Anglo American : Interim Results 2016

Balance sheet strengthened through capital and cost discipline - expected to deliver net debt of less than $10 billion at end 2016.

· Net debt at 30 June 2016 decreased to $11.7 billion (vs. $12.9 billion as at 31 December 2015) through cost discipline and working capital and capex reductions:

- Attributable free cash flow of $1.1 billion (vs. $0.2 billion in H1 2015)

- Disposal proceeds of $1.5 billion agreed and expect to be completed in H2 2016

· Group underlying EBIT of $1.4 billion, a 27% decrease, due to lower commodity prices ($1.2 billion underlying EBIT impact), partially offset by weaker producer country currencies ($0.9 billion underlying EBIT benefit) and incremental cost reductions

· Operating performance and associated cost and capex reductions mitigating headwinds:

- Unit costs decreased by 19% (vs. H1 2015) in US dollar terms (Cu eq.)

- Expect to deliver $1.6 billion of cost and volume improvements in 2016

- $1.9 billion target included $300 million now reclassified as capex and working capital reduction

- $0.3 billion of cost and volume improvements delivered in H1 2016

· Commodity price-driven impairment of $1.2 billion relating to Moranbah and Grosvenor coal assets contributing to a loss before tax of $364 million

Mark Cutifani, Chief Executive of Anglo American, said: 'The decisive actions we have taken to strengthen the balance sheet put us well on track to achieve our net debt target of less than $10 billion at the end of 2016 - both through stringent capital and cost discipline and improved operational performance - and assuming the completion of announced non-core asset divestments. We are transforming Anglo American to be a more resilient business, with a core portfolio of world class assets in products where we are developing a sustainable competitive advantage - in De Beers, PGMs and copper.

'Sharply lower prices across our products were mitigated by our self-help actions on costs, volumes, working capital and capital expenditure, together contributing to the $1.1 billion of attributable free cash flow generated in the first half of 2016. Across the business, our copper equivalent unit costs have reduced by 19% in US dollar terms, representing a 36% total reduction since 2012.

'We have agreed $1.5 billion of non-core disposals in H1 2016, including the Niobium and Phosphates businesses in Brazil. We will continue to divest non-core assets using strict value thresholds as we continue to reduce our debt levels and position the core business on a foundation to deliver sustainably positive cash flows.

'Keeping our people safe at work has always been my absolute priority. Despite continued good progress across all recordable cases, we have tragically lost six colleagues in five separate incidents in South Africa in the first six months of the year. We are determined that our goal of zero harm is achievable and we are working with every employee to deliver that future.'

Underlying EBIT is operating profit presented before special items and remeasurements, and includes the Group's attributable share of associates' and joint ventures' underlying EBIT. See notes 4 and 6 to the Condensed financial statements for underlying EBIT. For the definition of special items and remeasurements, see note 7 to the Condensed financial statements.

Copper equivalent unit cost shown on a reported basis.

The $1.9 billion target has been reduced by $0.3 billion due to $0.1 billion working capital reclass and $0.2 billion capital expenditure reclass.

The $0.3 billion is shown gross of a $0.1 billion downside relating to a Platinum stock adjustment recognised in 2015. Q2 2016 run-rate achieved of $0.6 billion.

See notes 6 and 10 to the Condensed financial statements for basis of calculation of underlying earnings.

Includes the Group's attributable share of associates' and joint ventures' revenue of $681 million (H1 2015: $1,788 million). See note 4 to the Condensed financial statements.

Underlying EBITDA is underlying EBIT before depreciation and amortisation in subsidiaries and joint operations, and includes the Group's attributable share of associates' and joint ventures' underlying EBIT before depreciation and amortisation.

Stated after special items and remeasurements. See note 7 to the Condensed financial statements.

Attributable ROCE is defined as the return on the capital employed attributable to the equity shareholders of Anglo American plc. It is calculated based on achieved prices and foreign exchange.

Financial review of Group results for the six months ended 30 June 2016

Summary

Anglo American reported underlying earnings of $0.7 billion (H1 2015: $0.9 billion), with underlying EBIT decreasing by 27% to $1.4 billion.

Falling realised prices were seen across most products compared with the prior year ($1.2 billion impact on underlying EBIT), with the platinum US$ basket price down 24%, metallurgical coal down 23%, copper down 15%, diamonds down 14% and Kumba's iron ore down 10%. This was only partly offset by weaker producer country currencies ($0.9 billion impact), in particular a 29% weakening of the South African rand against the US dollar.

Expected lower Kumba Iron Ore volumes as a result of the pit reconfiguration at Sishen, and lower Copper volumes due to expected lower grades, negatively affected underlying EBIT, although this was partially offset by increased sales volumes at De Beers. Underlying EBIT in H1 2015 also benefitted from a stock gain of $181 million following the annual inventory count in Platinum, compared to a gain of $38 million in the current period.

Net debt reduced to $11.7 billion from $12.9 billion at year-end due to continued focus on capital discipline, strong EBITDA performance, the realisation of working capital improvements and a successful bond buy-back process. In response to current conditions, capital expenditure (before capitalised operating cash flows) has reduced further to $1.2 billion (H1 2015: $2.0 billion).

Operational performance

Operational performance was mixed across the business. Iron ore production from Minas-Rio increased by 128% as the operation continues its ramp-up. Total production from Coal South Africa's Export mines was 7% higher as a result of productivity improvements. Total platinum production (metal in concentrate) rose by 2%, driven by continued strong performance at Amandelbult and Mogalakwena.

