Anglo American (Botswana) – Production Report for the third quarter ended 30 September 2022

Duncan Wanblad, Chief Executive of Anglo American, said: “Our performance stepped up 16%(1) quarter-on-quarter amid a challenging operating environment, driven by the ongoing ramp-up of our Steelmaking Coal longwall operations and continued strong performance at De Beers. Our new world-class copper mine in Peru, Quellaveco, continues to ramp-up production with shipments to customers now under way. Production in the third quarter was broadly flat(1) compared to the same period in 2021, as higher production from Quellaveco, Steelmaking Coal and De Beers was offset primarily by expected lower copper ore grades in Chile and some operational challenges at our Kumba iron ore business.

“As we move through the final quarter, we are focused on maintaining this operational momentum to deliver our full year guidance. The continued safe ramp-up of our steelmaking coal operations, as well as further performance improvements at our iron ore businesses, are priorities to set the platform for delivery into next year. We do continue to feel the effects of dislocations in the global economy on our business – in energy and across supply chains and labour markets – and are planning accordingly for 2023, confident in the strategic position of our business.

“We continue to make important progress towards our holistic sustainability commitments. With renewable electricity supply secured for all our South America operations, we have now formed our renewable energy partnership with EDF Renewables in South Africa. Our new jointly owned company, Envusa Energy, is developing its first phase of more than 600 MW of wind and solar projects, a major step towards our vision of a 3-5 GW renewable energy ecosystem in the region by 2030. The issuance of our first sustainability-linked bond, a first of its kind from a major diversified mining company, re-affirms our commitment to our targets to reduce greenhouse gas emissions and fresh water abstraction and to support job creation in the communities where we operate.”

Q3 2022 highlights

• Rough diamond production increased by 4%, principally reflecting the treatment of higher grade ore at Orapa (Botswana) as well as continued strong performance in Namibia.
• Steelmaking coal production increased by 28%, reflecting the ongoing ramp-up of the longwall operations. Continuing to do so in a safe and stable way is our first priority.
• Copper production decreased by 6%, due to planned lower grades at all our operations in Chile, as well as unfavourable ore characteristics at Los Bronces, partly offset by the first production of copper from Quellaveco in Peru.
• Metal in concentrate production from our Platinum Group Metals (PGMs) operations decreased by 6%, due to the impact of Eskom load-shedding (power outages) primarily in September, infrastructure closures at Amandelbult and lower grade at Mogalakwena.
• Iron ore production decreased by 5% primarily due to Kumba, which was impacted by the slow ramp-up after the safety intervention in the second quarter and Eskom load-shedding, primarily in September, while production at Minas- Rio was flat.
• Nickel production decreased by 4%, primarily due to lower grades.

De Beers

Rough diamond production increased by 4% to 9.6 million carats, primarily due to the treatment of higher grade ore at both Orapa (Botswana) and in South Africa, and continued strong performance in Namibia.

In Botswana, production increased by 4% to 6.6 million carats, primarily driven by treatment of higher grade ore at Orapa, partly offset by processing lower grade ore at Jwaneng.

Namibia production increased by 33% to 0.5 million carats, primarily driven by continued strong performance from the Benguela Gem vessel.

South Africa production increased by 5% to 1.7 million carats, driven by the treatment of higher grade ore and the benefit of plant upgrades.

Production in Canada decreased by 7% to 0.7 million carats, due to the treatment of lower grade ore and the impact of tight labour markets.

Demand for rough diamonds remained steady, with rough diamond sales totalling 9.1 million carats (8.5 million carats on a consolidated basis)(2) from three Sights, compared with 7.8 million carats (7.0 million carats on a consolidated basis)(2) from two Sights in Q3 2021 and 9.4 million carats (8.3 million carats on a consolidated basis)(2) from three Sights in Q2 2022. While consumer demand for natural diamonds continues to be robust, a deterioration of global economic conditions, reduced consumer spending and continued Chinese Covid-19 lockdowns have the potential to impact demand for diamond jewellery.

2022 Guidance

Production guidance(1) for 2022 is unchanged at 32–34 million carats (100% basis), subject to trading conditions and the extent of further Covid-19 related disruptions.
In line with normal seasonal trends, we anticipate that sales in the final quarter of the year will be affected by the normal temporary closure of cutting and polishing factories for the religious holidays in India.

Unit cost guidance for 2022 is unchanged at c.$65/ct.

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