2020 Investor Update: Transcript

Anglo American

Investor update

11 December 2020

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Mark Cutifani [Anglo American]: Welcome everyone.

Slide 3: Driving towards a safe & healthy future

We have been pleased with the consistent improvement across the business, although as you can see, we are not yet at zero and so, there is always more to do. Since 2013, we have recorded an 87% reduction in fatal incidents, a 93% reduction in health exposures and a 97% reduction in environmental incidents. Looking at the top 25-odd companies, our improvement in safety and health has been at twice the average industry improvement rates. Some would argue that we came off a more difficult base but we have continued to improve at a healthy rate and obviously for us the first target we want to achieve is zero fatal incidents., We continue to move closer to our target but still have more work to be done.

On health, our WeCare programme has been our central focus in 2020, as part of dealing with Covid and I will talk a little more about that in the next couple of slides.

On environment, the emerging maturity in our planning and associated processes has helped us to improve our performance on the environmental side. In particular, the work that we have done on our operating processes through the Operating Model, really is key. We are probably only 60% of the way through the implementation of our Operating Model, as it is a long implementation programme, and it is very much about culture as well and the way that we plan and execute our work. The focus is sharpened up through the environmental work and through our "Environment 365" programme which is a key part of the progress. We are making good progress but there is more to be done. When we talk about safety and health, from our perspective, it is not a box tick. When we talk to our targets for a business, it is all part of the sustainability that we need to build into the business and make sure that the business is both delivering value to shareholders and we're resilient - through the portfolio of assets and our approaches so we are delivering and can deliver consistently through cycles.

Slide 4: Committed to delivery

We look at effectiveness. When shareholders judge us, we say that the first thing we need to deliver is free cash flow from the operations to return capital to shareholders, to invest in the business and to invest in new opportunities in the business, so that we continue to give you a balance in terms of value and returns. Stephen will talk to our balanced approach but it starts with the ability to be able to generate better than 10% sustainable free cash flow thorough the cycle, which puts you in the top quartile of businesses across the mining industry. If you get to 15%, it puts you at the top of the industry through the cycle - we have been up near 12-13%.

In measuring the cash flows, we think it is equally as important to focus on our efficiency measure, which is return on capital employed. Now, obviously the marketing difference return on equity is a little different. We understand the nuances but overall as a business we are looking to deliver better than

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15% through the cycle. That then gives you comfort that we are using your money appropriately in generating sustainable free cash flow.

Finally, across our 7 pillars: safety & health, environment, social performance, people (making sure we have the talent pool to keep building the business and improving the business), production (and the resource base), unit cost position and then having a flexible balance sheet. This is absolutely key to making sure we can deliver those opportunities over the long-term, which is critical. And then in today's world where ESG issues are becoming more and more the focus, we are making sure that we are reducing the physical and energy footprints, reducing greenhouse gas emissions and water use, and making sure we are doing all of the things that you expect us to do in terms of navigating and being a leader in the industry across all fronts. It is all about creating a sustainable business.

Slide 5: Covid response

In terms of specific challenges we have had in the year, we have applied a holistic approach to Covid consistent with our overall approach in terms of our social engagements and connections with our local communities through to our federal governments and obviously through our employees. Our WeCare programme, we believe is the benchmark for the industry in terms of focusing on protecting individuals, employees, local communities and how we protect livelihoods for both employees and our communities have been very important and well recognised across the globe in all jurisdictions that we work in.

In making our operation safe, we were very quick off the mark in engineering new processes (which came through our Operating Model) and making sure we are keeping people healthy. On our projects we have everyone back to work, with social distancing in place. So all of this work and all of the things we have done with the communities has really helped build a stronger relationship with our local communities and for us it has been very much about building on the connection in terms of communities all the way through to federal governments, making sure that when people think about the soft issues, that they look at Anglo American and say: There is a company we can do business with. Whether it is a government, a local community, an indigenous community or our employees, we have to be front and centre and we want to be the go-to company in terms of the partnership for the long-term. We think it is the only way you can build a resilient business and protect the delivery of returns to shareholders for the long-term. We want to be the favoured partner for all of our communities.

Slide 6: A transformed, robust business

We are a very different business today. We are still a work in progress. You can see that through the portfolio restructuring, the Operating Model implementation, the technical improvements, the focus on the ESG work and our capital discipline, we have gone from 30% EBITDA margin to 42% in 2019 and the way things are looking we will do that, at least, for this year. So the guys have done a fantastic job in the operations in protecting the business and keeping our costs tight. With the projects and the cost and the volume improvements, we believe our margins will be in the range of 45 to 50% as we head

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into 2023. We are on track to deliver on our targets and it continues the transformation for us as a business.

Slide 7: 2020 A solid portfolio performance

A quick look across the portfolio. At De Beers, we are seeing promising early signs on demand recovery after what was obviously a tough year. We're closely watching the US selling season a bit early to call but looks encouraging despite the obvious Covid issues in the US. China has been very strong. The one-year extension in Botswana recognises the impact of Covid in 2020 and will allow us time to finalise the conversations in an appropriate way. In stepping back from the current situation, Bruce and the team had been looking to transform the business to align to modern markets and are in that process as we speak. For us, it is about making sure we have the best business we can in diamonds. The other most significant emerging issue, is the tightening supply across the industry. Of the 30 million carats we have seen drop out of the market, I would say about two thirds probably won't come back given the Argyle closure and other issues.

In Copper, the team has done a great job continuing to drive efficiencies with strong performance across our operating portfolio despite continuing water challenges but they have been able to mitigate through improving the water consumption efficiencies and gaining access to other sources so that we are able to maintain our guidance. Unit costs are about $1.10/lb - without the help of by-product credits. The Operating Model and P101 work is well embedded in the operations and is setting us up for the next wave of technology implementation.

In PGMs, obviously a tough start to the year but the second half being stronger. The news this week we have the ACP A unit up and running three weeks ahead of what we had forecast and the gearing up has gone really well - new design parameters; 8 different control systems we have been able to put in around the bringing up of the ACP. Clearly more to be done.

In Bulks, clearly a tough first half in Met Coal, balanced off with strong performance by Minas-Rio's, best year yet and the pig run there has gone well. The guys had forecast where we would have to make some pipe replacements, I think there were 4 lengths pipe, all planned, done, finished on time, the best production ever, cost was strong. Kumba made a solid contribution for the year, working well with Transnet to make sure we can keep going forward and delivering strong numbers. With that I will hand to Stephen.

Stephen Pearce [Anglo American]:

Slide 9: Balanced and disciplined approach

Thank you, Mark. Picking up on Mark's points, it is a combination of maximising revenue through the Marketing team's focus and the continued focus around productivity and costs, a strong and a flexible balance sheet, returns to shareholders and disciplined growth. These have been and remain our focus areas as we go forward. One of my favourite sayings that Mark mentions is, it is all about getting the

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