Rough diamond production decreased by 15%, reflecting the decision to reduce production in response to prevailing trading conditions in H2 2015. Iron ore production at Sishen decreased by 28%in line with the reconfiguration of the pit to a lower-cost shell. Run rates in H1 2016 were affected by the significant restructuring process and exacerbated by higher levels of rainfall and by safety stoppages. The successful restructuring has reduced mining costs and increased mine flexibility. Production is expected to increase in H2 2016 to achieve the full year production target of 27 Mt. Copper production for the retained portfolio decreased by 4%, with Los Bronces 16% lower, driven by significantly lower expected grades. This was partly offset by Collahuasi, where attributable production increased due to strong plant performance and higher grades. In Australia, coal production decreased by 5% as a result of a longwall move at both underground operations in 2016, whereas there was only a single move at Grasstree in H1 2015, and the ramp-down of production at Drayton which will cease mining activity later this year. Grosvenor produced its first longwall coal in May 2016, seven months ahead of schedule.

The Group achieved a favourable cost performance in H1 2016, primarily as a result of cost reduction initiatives and the benefits of weaker producer country currencies. Consolidated unit cash costs at De Beers declined by 21% as a result of cost savings, supported by favourable exchange rate movements and portfolio changes. Unit costs at Coal Australia decreased by 14% (8% in A$), also following significant cost reduction initiatives, particularly in the open cut operations. The flat on-mine local currency unit costs at Coal South Africa benefited from the increase in production in the Export mines, driven by productivity improvements across all operations. At Copper, C1 unit costs decreased by 18%, which included the benefit resulting from the divestment of Anglo American Norte (AA Norte), in addition to cost reduction initiatives which more than compensated for the effects of lower output. FOB cash costs at Kumba Iron Ore were 18% lower, primarily due to a weaker South African rand and savings in operating costs mainly from the reduced mining profile at Sishen mine following the restructuring to the smaller pit design, as well as productivity gains in mining and processing operations. At Platinum, year-on-year cash operating costs per unit of platinum production (metal in concentrate) also decreased by 21% owing primarily to a weaker South African rand and cost containment.

Income statement

Underlying EBIT

Group underlying EBIT decreased by 27% to $1.4 billion (H1 2015: $1.9 billion).

Underlying earnings

Group underlying earnings decreased by 23% to $0.7 billion (H1 2015: $0.9 billion).

Net finance costs

Net finance costs, before special items and remeasurements, excluding associates and joint ventures, were $109 million (H1 2015: $161 million). The decrease was driven by a net foreign exchange gain of $36 million in the current period compared to a loss of $45 million in the previous period, primarily due to the strengthening of the Brazilian real.

Tax

The effective tax rate, before special items and remeasurements, including attributable share of associates' and joint ventures' tax, was 32.2% for the six months ended 30 June 2016. This is higher than the equivalent rates of 28.0% for the six months ended 30 June 2015 and 31.0% for the year ended 31 December 2015. This increased rate was due to the net impact of certain prior year adjustments, the remeasurement of withholding tax provisions across the Group and the relative levels of profits arising in our operating jurisdictions. In future periods, it is expected that the effective tax rate will remain above the United Kingdom statutory tax rate (20%).

The tax charge for the period, before special items and remeasurements and excluding associates and joint ventures, was $390 million (H1 2015: $408 million).

Reconciliation to loss for the period attributable to equity shareholders from underlying earnings

Special items and remeasurements

Special items and remeasurements principally relate to an impairment of $1.2 billion of the Moranbah-Grosvenor operation. Full details of the special items and remeasurements charges are to be found in note 7 to the Condensed financial statements.

Group ROCE

Attributable ROCE was in line with H1 2015 at 8%, primarily as a consequence of weaker commodity prices, offset by improved operational performance, the benefit of weaker producer country currencies, and a lower proportion of post-tax earnings attributable to non-controlling interests. In addition, average attributable capital employed was lower at $27.4 billion (H1 2015: $35.5 billion), driven by impairments and partially offset by ongoing capital expenditure.

Attributable ROCE is the primary return measure used in the Group. It is defined as the return on the capital employed attributable to equity shareholders of Anglo American plc, and therefore excludes the portion of underlying EBIT and capital employed attributable to non-controlling interests in operations where Anglo American plc has control, but does not hold 100% of the equity. Joint operations, associates and joint ventures are included in their proportionate interest and in line with appropriate accounting treatment. ROCE is calculated as underlying attributable EBIT divided by average attributable capital employed and is based on achieved prices and foreign exchange.

Balance sheet

Net assets of the Group remained flat at $21.4 billion (31 December 2015: $21.3 billion). Capital expenditure of $1.1 billion, including capitalised operating cash flows, was largely offset by depreciation of $1.0 billion, while the strengthening of the South African rand and Australian dollar since 31 December 2015 increased the value of operating assets denominated in these currencies. This was offset by the impairment of the Moranbah and Grosvenor assets and reductions in working capital.

Net debt

Net debt (including related hedges) of $11.7 billion was $1.2 billion lower than at 31 December 2015 and $1.8 billion lower than at 30 June 2015, representing gearing of 35.4% (31 December 2015: 37.7%). Net debt is made up of cash and cash equivalents of $5.8 billion (31 December 2015: $6.9 billion) and gross debt including related derivatives of $17.5 billion (31 December 2015: $19.8 billion). Net debt has continued to reduce in 2016, driven by stable operating cash inflows, working capital improvements, including a significant reduction in inventories at De Beers, gains from the bond buy-back process and falling capital expenditure.

