No change in risk
meet the country’s demands, notice power supply outages Risk appetite: Operating within
leading to unplanned can lead to production the limits of our appetite.
outages and failure of the shortfalls, with a negative
national grid. effect on revenue, costs and Commentary: Reduced industrial
productivity. There are demand has improved the position,
Root cause: Anglo American potential safety implications, but new generation capacity has
is a significant consumer of particularly for underground not yet been delivered to the
power owing to the extent of mines and process activities. extent required. A complete failure
our operations in South Africa. Loss of critical computing of the national grid is considered to
The risk is created through the systems can interrupt normal be a very low likelihood event.
state’s lack of investment in business activities.
generating capacity due to
funding challenges and a Mitigation: A central electricity
maintenance backlog in some monitoring system enables
generating facilities, leading to measurement and analysis of
unplanned outages. site level power consumption.
Business units have
emergency generation
capability for deep-level shafts
and procedures are in place to
minimise disruption. Regular
interactions are held with
management of the state-
owned power supplier to
understand operational
challenges.
7. DELIVERY OF CASH TARGETS
Inability to deliver the EBIT Impact: Inability to deliver A new principal risk
improvement targets of $1 required levels of cash flow
billion in 2017. and loss of investor Risk appetite: Operating within
confidence. the limits of our appetite.
Root cause: Unplanned and
unexpected operational issues Mitigation: A number of Commentary: This is a new
will affect delivery of the target. initiatives are under way and principal risk for 2016.
Delivery will require the support regular tracking and monitoring
of joint venture partners for mechanisms are in place.
non-wholly-owned operations. Implementation of our
Operating Model is one of the
key initiatives that mitigates
this risk.
8. SAFETY
Failure to deliver a sustained Impact: Loss of life, workplace This risk has increased since
improvement in safety injuries and safety-related 2015
performance. stoppages all immediately
affect production, while, over Risk appetite: Operating within
Root cause: Inability to deliver the longer term, such factors the limits of our appetite.
a sustained improvement in are also a threat to our licence
safety performance will result to operate. Commentary: During 2016 there
from management were 11 fatalities compared with
interventions and training Mitigation: A continued, six in 2015. Although the total
initiatives failing to translate relentless focus on safety recordable case frequency rate
into behavioural change by all improvement and safety risk (TRCFR) reduced from 0.93 to
employees and contractors. management is adopted by 0.71 per 200,000 hours worked,
Non-compliance with critical executive management. management has increased the
controls is a common failure in Operating standards and risk rating to ensure an appropriate
safety incidents. guidelines are in place to response to the increase in
mitigate safety risk, supported fatalities.
by a robust risk management
and risk assurance processes.
9. TAILINGS DAM FAILURE
A release of waste material Impact: Potential for multiple
leading to loss of life, fatalities and injuries, at the No change in risk
injuries, environmental mine site and in local Risk appetite: Operating within
damage, reputational communities, long term the limits of our appetite.
damage, financial costs and environmental damage,
production impacts. significant reputational damage Commentary: Tailings dam failure
and loss of licence to operate. is considered a catastrophic risk –
Root cause: Tailings dam The financial impact i.e. a very high severity but very
failures can result from over- associated with clean-up costs low frequency event that must be
topping, poor operating and legal liability claims could treated with the highest priority.
practices, instability of pit be substantial.
slopes, inadequate design and
construction, or seismic events. Mitigation: Anglo American
employs technical standards
that provide minimum design
criteria and operational
performance requirements; all
of which are regularly
inspected by technical experts.
Assurance work is conducted
to monitor the controls
associated with management
of tailings dam facilities.
10. SLOPE WALL FAILURE
A sudden and unexpected Impact: Potential for multiple No change in risk
failure of a slope causing fatalities or injuries, significant
landslides and inrush to pit production impact and damage Risk appetite: Operating within
or other asset (such as a to assets. Financial costs the limits of our appetite.
pipeline), leading to loss of associated with recovery and
life, injuries, environmental legal claims may be extensive. Commentary: Slope wall failure is
damage, reputational Regulatory issues may result considered a catastrophic risk –
damage, financial costs and and community relations may i.e. a very high severity but very
production impacts. be affected. low frequency event that must be
treated with the highest priority.
