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New capital investment

"This array of projects stretching well into the future, building on the Group’s unique suite of existing assets, has created formidable organic growth potential"

Several major projects are under development across the Group’s platinum, diamond, coal, base metals and iron ore businesses. These projects amount to $12 billion on an attributable basis. Under active consideration, and at the pre-feasibility or feasibility stages are further major projects with an estimated potential cost of around $29 billion. This array of projects stretching well into the future, building on the Group’s unique suite of existing assets, has created formidable organic growth potential.

In South Africa, Anglo Platinum approved several projects in 2007, including 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, with the mine expected to mill an additional 600,000 tonnes of ore per month when it reaches full capacity in 2009. The $224 million East Upper UG2 project at Amandelbult, to exploit mainly the UG2 reef, will raise the mine’s platinum output by 100,000 ounces a year by 2012. Accessing Merensky reef, the $316 million Paardekraal 2 shaft project aims to replace 120,000 ounces of platinum annually by 2015.

Base Metals has several projects in South America to ensure that the Group retains its significant market position in copper. In Chile, approval has been given for a $1.7 billion expansion of Los Bronces to take production to an average initial level exceeding 400,000 tonnes per annum (tpa) of copper from 2011, while investigations are under way on a potential two phase expansion at Collahuasi. In Peru, the Quellaveco project, currently the subject of a revised feasibility study, is scheduled to be submitted for Board approval in the second half of 2008. If approved, this copper mine would produce in the region of 200,000 tpa, at a capital cost of $1.7 billion. Also in Peru, the Group won the tender for the Michiquillay copper project for a staged cash investment of $403 million. Michiquillay, which will exploit one of the largest undeveloped copper deposits in the world, has the potential to produce up to 300,000 tpa.

In Brazil, the $1.5 billion Barro Alto project is on schedule for first production in 2010 and will provide a significant boost to the Group’s growing market position in nickel. Also in Brazil, Ferrous Metals acquired a 49% stake in the MMX Minas-Rio iron ore project for a consideration of $1.15 billion during the year, plus a potential payment of $600 million if certain criteria are met. Phase 1 of the project consists of a 26.5 million tonnes per annum (Mtpa) mine and a 525-kilometre slurry pipeline to transport pellet feed to a port facility which is being developed. The mine is also being planned to produce 3 Mtpa of lump for domestic sale. First production is scheduled for 2010. The capital cost, on a 100% basis, for the construction of the mine, the pipeline and the port for phase 1, is estimated at $3.46 billion. 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 the Group acquires 100% of the interests held by MMX in these assets. The resource statements for Minas-Rio and Amapá are currently being updated.

In Alaska, a 50% stake in the Pebble copper project has been acquired for a staged cash investment of $1.425 billion. The key assets of the project, which is co-owned by Northern Dynasty Minerals, are its open pit style Pebble West copper-gold-molybdenum deposit and the adjacent deeper and higher grade Pebble East deposit. The objective is to complete a pre-feasibility study by the end of 2008.

“It is estimated that about 55% of the total investment in the Los Bronces expansion project will be spent in the Chilean economy”

At Kumba Iron Ore’s $754 million Sishen Expansion Project in South Africa, first commercial output was delivered by the end of 2007. The project is expected to ramp up to full production capacity of 13 Mtpa of iron ore in 2009. Further brownfield and greenfield projects should increase Kumba’s annual output to more than 70 Mtpa.

In 2007, Coal progressed expansion programmes in all its major countries of operation. The recently approved $505 million, 6.6 Mtpa, Zondagsfontein project will form an important part of Coal’s plans to increase its South African coal production by 50% to around the 90 Mtpa level by 2015. Zondagsfontein will produce thermal coal for Eskom.

In Australia, the $835 million Dawson mine continues to ramp up towards full production of an additional 5.7 Mtpa (100%) of metallurgical and thermal coal for the export market.

Also in Australia, the $690 million Lake Lindsay greenfield project is on schedule for first production in the first quarter of 2008. Annual saleable production will be 4.0 Mtpa (100%), comprising mainly metallurgical coal.

De Beers is progressing a number of projects to maintain its role as a leading global diamond producer. The major expansion focus is in Canada, where De Beers has two significant projects. The technically and logistically challenging Snap Lake development close to the Arctic Circle in the Northwest Territories was brought into production late in the fourth quarter of 2007 and plans to produce approximately 1.6 million carats per annum. In Ontario, the province’s first diamond mine, Victor, is set to enter production in the second quarter of 2008, yielding 0.6 million carats per annum. In South Africa, the South African Sea Areas marine mining vessel (mv) was launched off the Atlantic coast in June. As De Beers’ newest vessel, the mv Peace in Africa is expected to yield approximately 0.2 million carats per annum. Work continues in South Africa on reopening the long dormant Voorspoed mine, with first production due in the fourth quarter of 2008, yielding 0.7 million carats per annum.