Cash flows from operations

Cash flows from operations remains in line with H1 2015 at $2.8 billion. The price-driven 25% decrease in underlying EBITDA has been partly offset by cash inflows on operating working capital of $498 million (H1 2015: outflows of $15 million). These were primarily driven by De Beers, where total inventories (including Element Six and consumables) reduced by $0.5 billion, from $1.5 billion at December 2015 to $1.0 billion, Kumba Iron Ore, with a reduction in finished goods volumes from $119 million to $59 million, and Platinum, where combined pipeline and finished stock volumes reduced, excluding the non-cash stock adjustment, in spite of challenges at the Precious Metals Refinery (PMR). There was also a drive in cash collection for operating receivables primarily in Copper, Kumba Iron Ore and Platinum offsetting pressure on working capital from rising prices.

Attributable free cash flow

Attributable free cash flow of $1.1 billion was primarily driven by EBITDA generation and working capital improvements, as well as a reduction in capital expenditure (including capitalised operating cash flows) of $1.0 billion to $1.1 billion (H1 2015: $2.1 billion).

Liquidity and funding

At 30 June 2016, the Group had undrawn committed bank facilities of $9.9 billion and cash of $5.8 billion. The Group's liquidity position has been maintained in the period, while gross debt has declined by $2.3 billion to $17.5 billion (31 December 2015: $19.8 billion) primarily due to the successful bond repurchase. The Group's forecasts and projections, taking account of reasonable possible changes in trading performance, indicate the Group's ability to operate within the level of its current facilities. The Group has certain financial covenants in place in relation to external debt which are not expected to be breached in the foreseeable future.

Dividends

No interim dividend was declared for 2016 (H1 2015: 32 US cents per ordinary share).

In order to further protect its balance sheet and cash position, Anglo American plc announced in December 2015 its decision to suspend dividend payments. The commitment to a dividend during the ordinary course of business remains a core part of the Group's overall capital allocation approach and the Board has recommended that, upon resumption, Anglo American plc should adopt a payout-ratio-based dividend policy in order to provide shareholders with exposure to improvements in commodity prices, while retaining cash flow flexibility during periods of weaker pricing.

Projects and capital expenditure

Following a continued focus on capital discipline and in response to current conditions, excluding capitalised operating cash flows, capital expenditure has reduced further to $1.2 billion (H1 2015: $2.0 billion). The reduction was driven by a 43% decline in expansionary capital expenditure, chiefly as a result of the Minas-Rio iron ore project in Brazil moving into its ramp-up phase and a 45% fall in stay-in-business expenditure as a result of lower spend at Kumba Iron Ore, Copper and De Beers.

Expansionary capital expenditure remains focused on the delivery of our portfolio of existing major projects, including the Gahcho Kué and Grosvenor projects in De Beers and Coal respectively. As these projects transition into production, expansionary capital expenditure will continue to decrease, enabling the Group to further align such expenditure with prevailing commodity market conditions.

Projects in ramp-up in 2016

In Nickel, the rebuild of the two furnaces at Barro Alto was concluded, with commercial production being reached in October 2015 and full capacity in H1 2016.

Capital expenditure is defined as cash expenditure on property, plant and equipment, including related derivatives less proceeds from disposal of property, plant and equipment and direct funding for capital expenditure from non-controlling interests.

Niobium's Boa Vista Fresh Rock project reached commercial production in March 2016, and is expected to reach full nameplate capacity in H2 2016.

The Minas-Rio iron ore operation continued to ramp up in H1 2016, with increases in quarter-on-quarter production. The operation will remain in ramp up throughout the year.

Grosvenor metallurgical coal longwall operation started production of longwall coal in May 2016 and is expected to reach commercial production in H2 2016.

No new major growth projects have been initiated in H1 2016, in line with the Group's focus on improving cash flows.

Disposals update

The evaluation and sales processes for a number of Anglo American's major assets are progressing. During H1 2016, Anglo American plc agreed and announced the sale of Niobium and Phosphates (total cash consideration of $1.5 billion - the transaction is dependent on a number of conditions and is expected to close in the second half of 2016), Callide, the remaining Tarmac Middle East businesses and Foxleigh.

As indicated on 16 February 2016, Anglo American plc is progressing a number of processes to assess the potential disposal value of certain of its non-core assets, including the Nickel business and the Moranbah and Grosvenor metallurgical coal assets. Any final decisions on sale will depend on value.

The Board

Ray O'Rourke resigned as an independent non-executive director with effect from 25 July 2016 in order to concentrate on his business commitments as chairman and chief executive of Laing O'Rourke. Mr O'Rourke brought a significant range of business experience along with specialist knowledge of complex projects. The Board is grateful for his commitment and valuable contributions over the past six years.

Rene Medori, Finance Director, informed the Board in April of his decision to retire when he reaches the age of 60 in 2017, in order to enable an orderly succession. The Board has initiated a formal process to appoint a successor. Mr Medori will continue to serve in role until the appropriate time to ensure a smooth transition.

Principal risks and uncertainties

Anglo American plc is exposed to a variety of risks and uncertainties which may have a financial, operational or reputational impact on the Group, and which may also have an impact on the achievement of social, economic and environmental objectives.

