2022 Investor Update: Transcript

2022 Investor update

9 December 2022

2022 Investor update	9 December 2022

Introduction

Duncan Wanblad

Chief Executive, Anglo American Plc

Slide 1 - Welcome

Good morning, everyone and welcome.

Thank you for joining us in person and on the line. We always appreciate your time.

Slide 2 - Cautionary statement

I encourage you to read this slide carefully in your own time.

Slide 3 - Focused on our strategic priorities

These are my 4 priorities that I talked through in some detail earlier in the year - and they are absolutely unchanged.

Many of you joined us for our second sustainability update of the year just six weeks ago, Stephen will touch briefly on a few important pieces of progress since then, but our focus today will be on the other 3 priorities

- safety, stability and value-adding growth.

I'm not going to provide an update on strategy as I remain very comfortable with our strategy, having been head of strategy for the last few years. That strategy centres around portfolio, innovation and people. Of course, it will continue to evolve rather than step change.

Slide 4 - Safety is our first priority

Safety is without exception our first priority.

As I discussed at our recent sustainability update, we have had two workplace fatalities this year - that is 2 people who will be sorely missed by their families, friends and colleagues every day. It is not acceptable and it is incumbent upon us to improve.

Our injury rates underscore this imperative to re-focus the attention of the entire workforce. Without a doubt, planned work is always safer. Embedding that consistently through our Operating Model has been a key priority through the second part of the year, as we have worked to restore our operational disciplines post the necessary disruptions of Covid.

2022 operating performance & outlook

Duncan Wanblad

Chief Executive, Anglo American Plc

Let's step back for a moment and look at the broader macro challenges.

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2022 Investor update	9 December 2022

Slide 6 - Challenging and dynamic operating context

The world we are operating in has become more challenging, no doubt.

From the profound disruptions of the pandemic, through to more challenging and volatile geo- and socio- politics, which for example, we have seen impacting on permitting processes; as well as conflict that is creating significant market dislocations and pushing some economies towards recession - and rising societal expectations. Inflation is driving up costs and the cost of capital. And the impact of all this has been exacerbated by climate change; we are certainly experiencing more frequent, more extreme weather events around the world.

We have responded to the effect of these challenges - be that lack of people or skills availability, dislocated supply chains or high inflation.

Slide 7 - Sequential performance improvement in 2022 as stability is re-embedded

As you know, our H1 was impacted by these events, but we did improve through the second half.

I am confident that our focus during 2022 on prioritising our operational activities, getting back to basics and ensuring our Operating Model is implemented appropriately as we move into 2023 will put us in good shape. Don't get me wrong, we still have work to do in places but we know what we need to deliver and the teams have clear, coherent plans in place.

Slide 8 - Step-up in H2 performance despite some operational challenges

The team have done a really good job of managing the challenges that have been thrown at them but in some areas we need to adjust our plans:

1. Ore quality - lower grades, recoveries and challenges with harder material are impacting us in Chile, PGMs, Nickel and Minas-Rio - you have seen that in our numbers this year and they will continue to impact us over the next few years. Of course, we knew about these pressures, and we expected to be able to offset it through blending strategies and amendments to our processing strategies. But for example, with the harder ore, there was always a degree of estimation in how it would handle through the comminution process. And the development activities to firm up those estimates were the ones that were necessarily deprioritised as we operated with fewer people available during covid as well as not being able to get our central technical experts out to site - so we are now having to do that work real- time.
2. Logistics and operational parameters - at both Kumba and Steelmaking Coal we are working within a different set of operating parameters than we previously expected. At Kumba, the logistics determine our production capacity - with Transnet being the key constraint there. We have tempered our expectations accordingly. At Steelmaking Coal, as we have ramped up the longwalls we are now much clearer on how those protocols translate into operational performance. We still see significant potential but we need to continue that learning journey and embed that in our processes first, prioritise stable and then we can incrementally look to step it up from there. Load-shedding in South Africa has also impacted production around the edges and again we will have taken this into account in our guidance.
3. Ramp-ups - at Quellaveco and Venetia underground we are factoring in a slower ramp-up than previously anticipated. At Quellaveco, that is just a slower start to the ramp-up; while at Venetia underground that is driven by ground and logistics challenges - exacerbated by those challenges of covid, supply chains and weather that I touched on earlier - albeit the strong performance from the last cut of the Venetia open pit benefited 2022 with us upgrading guidance by 1Mct at the half year - so, net-net, we're flat vs previous guidance.

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2022 Investor update	9 December 2022

Finally, we are also taking into account increased weather uncertainty and are now building resilience into our operations accordingly.

