Outgoing Anglo American CE Mark Cutifani
Diversified miner Anglo American reports that it maintained a strong performance this year, with high demand for diamonds and overall production up 7% on the back of particularly strong production of platinum group metals (PGMs); as well as the expectation of a further improvement in 2022.
Unit costs also improved by 10% this year, despite consumer price index inflation and some production slowdowns.
The miner notes that capital expenditure of $5.2-billion was lower as a result of Covid-19 delays and supply chain disruptions, while unit costs for 2022 are expected to increase by 4%.
Outgoing CE Mark Cutifani, who will be succeeded by Duncan Wanblad in April, says Covid-19 has continued to pose challenges this year, particularly in the countries where vaccination uptake has been lower. “We have kept our focus on keeping our employees and communities safe and encouraging vaccination at the earliest possible opportunity. We need to continue being prudent with this virus and we will continue putting the safety and health of our employees first.”
Anglo forecasts that its capital expenditure for 2022 will be between $6.2-billion and $6.7-billion, reflecting 2021 deferrals and the Woodsmith polyhalite fertiliser project addition.
“Anglo is a resilient and agile business that is set to deliver 35% growth over the next decade at an attractive 50% margin,” he says.
FD Stephen Pearce says the company’s balanced approach is supporting sequenced investment in value-accretive growth and considerable long-term business improvement, alongside attractive shareholder returns. “We have delivered $10.3-billion in cash returns to our shareholders since 2017 and $4-billion in the [second half of this year] alone.”
The miner is also targeting its near-term performance improvement target to between $3.5-billion and $4.5-billion by 2023, as it accelerates the delivery of its P101 and technology programmes, while also bringing growth projects onstream. “First and foremost is our Quellaveco project, in Peru, in mid-2022, where we have also increased early copper production plans to create additional value,” says Cutifani.
In addition, he says the company is “clear” that climate change presents a “defining challenge of our time”, and that Anglo has a crucial role to play in supporting the transition to a low carbon economy by producing many of the metals and minerals that enable decarbonised energy and transport.
“Of course, we are also moving at pace to reduce our own emissions and have committed to operate carbon-neutral mines by 2040, while having an ambition to reduce our Scope 3 emissions by 50% in that same timeframe,” states Cutifani.
Pearce adds that Anglo’s ongoing investment in the business also supports its emissions reduction objectives and the miner, therefore, expects its normal cycle of capital investment to continue to fund the majority of our operational decarbonisation projects.
Meanwhile, Cutifani highlights that, combined with Anglo’s integrated approach to technology, in pursuit of the safer and more sustainable supply of materials essential to the energy transition and growing consumer demand patterns, the miner is “well positioned” to meet the expectations of its full breadth of stakeholders across society.
WOODSMITH
Anglo, in a statement, reports that the upgrading of the scope of its UK-based Woodsmith polyalite fertiliser project will enhance the project’s long-term value.
The miner conducted a detailed technical review of this project in mid-2020 to ensure the technical and commercial integrity of the full scope of its design.
Now largely complete, the review has confirmed the findings of Anglo’s due diligence that a number of elements of the project’s design would benefit from modification to bring it up to the miner’s safety and operating integrity standards and to enhance the value of the asset for the long term.
To bolster leadership of this project, Anglo has appointed Tom McCulley, who has led the development of the Quellaveco copper project, as the group’s Crop Nutrients CEO, taking over from Chris Fraser.
After 12 years of driving the Woodsmith project, from inception to its current position, Fraser will step aside and take on a strategic projects role for Anglo. Both appointments will be effective from January 1.
Going forward, Anglo points out that the Woodsmith team is further developing the engineering to enhance the configuration of the project, recognising the multi-decade life of the mine.
In this regard, particular attention is being paid to the aspects identified at the outset of Anglo’s ownership – namely, the sinking of the two main shafts, the development of the underground mining area and the changes required to accommodate both increased production capacity and the more efficient and scalable mining method of using only continuous miners. Such improvements will also require the installation of additional ventilation earlier in the development of the underground mining area.
Anglo expects these changes to the design of the mine infrastructure, which will result in a different, enhanced configuration and therefore a different construction and production ramp-up schedule, will ensure that its exacting standards are met and the full commercial value of the asset is realised.
In the meantime, construction of the major critical path elements of the project, principally the two main shafts and the mineral transport tunnel, is progressing, with about $700-million of capital to be invested in 2022.
Furthermore, Anglo reports that its development of the market for its POLY4 fertiliser product continues to demonstrate the benefits of its multi-nutrient, low-chloride characteristics on the full breadth of crops at commercial scale.