The principal risks and uncertainties facing the Group at the year-end were set out in detail in the strategic report section of the Annual Report 2015 and have not changed significantly since. The principal risks relate to the following:

• Safety
• Commodity prices
• Political and regulatory
• Organisation change
• Portfolio restructuring
• Minas-Rio
• South Africa power
• Tailings dam failure
• Slope wall failure
• Mineshaft failure
• Fire and/or explosion

Two new principal risks have been included in the 2016 risk profile as follows:

• Reduction in future demand for core commodities as a result of shifts in market forces.
• Inability to deliver the 2016 and 2017 cash improvement targets.

The Group is exposed to changes in the economic environment, as with any other business. Details of any key risks and uncertainties specific to the period are covered in the Operations review section.

The Annual Report 2015 is available on the Group's website www.angloamerican.com.

Operations review for the six months ended 30 June 2016

PLATINUM

In keeping with industry benchmarks, production disclosure has been amended to reflect own mine production and purchases of metal in concentrate. Previous disclosure of own mine production and purchases of metal in concentrate was converted to equivalent refined production using standard smelting and refining recoveries.

Average US$ basket price.

Total cash operating costs.

Financial and operating overview

Underlying EBIT decreased by $138 million to $134 million (H1 2015: $272 million). This was due to lower sales volumes of palladium, rhodium and minor metals, the weakening of dollar metal prices, and a lower stock gain of $38 million (H1 2015: $181 million) from an annual inventory count.

Year-on-year cash operating costs per unit of platinum production (metal in concentrate) decreased by 21% to $1,262 per ounce, owing primarily to a weaker South African rand.

Markets

The average US dollar basket price per platinum ounce sold for H1 2016 was $1,632 per ounce, down 24% on the H1 2015 average achieved price of $2,157 per ounce. Despite the lower average platinum market price, the platinum price increased over the first six months in 2016. Fundamentals are generally supportive for platinum and palladium.

Refer to note 2 to the Condensed financial statements for further details.

Global production of the platinum group metals has fallen in the first six months of 2016, with exports of these metals from South Africa underperforming previous year levels. The recovery of platinum from end-of-life automotive catalysts continued to be weak in the first half despite improving economic fundamentals for the recycling industry.

In H1 2016, platinum demand was relatively robust. Light-duty vehicle sales grew strongly in Western Europe, rising 9% year on year. Autocatalyst platinum demand was further supported by the impact of the introduction of Euro 6b emissions rules in late 2015, which raised catalyst loadings and have offset a small decline in the market share of the diesel engine. There were also some signs of the Chinese platinum jewellery market stabilising over this period, with sales of platinum on the Shanghai Gold Exchange 2% above H1 2015 levels. Industrial demand for platinum remains healthy despite widespread concerns over the state of the global economy.

Operating performance

Total platinum production (metal in concentrate) rose by 2% to 1,152,700 ounces (H1 2015: 1,125,000 ounces). Production increases generated by Amandelbult, joint operations, Union and Unki were partially offset by lower production from Rustenburg.

Mogalakwena mine increased production by 2% to 207,800 ounces, including 15,400 ounces (H1 2015: 11,200 ounces) processed at the Baobab concentrator. Mogalakwena had a strong mining performance, with tonnes milled up 6% year on year, though this was partly offset by a return to normalised grades in Q2 2016.

Production at Amandelbult increased by 15% to 217,100 ounces. Strong output was attributable to a new opencast area which produced 18,000 ounces, as well as to operational efficiency improvements from underground operations.

Production from Unki mine in Zimbabwe increased by 13% to 36,400 ounces. This was driven mainly by an increase in milled volumes resulting from mining production efficiency improvements, as well as an improvement in recovered grade through better mining height control.

Platinum production from Rustenburg, including Western Limb Tailings Retreatment, decreased by 10% year on year to 218,700 ounces. Lower output was attributable to a Section 54 safety stoppage associated with a fatal incident at Khuseleka shaftin June 2016 and the mining of difficult ground areas, as well as a marginally lower grade. This was partly compensated by a 13% improvement in production from tailings, which increased to 25,800 ounces.

Platinum production from Union increased 15% to 75,500 ounces, the mine's best performance since 2013, as a result of implementation of the optimised mine plan and productivity improvements. This was achieved despite the closure of the decline sections which removed approximately 60 koz of annual production and closure of marginal production areas.

Platinum production from joint operations, inclusive of both mined and purchased production, increased by 8% year on year to 388,300 ounces. All mines showed year-on-year improvements, with the exception of Bokoni. Kroondal mine achieved its best H1 performance since inception by producing 137,300 ounces. Production at Bokoni was down 16% owing to the closures of UM2 and Vertical shafts in Q4 2015, safety stoppages relating to fatal incidents in January and February 2016, and to disruption in the surrounding community.

Refined platinum production decreased by 9% to 1,008,400 ounces owing to a planned stocktake and the impact of a Section 54 safety stoppage at the precious metal refinery (PMR) in Q1 2016, which halted production for 12 days and affected production build-up for a further 37 days. The PMR has recovered to steady state, and made up most of the shortfall in production.The remainder of the shortfall in refined production will be caught up in Q3 2016.

Despite lower refined production, platinum sales volumes increased by 5% to 1,221,200 platinum ounces, drawing down from refined metal inventory.

Operational outlook

It is anticipated that platinum production guidance (metal in concentrate) is unchanged at between
2.3-2.4 million ounces in 2016. The Twickenham project will be placed on care and maintenance in H2 2016.

It is estimated that cash unit costs will be ZAR19,250-ZAR19,750 per platinum ounce (metal in concentrate) for 2016.

DE BEERS

Prepared on a consolidated accounting basis, except for production which is stated on a 100% basis.