Root cause: Slope wall failure Mitigation: Technical
can result from inadequate standards exist that provide
design, unexpected adverse minimum criteria for slope
geological conditions, stability design and operation.
shortcomings in the mining Monitoring of slope movement
process, or natural events such is conducted at all open pit
as seismic activity or excessive operations. Inspections and
rainfall. training and awareness
programmes are provided by
technical experts, and
assurance work is conducted
to assess the effectiveness of
controls.
11. MINESHAFT FAILURE
A sudden and unexpected Impact: Multiple fatalities and No change in risk
failure of a mineshaft. injuries, damage to assets,
production loss and Risk appetite: Operating within
Root cause: Mineshaft failure reputational damage. Financial the limits of our appetite.
can occur as a result of rope costs associated with recovery
failure, fire and explosion in a and liability claims may be Commentary: Mineshaft failure is
shaft, flooding, power failure, significant. considered a catastrophic risk –
mud rush, conveyance failure i.e. a very high severity but very
or structural failure. Mitigation: Technical low frequency event that must be
standards exist that provide treated with the highest priority.
minimum criteria for mineshaft The sale of the Rustenburg
management. Inspections are operations has reduced the
carried out by technical experts number of vertical shafts in the
and assurance work is Group and the exposure to this
conducted to assess the risk.
effectiveness of controls.
12. FIRE AND/OR EXPLOSION
Fire and explosion risks are Impact: Multiple fatalities and No change in risk
present at all mining injuries, damage to assets,
operations and processing loss of production, reputation Risk appetite: Operating within
facilities such as smelters damage and loss of licence to the limits of our appetite.
and refineries, in our operate. Financial costs
Platinum, Copper and Nickel associated with recovery and Commentary: Fire and explosion
businesses. liability claims may be is considered a catastrophic risk –
significant. i.e. a very high severity but very
Root cause: The combined low frequency event that must be
presence of fuel, heat and Mitigation: Technical treated with the highest priority.
oxygen, as well as conditions standards exist that provide
that can lead to the minimum criteria for prevention
concentration and confinement of underground explosions and
of these elements, can cause fire. Inspections are carried out
an explosion – including gas, by technical experts and
coal dust (particularly in assurance work is conducted
underground mines), sulphide to assess the effectiveness of
dust or furnace gas explosions. controls. Third-party reviews of
fire risk are conducted at each
location where significant risk
is present.
RELATED PARTY TRANSACTIONS
The Group has a related party relationship with its subsidiaries, joint operations, associates and joint
ventures (see note 37 and 40). Members of the Board and the Group Management Committee are
considered to be related parties.
The Company and its subsidiaries, in the ordinary course of business, enter into various sale,
purchase and service transactions with joint operations, associates, joint ventures 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.
Joint
Associates Joint ventures operations(1)
US$ million 2016 2015 2016 2015 2016 2015
Transactions with related parties
Sale of goods and services 19 28 1 3 171 123
Purchase of goods and services (399) (425) (137) (183) (3,390) (2,606)
Balances with related parties
Trade and other receivables from related parties 5 7 1 – 17 15
Trade and other payables to related parties (126) (135) (30) (15) (79) (68)
Loans receivable from related parties(2) – – 401 431 – 21
(1) Represents the portion of balances and transactions with joint operations or joint operation partners that the Group does not
have the right to offset against the corresponding amount recorded by the respective joint operations. These amounts primarily
relate to purchases by De Beers and Platinum from their joint operations in excess of the Group’s attributable share of their
production.
(2) Included in ‘Financial asset investments’ on the Consolidated balance sheet.
At 31 December 2016 the directors of the Company and their immediate relatives controlled 0.33%
(2015: 0.2%) of the voting shares of the Company.
Remuneration and benefits received by directors are disclosed in the Remuneration report.
Remuneration and benefits of key management personnel, including directors, are disclosed in note
26.
Information relating to pension fund arrangements is disclosed in note 27.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. The
directors are required to prepare the Group financial 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 financial statements in accordance with
Financial Reporting Standard 101 ‘Reduced Disclosure Framework’. The directors must not approve
the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period.
In preparing the parent company financial 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 Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ has been
followed, subject to any material departures disclosed and explained in the financial
statements
- prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Company will continue in business.
