Expanding our asset base
During 2007, we were active in identifying and acquiring major new projects, particularly copper and iron ore, to deliver significant volume growth over the next decade.
The Group has a tremendous project pipeline, one of the strongest in the sector, building on our unique portfolio of existing assets and delivering considerable organic growth potential. We have a number of major projects under development, involving investment of some $12 billion across all our businesses. In addition, we have a further $29 billion of projects under consideration. 2008 will also see our planned expansions delivering significant new production in iron ore and coal.
Potential volume growth
- Potential copper output of 1.6 Mtpa by 2016
- Potential iron ore output of 150 Mtpa by 2017
Several projects were approved in Anglo Platinum during the year, in particular the $279 million expansion at the base metals refinery, the $139 million Townlands ore replacement project and the $188 million Mainstream inert grind projects. The $692 million PPRust North expansion project is in progress and will mill an additional 600,000 tonnes of ore per month.
Anglo Coal has approved expansion programmes in both South Africa and Australia. The recently approved $505 million, 6.6 million tonnes per annum (Mtpa) Zondagsfontein project will form an important component of plans to increase Anglo Coal’s South African production by 50% to around the 90 Mtpa level by 2015.
In November we announced the approval of the $1.7 billion expansion of Los Bronces in Chile. First production is scheduled for 2011 and will increase copper production to an initial level exceeding 400,000 tpa, making Los Bronces one of the ten largest copper mines in the world. Also in Chile, a two phase expansion at Collahuasi is being considered. In Brazil, the Barro Alto project is on schedule to boost the Group’s nickel output, with first production due in 2010.
At Kumba Iron Ore, the commissioning of the $754 million, 13 Mtpa Sishen Expansion Project commenced during the year, with ramp up to full production anticipated in 2009.
“In 2007, we made considerable progress towards achieving our aim of becoming a significant player in the global seaborne iron ore trade”
In Canada’s Northwest Territories, De Beers’ Snap Lake, the country’s only underground diamond mine, delivered its first diamonds in October and plans to produce approximately 1.6 million carats per annum. In Botswana, De Beers is reviewing a number of development opportunities.
Turning to acquisitions, we made considerable progress towards achieving our aim of becoming a significant player in the global seaborne iron ore trade. In July, we purchased a 49% stake in the MMX Minas-Rio iron ore project in Brazil for an effective price of $1.15 billion, plus a potential payment of up to $600 million if certain criteria are met. Furthermore, in January 2008, Anglo American announced that it was in exclusive discussions with MMX’s majority shareholder to acquire control of the Minas-Rio project and the Amapá iron ore mine for approximately $5.5 billion if we acquire 100% of the interest held by MMX in these assets.
In April, we announced the acquisition of the Michiquillay copper project in northern Peru for $403 million. Michiquillay is one of the largest undeveloped copper deposits in the world. This is our second major investment in Peru where the feasibility study for the Quellaveco copper deposit in the south of the country is at an advanced stage.
In July, we acquired a 50% stake in the Pebble copper project in Alaska for a staged cash investment of $1.4 billion. The key assets of the project, which is co-owned by Northern Dynasty Minerals, are its open pit Pebble West deposit and the deeper and higher grade Pebble East deposit. The Pebble resources rank among the world’s most important accumulations of copper, gold and molybdenum.
Right: Round-the-clock operations at Kumba’s Sishen open pit, which yielded about 30 million tonnes of iron ore in 2007
In both Peru and Alaska, a key priority is to build supportive relationships with local communities, consistent with our policy of developing and operating projects to the highest standards and to promote truly sustainable development.
Close to year end we announced the acquisition of a 70% interest, for $620 million, in the Foxleigh coal mine in Australia, which adjoins our German Creek and Lake Lindsay operations.
We are also widening our horizons geographically. In an exciting recent development, Anglo American and China Development Bank have entered into a Memorandum of Understanding (MOU). Anglo American is actively looking for further projects in China and the MOU represents a long term commitment from both parties to establish a strategic relationship to identify and develop a pipeline of mining projects in China, Africa and elsewhere.