Sales volumes on a 100% basis were 18.3 million carats (H1 2015: 14.0 million carats).

Pricing for the mining business units is based on 100% selling value post-aggregation of goods. The group realised price includes the price impact of the sale of non-equity product and, as a result, is not directly comparable to group unit costs, which relate to equity production only.

Total cost per carat recovered calculated as total production and operating costs before operating special items (excluding depreciation), divided by carats recovered.

Includes rough diamond sales of $3.1 billion (H1 2015: $2.7 billion).

Underlying EBIT used in the calculation of De Beers' attributable return on capital employed is based on the last 12 months rather than the first six months of performance. This is due to the seasonal sales and underlying EBIT profile of De Beers.

Other includes Element Six, downstream, acquisition accounting adjustments, and projects and corporate.

Financial and operational overview

Underlying EBIT increased by 2% to $585 million (H1 2015: $576 million). This was the result of higher revenues from stronger rough diamond demand, tight operating cost control and favourable exchange rates. As a result of cost-saving programmes and portfolio changes, supported by favourable exchange rate movements, consolidated unit costs declined from $82/carat to $65/carat.

Total revenue increased by 8% to $3.3 billion (H1 2015: $3.0 billion), mainly driven by higher rough diamond sales, which increased by 11% to $3.1 billion. This was due to a 29% increase in consolidated sales volumes to 17.2 million carats (H1 2015: 13.3 million carats), partly offset by a 14% decrease in average realised rough diamond prices to $177/carat (H1 2015: $206/carat) which reflected the 16% lower average rough price index for the period.

Markets

Preliminary data indicate that during H1 2016, the US market showed positive growth overall, while the Chinese market was broadly stable. Japan demonstrated modest growth in local currency, whereas consumer demand in India was hampered by a month-long jewellers' strike in March 2016 against new government regulations.

Sentiment in the Midstream improved during the period under review, as good year-end holiday sales, particularly in the US, necessitated retailer inventory restocking, which enabled the cutting centres to rebalance their polished stock. At the same time, rough inventories in the midstream were lower, after materially restrained buying in H2 2015. The significant midstream restocking, when combined with the contribution of positive holiday sales, resulted in positive growth in demand for rough diamonds in H1 2016.

Operating performance

Mining and manufacturing

Rough diamond production decreased by 15% to 13.3 million carats (H1 2015: 15.6 million carats), reflecting the decision to reduce production in response to prevailing trading conditions in H2 2015.

Debswana's production decreased by 9% to 10.5 million carats, with Orapa down by 25% compared with H1 2015 and Damtshaa (a satellite operation of Orapa) placed on care and maintenance from 1 January 2016. Jwaneng Cut-8 continues to progress and, by the end of June 2016, 77% of the 500 million tonnes of waste stripping required to expose the ore had been mined. The first Cut-8 ore to the processing plant remains scheduled for 2017.

Production at Namdeb Holdings decreased by 17% to 0.7 million carats, with reduced output at Debmarine Namibia (as a result of the Mafuta vessel undergoing extended planned in-port maintenance) and lower grades at Namdeb's land operations. In South Africa, production declined by 20% to 1.8 million carats, mainly due to the completion of the sale of Kimberley Mines in January 2016. Construction of the Venetia Underground mine continues to progress, with the decline advanced to more than 1,550 metres. First production from the underground operation is scheduled for 2022. In Canada, production fell by 69% to 0.3 million carats owing to Snap Lake being placed on care and maintenance in December 2015. In early July 2016, approval was granted to flood the Snap Lake mine. Production at Victor was 8% lower than in H1 2015 (0.3 million carats in both periods). The Gahcho KuŽ project in Canada is progressing according to plan. The project is 96% complete and remains on track for first production during H2 2016, with commercial production expected to be reached in Q1 2017.

Owing to continuing depressed markets in key industrial sectors (principally oil and gas), Element Six experienced a challenging first six months. The reduction in contribution arising from lower sales has been partially offset by a comprehensive cost-reduction programme.

Brands

Forevermark continues to expand its retailer network and is available in 1,874 outlets (a 6.5% increase since the end of 2015) in 38 countries, including the new markets of Hungary, Thailand and South Korea. In June 2016, Forevermark announced the launch of the Black Labelcollection (an innovative collection of fancy-shape diamonds with unrivalled sparkle in every cut) and announced a Q4 2016 US national television campaign featuring the Ever Ustwo-stone diamond collection. In Q1 2016, De Beers also invested in additional Chinese New Year marketing campaigns to further stimulate diamond jewellery gift giving, which was received positively by the industry.

De Beers Diamond Jewellers maintained its focus on fast-growing markets, with 35 stores in 16 key consumer markets around the world. Growth in mainland China sales helped to offset the significant impact of lower Chinese tourist levels in Europe.

Namibia sales agreement

In May 2016, the Government of the Republic of Namibia and De Beers signed a new 10-year sales agreement for the sorting, valuing and sale of Namdeb Holdings' diamonds. This represents the longest sales agreement ever concluded between the parties.

Outlook

Macro-economic conditions underpinning consumer demand for diamonds remain broadly stable in aggregate, but with persistent downside risks looking into H2 2016 (including recent social and political instability). Rough diamond revenues are expected to be weighted towards H1 2016, consistent with prior years and typical of the seasonal drivers.

In the Midstream, caution in rough diamond buying is expected to prevail, as the supplies bought by diamantaires in H1 2016 are gradually converted into polished.