In preparing the Group financial statements, IAS 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 specific requirements in IFRS is
insufficient to enable users to understand the impact of particular transactions, other events
and conditions on the entity’s financial position and financial 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 sufficient to show and
explain the Company’s transactions, disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that the financial 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 financial
information included on the Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
RESPONSIBILITY STATEMENT
for the year ended 31 December 2016
We confirm that to the best of our knowledge:
(a) the financial statements, prepared in accordance with the applicable set of accounting standards,
give a true and fair view of the assets, liabilities, financial position and profit of Anglo American plc
and the undertakings included in the consolidation taken as a whole
(b) the strategic report 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
(c) the annual report and financial statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for shareholders to assess the Company’s
performance, business model and strategy.
By order of the Board
Mark Cutifani René Médori
Chief Executive Finance Director
For further information, please contact:
Media Investors
UK UK
James Wyatt-Tilby Paul Galloway
james.wyatt-tilby@angloamerican.com paul.galloway@angloamerican.com
Tel: +44 (0)20 7968 8759 Tel: +44 (0)20 7968 8718
Marcelo Esquivel Trevor Dyer
marcelo.esquivel@angloamerican.com trevor.dyer@angloamerican.com
Tel: +44 (0)20 7968 8891 Tel: +44 (0)20 7968 8992
South Africa Sheena Jethwa
Pranill Ramchander sheena.jethwa@angloamerican.com
pranill.ramchander@angloamerican.com Tel: +44 (0)20 7968 8680
Tel: +27 (0)11 638 2592
Ann Farndell
ann.farndell@angloamerican.com
Tel: +27 (0)11 638 2786
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Notes to editors:
Anglo American is a globally diversified mining business. Our portfolio of world-class competitive mining
operations and undeveloped resources provides the raw materials to meet the growing consumer-
driven demands of the world’s developed and maturing economies. Our people are at the heart of our
business. It is our people who use the latest technologies to find new resources, plan and build our
mines and who mine, process and move and market our products to our customers around the world.
As a responsible miner - of diamonds (through De Beers), platinum and other precious metals, copper,
nickel, iron ore and coal - we are the custodians of what are precious natural resources. We work
together with our key partners and stakeholders to unlock the long-term value that those resources
represent for our shareholders and for the communities and countries in which we operate – creating
sustainable value and making a real difference.
www.angloamerican.com
Forward-looking statements:
This announcement includes forward-looking statements. All statements other than statements of historical facts included in
this announcement, including, without limitation, those regarding Anglo American's financial position, business and acquisition
strategy, plans and objectives of management for future operations (including development plans and objectives relating to
Anglo American's products, production forecasts and Ore Reserves and Mineral Resources), are forward-looking statements.
By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of Anglo American, or industry results, to be materially different from
any future results, performance or achievements expressed or implied by such forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding Anglo American's present and future
business strategies and the environment in which Anglo American will operate in the future. Important factors that could cause
Anglo American's actual results, performance or achievements to differ materially from those in the forward-looking statements
include, among others, levels of actual production during any period, levels of global demand and commodity market prices,
mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the availability of
mining and processing equipment, the ability to produce and transport products profitably, the impact of foreign currency
exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political
uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental
authorities such as changes in taxation or safety, health, environmental or other types of regulation in the countries where
Anglo American operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo
American's most recent Annual Report. Forward-looking statements should, therefore, be construed in light of such risk factors
and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of
the date of this announcement. Anglo American expressly disclaims any obligation or undertaking (except as required by
applicable law, the City Code on Takeovers and Mergers (the "Takeover Code"), the UK Listing Rules, the Disclosure and
Transparency Rules of the Financial Conduct Authority, the Listings Requirements of the securities exchange of the JSE
Limited in South Africa, the SWX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and any
other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein to
reflect any change in Anglo American's expectations with regard thereto or any change in events, conditions or circumstances
on which any such statement is based.
Nothing in this announcement should be interpreted to mean that future earnings per share of Anglo American will necessarily
match or exceed its historical published earnings per share.
Certain statistical and other information about Anglo American included in this announcement is sourced from publicly available
third party sources. As such, it presents the views of those third parties, though these may not necessarily correspond to the
views held by Anglo American.
Date: 13/03/2017 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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