We have the right team in place and they have the right focus. We will be executing on that focus.

Slide 9 - Attractive 10%+ growth by 2024 - despite guidance revisions

Those same challenges I have touched on have led to some adjustments to our guidance.

To highlight a few things here:

De Beers - Volumes step-up in 2025 as we enter a higher grade area at Orapa, as well as the ongoing ramp-up of Venetia underground - and assumes strong underlying demand.

Copper - I have spoken to the grades in Copper already.

PGMs - 2025 reflects the Siyanda switch from POC to tolling.

And I have touched on the resetting of the Bulks guidance.

We fundamentally still offer highly attractive 11% growth by 2024.

Slide 10 - Leveraging our leading capabilities to maximise portfolio potential

We have focused our efforts on safe and consistent operational execution to provide a solid, stable platform going into 2023.

As we have regained that momentum, we have moderated our production plans and re-phased certain of our investments to better reflect the highly dynamic external environment, with clear priorities to deliver that stable platform for strengthened and repeatable performance.

Looking beyond 2023, I am confident that this reset positions us well to execute on our strategy. We have the right assets focused on future-enabling products and our Operating Model builds in performance stability while identifying the capability of each asset.

We believe that our technology offering and our integrated approach to the full breadth of sustainability are both differentiated andindustry-leading and will enable us to unlock the full capability of the assets.

That prioritisation is also why we split Tony's role into two. Matt, in his role as Group Director for Technical, will focus on delivering and maintaining stability and then driving for best practice levels of operational and technical excellence; while the new Group Director for Projects and Development will focus on the project and technology development opportunities, including all our data analytics and decarbonisation work.

We then apply our strong, customer-centric marketing capabilities to optimise value and identify opportunities as a broader materials solutions provider as we take our product to market. That customer focus is something that De Beers has been focused on a daily basis for many decades, of course.

And our suite of attractive organic growth provides strong options to deliver at least 25% growth in volumes over the next decade. And it does not stop there. We will sequence these options appropriately based on capital efficiency and returns, while keeping flexibility to compare against inorganic opportunities, but always for value.

The ramp-up of Quellaveco over the next year is a significant step towards that growth and I will talk a little bit later about Woodsmith. Collahuasi, Mogalakwena and Sakatti are the other main contributors.

Collahuasi is a great ore body and there is plenty of potential for progressive expansions there that, as you know, we are working on with the team and our partners.

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2022 Investor update	9 December 2022

With that I will hand over to Stephen to take you through some of the numbers.

The numbers

Stephen Pearce

Finance Director, Anglo American Plc

Thanks Duncan. Morning all. This morning I will be covering:

• 2022 - a quick update as we wrap up the year
• 2023 and beyond - where we are heading in terms of production, costs and capital

Slide 12 - 2022 full year guidance

Turning to guidance for the full year 2022 numbers.

Capex expected to come in a little under our existing guidance at ~$5.7bn driven by a combination of delays, deferrals and weaker producer currencies. I'll talk more on capex and guidance shortly.

Production - Duncan has covered the main drivers there.

Costs up ~16% on 2021 versus the 18% impact we had in the first half. Pleased to see that improving in H2 as volumes stepped up. If you recall - 12% of the 18% impact in H1 was volume related.

We are seeing a build in working capital this year of around $2.0-2.5bn. That number depends on where prices land at the end of the year plus things like logistics and markets remain volatile but a few data points for your models. We had a $1bn build in working capital at the end of H1.

Of the total of $2.0-2.5bn over the year:

• ~0.7 is the ramp-up of Quellaveco and Steelmaking Coal - that's good
• ~0.3 is higher De Beers inventories to support sales in the new year - that's also good
• ~0.6 is the PGMs (Polokwane smelter delay) and Kumba due to the Transnet strike, both of which should largely reverse in 2023.

A couple of other guidance points:

• Depreciation coming in slightly lower than expected at ~$2.6bn driven by weaker producer currencies and lower production.
• And ETR expected to be circa 34%.

Slide 13 - Sustainable focus on costs in 2023

Duncan has talked you through the volumes for 2023, I will now focus on 2023 unit costs.

Copper equivalent unit costs are forecast to rise ~3% - though the impact of FX rates in our countries of operation is hard to predict. Increasing volumes in 2023 help offset the impact of inflation - and if we exclude Quellaveco from that number, we are looking at around a 9% increase - which probably gives a better reflection of the underlying cost pressures. That compares to the ~16% increase I already mentioned for 2022. We are hopeful that inflation in 2023 will moderate from the very high levels we have seen in 2022.

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