Forecast diamond production (on a 100% basis) for 2016 remains unchanged and is expected to be in the range of 26-28 million carats, subject to trading conditions. Consistent with this level of production, plans are in place to deliver approximately $200 million of cash savings in production costs, overheads, capital expenditure and disposal proceeds in 2016.

BASE METALS AND MINERALS

COPPER

Excludes16 kt third-party sales.

C1 unit cost including by-product credits.

44% shareof Collahuasi production, sales and financials.

Financial and operating overview

Underlying EBIT decreased by 35% to $113 million. This was largely due to a 21% decline in the average LME copper price, lower by-product prices (molybdenum was approximately 20% down year on year), and an 18% decline in sales volumes (in part due to the sale of AA Norte in September 2015). The decrease in underlying EBIT was mitigated by a $155 million reduction in cash costs. These were largely driven by cost-reduction initiatives and productivity improvements across all operations, as well as by the implementation of an optimised mine plan at El Soldado (where mining activities were reduced to a one-phase operation). At 30 June 2016, 155,300 tonnes of copper were provisionally priced at 220 c/lb. Provisional pricing of copper sales resulted in an underlying EBIT gain of $23 million (H1 2015: loss of $133 million), bringing the realised copper price to 215 c/lb for the period.

Markets

Differencesbetween market prices and realised prices are largely a function of timing of sales and final settlements.

The average LME copper price was 21% lower at 213 c/lb compared with H1 2015. Sentiment has been dominated by key macro-economic and geopolitical events, with concerns over China's economic outlook particularly weighing on the copper market. There were some positive developments, however, in the first six months of this year. Construction activity in China displayed a marked improvement, while investment in the power grid has accelerated sharply. These two sectors directly account for more than 40% of copper use in China which, in turn, accounts for almost half of global copper consumption.

Globally, despite excess capacity in some manufacturing sectors, consumption patterns appear to have stabilised following some weakening in 2015. However, despite cuts in spending, mine-through-refined production growth has outpaced demand with a small number of major mine expansions, predominantly in Peru, and additions to smelter-refinery capacity in China, keeping the market well supplied.

Operating performance

Production at Los Bronces was 16% lower at 160,800 tonnes, driven by significantly lower grades (H1 2016 0.68% vs. H1 2015 1.02%), partly offset by improved throughput performance following the lifting of water restrictions during H1 2016. Severe weather conditions, including significant snowfall (with more than six metres of snow recorded by 30 June 2016, around double that of an average year) hampered operations at the mine during Q2 2016, interrupting ore extraction and the operation's ability to mine higher-altitude, higher-grade areas. In addition, the occurrence of late snow in 2015 and its subsequent melting have caused dewatering issues in the pit. C1 unit costs were 3% lower than prior year at 152 c/lb, however, as cost-reduction initiatives across all areas of the mine, plant and services and support more than compensated for the effects of lower output.

At Collahuasi, Anglo American's attributable production increased by 13% to 107,300 tonnes. Strong plant performance following rectification work undertaken in 2015 was supported by higher grades (H1 2016 1.18% vs. H1 2015 1.12%), offset by reduced cathode production with the closure of the oxide plant at the end of 2015. C1 unit costs were 23% lower at 118 c/lb, benefiting from the higher production and an ongoing focus on reducing costs at both the mine and the plant.

Production at El Soldado increased by 40% to 22,600 tonnes on the back of improved throughput and higher grades. C1 unit costs positively reflected the higher production as well as the benefits resulting from implementation of the optimised mine plan. On 8 July 2016 the unionised workforce at El Soldado went on strike after rejecting the offer made by the company as part of the collective bargaining process.

Operational outlook

Production for the year as a whole is expected to be below that of 2015, after adjusting for the disposal of AA Norte and the curtailment of oxide production at Collahuasi, together accounting for approximately 120,000 tonnes. Because of the severe weather experienced at Los Bronces during Q2 2016, which negatively affected mine extraction and the ability to mine the higher-altitude, higher-grade areas, full-year production guidance has been revised down to 570,000-600,000 tonnes for 2016 (previously 600,000-630,000 tonnes) and 2017 (previously 590,000-620,000 tonnes).

NICKEL

Key performance indicators

Nickel segment includes $(4) million and $(7) million of projects and corporate costs for H1 2016 and H1 2015, respectively.

Financial and operating overview

The underlying EBIT loss of $12 million was $12 million down on that for H1 2015, driven by the lower nickel price, partially offset by a favourable exchange rate and the benefit of the rebuild.

Underlying EBIT generated by the Barro Alto project was capitalised during H1 2015, with capitalisation ending with effect from the end of October 2015 as the project entered commercial operation. Before capitalisation, Barro Alto's underlying operating loss of $8 million had improved by $4 million (H1 2015:
$12 million loss), owing to lower cash costs driven by efficiency gains arising from higher production volumes and lower maintenance and energy costs, as well as a favourable exchange rate. This was partially offset by the decline in nickel prices, lower energy surplus sales and cost inflation.

Nickel C1 unit costs decreased by 35% to 323 c/lb, mainly attributable to volume improvements from the ramp-up of Barro Alto and the weaker Brazilian real, partly offset by inflation.

Markets

The average market price is the LME nickel price, from which ferro-nickel pricing is derived. Ferro-nickel is traded based on discounts or premiums to the LME price, depending on market conditions, supplier products and consumer preferences.

Differences between market prices and realised prices are largely a function of variations in volumes of sales.

The average LME nickel cash settlement price of 393 c/lb for H1 2016 was 37% lower than the average price in H1 2015.

H1 2016 was characterised by concerns about world and Chinese economic growth, which put downward pressure on metal prices. There was however a marked improvement in demand in Q2 2016 and a reduction in LME nickel stocks, which led to increases in the LME nickel price and the ferro-nickel premium. World stainless steel production (the primary end-use for all ferro-nickel and for more than 65% of total nickel) increased by 4.7% compared with H1 2015, driven mainly by China. With Chinese nickel pig iron (NPI) production declining, price-led cutbacks at other nickel producers and lower availability of nickel-bearing stainless steel scrap, there was a tight market for nickel and a shortage of nickel-iron units (ferro-nickel, NPI and stainless steel scrap).

Operating performance

Nickel output increased by 72% to 22,300 tonnes following the successful rebuild of the Barro Alto furnaces, which are now producing at close to nameplate capacity. Codemin's production was in line with the previous year's at approximately 4,600 tonnes.

Operational outlook

Following the successful Barro Alto furnace rebuilds in 2015, full-year nickel production in 2016 remains unchanged at an expected 45,000-47,000 tonnes.

NIOBIUM ANDPHOSPHATES

Key performance indicators

Niobium and Phosphates also include $(2) million and $(1) million of projects and corporate costs for H1 2016 and H1 2015, respectively.

Financial and operating overview

Niobium

Underlying EBIT decreased by 38% to $20 million (H1 2015: $32 million), as a result of lower prices and inflation, partly offset by the benefit of the weaker Brazilian real and higher sales volumes. Underlying EBIT of $8 million from Boa Vista Fresh Rock (BVFR) was capitalised during January and February 2016, with commercial production achieved in March 2016.

Phosphates

Underlying EBIT of $42 million was in line with H1 2015, reflecting the benefit of the weaker Brazilian real and underlying reductions in operating costs, together withhigher sales volumes, offset by lower pricing and inflation.

Markets

Niobium

Worldwide demand for ferro-niobium has remained soft, with lower average niobium prices across all regions as a result. This is attributable to challenging conditions in the steel industry in China, with the country only returning to the market in early February 2016 following Chinese New Year, and weaker demand in North America. However, there was an increase in demand in India.

Phosphates

The average MAP CFR Brazil price of $354/tonne was 27% lower than for H1 2015 as a result of surplus global supply and weaker demand in key markets. In Brazil, demand for phosphate fertilisers in H1 2016 was approximately 5.1 million tonnes, a 10% increase on H1 2015. This reflected higher demand and earlier purchasing of the main crop, boosted by an attractive barter ratio which incentivised purchasing.

Operating performance

Niobium

Production decreased by 10% to 2,600 tonnes. This was mainly due to a shutdown at the start of the year, in order to reduce stock levels and facilitate site maintenance and work on residue disposal, and to a planned stoppage in May 2016 to implement the downstream metallurgy project. Subsequent plant performance has been strong, with an all-time production record achieved in June 2016. The BVFR plant reached 82% of nameplate capacity on average in Q2 2016, with continued improvements in plant stability.

Phosphates

Fertiliser production rose by 9% to 560,800 tonnes owing to strong granulation plant performance at both sites and favourable operational conditions, which allowed two planned maintenance stoppages, scheduled for January and March 2016, to be combined. Phosphoric acid production increased by 22%, due to increased plant stability and higher equipment availability at both sites. Dicalcium phosphate (DCP) production was 3% lower as a result of the stoppage at Cubat‹o which took place in March 2016 (takes place every 18 months) combined with lower demand at Catal‹o.

Update on sales process

During H1 2016, Anglo American plc agreed and announced the sale of Niobium and Phosphates, for a total cash consideration of $1.5 billion to ChinaMolybdenum Co Ltd. The transaction is dependent on a number of conditions and is expected to close in the second half of 2016.

IRON ORE AND MANGANESE

Iron Ore Brazil production is Mt (wet basis).

Prices for Kumba Iron Ore are the average realised export basket price (FOB Saldanha). Prices for Iron Ore Brazil are average realised export basket price (FOB Au) (wet basis).

Production, sales and financials include ore and alloy.

Financial and operating overview

Kumba Iron Ore (Kumba)

Underlying EBIT decreased by 25% to $387 million (H1 2015: $513 million), mainly due to the fall in the iron ore benchmark price to an average of $52/tonne (H1 2015: $60/tonne), and 22% lower sales volumes. Realised FOB export prices averaged $55/tonne, 10% lower than in H1 2015.

Total cash costs declined by 34%, driven principally by the 36% decrease in planned waste mined following the Sishen pit redesign, lower input costs on diesel and overhead cost savings, aided by the further weakening of the South African rand against the US dollar. FOB cash costs decreased by 18% to $27/tonne (H1 2015: $33/tonne). This was primarily due to the weaker rand and savings in operating costs mainly as a result of the reduced mining profile at Sishen mine following the restructuring to the smaller pit design, and productivity gains in mining and processing operations. The restructuring is substantially complete and is expected to contribute to annual savings from 2017.

Sales decreased by 22% to 20.2 Mt (H1 2015: 26.0 Mt) following a 28% reduction in production at Sishen as a result of the restructuring and reconfiguration of the Sishen mine to a lower production profile in order to lower the cost base. Kumba's logistics volumes were hampered by low stock levels through the logistics chain. At the mines, finished product stock reduced to 1.1 Mt and port stockpiles to 1.2 Mt, while total finished-product stock decreased to 2.3 Mt by end-June 2016 (30 June 2015: 3.8 Mt, excluding Thabazimbi).

Iron Ore Brazil

The underlying EBIT loss amounted to $10 million (H1 2015: $11 million loss). Minas-Rio continues to capitalise its operating results as the asset is not yet deemed to be in commercial production and is currently in the ramp-up phase. Minas-Rio'scapitalised operating loss was $17 million, $128 million lower than prior year (H1 2015: $145 million loss). This reflected higher sales volumes and lower unit costs as the operation ramps up, partly offset by lower realised iron ore prices.

Samancor

Underlying EBIT increased by $2 million to $38 million with the benefits of 10% higher ore sales through stock drawdown and the restructuring of the South African Manganese operations offsetting lower Australian alloy production due to power shortages and a 15% realised price reduction.

The South African Manganese operations restructuring was completed in Q1 2016. This reduced the operating cost base and increased production flexibility in reaction to the sharply declining price through 2015, which has continued into 2016.

Markets

Iron ore

Kumba's outperformance over the Platts 62% Fe CFR China index is primarily representative of the superior iron (Fe) content and the relatively high proportion (approximately 64%) of lumps in the overall product portfolio.

Iron Ore Brazil produces a higher-grade product than the Platts 62% Fe indices, with pricing reflecting the increased Fe content and lower gangue. Platts 62% is referred to for comparison purposes only.

The IODEX 62% Fe CFR China spot price averaged $52/dmt in H1 2016, down 13% year on year. Despite the H1 2016 market price being lower than in H1 2015, seaborne iron ore prices have seen a strong recovery, rallying 29% through the first six months to $55/dmt by the end of June 2016. The improvement in downstream demand in China, driven by a record liquidity injection and accelerated infrastructure spending, has temporarily held off the overcapacity in the domestic steel sector, pushing steel prices higher. This positive demand environment and improved mill margins have driven up Chinese crude steel production, boosting demand for iron ore. In addition, the upturn in demand has coincided with reduced production increases, although the recent price rally has incentivised high-cost domestic and seaborne iron ore supply back into the market.

Manganese

Following a 57% reduction in the index ore price during 2015, the price has recovered by 33% in the first half of 2016 closing at $3.09/dmtu (44% Mn CIF China). The price recovery was driven by demand from China following an increase in infrastructure spending resulting in higher steel prices.

Operating performance

Kumba

Production at Sishen declined by 28% to 11.5 Mt (H1 2015: 16.1 Mt), while waste mined amounted to 64.9 Mt, a 40% reduction from H1 2015, in line with the reconfiguration of the pit to a lower-cost shell. Run rates for H1 2016 were affected by the significant restructuring process which commenced in the first quarter, which has now been substantially completed. Lower run rates were exacerbated by higher levels of rainfall and safety stoppages. The successful restructuring has increased mine flexibility, with run rates on key operating parameters improving from May to June 2016. Sishen production is now in line with full-year guided production of approximately 27 Mt.

Kolomela mine produced 5.9 Mt in H1 2016 (H1 2015: 5.9 Mt) from 26% lower ex-pit ore, benefiting from stockpiled material. Waste mining decreased to 20.2 Mt from 26.3 Mt in H1 2015. Operations were impacted by a safety stoppage early in the period following a fatal incident in January 2016.

Roll-out of the Anglo American Operating Model at Kolomela mine went live during H1 2016, with work-management processes being implemented at both the plant maintenance and plant operations. This work is currently in the stabilisation phase, and the mine has already seen significant benefits, most notably the reduction in plant throughput variation. At Sishen mine, implementation of the Anglo American Operating Model continues to support the operations post the restructuring.

At Thabazimbi, mining activities ceased on 30 September 2015 and processing activities ceased on 31 March 2016. Closure of the mine is proceeding according to plan.

Iron Ore Brazil

Iron ore production from Minas-Rio increased by 128% to 6.8 Mt (wet basis) during H1 2016, as the operation continues its ramp-up. The constrained pit and ongoing licence processes have resulted in lower than anticipated quality run-of-mine material. A provisional approval has been granted for the next phase of licensing, which has allowed immediate access to the next tranche of reserves.

Samancor

Production of manganese ore was in line with prior year at 1.6 Mt (attributable basis). Production from the Australian operations was 3% higher following the completion of the Premium Concentrate Ore project in May. This offset an 8% reduction from the South African operations following a strategic review, completed in Q1 2016 in reaction to the challenging market conditions.

Production of manganese alloys decreased by 51% to 61,800 tonnes (attributable basis). This was due to power shortages in Tasmania resulting in production at 2 of the 4 furnaces being suspended. They are currently being brought back on line, with a return to full production rates expected in July. South African manganese alloy production decreased following the decision in May 2015 to suspend three of the four furnaces. The South African operations will continue to operate one of four furnaces until market conditions improve.

Operational outlook

Kumba

Despite rallying, iron ore prices are not expected to recover materially in the short or medium term. Kumba's ongoing priorities are to ensure a strong focus on operational delivery, and to lower production costs through productivity and efficiency gains.

Kumba is accelerating study work on its low grade beneficiation projects at Sishen to utilise spare plant capacity, which includes leveraging off low-grade technology to upgrade the DMS plant to UHDMS (Ultra High Dense Medium Separation), as well as the construction of a second modular plant at Sishen. Sishen's production guidance remains unchanged at approximately 27 Mt for 2016, while waste movement is expected to be 135-150 Mt.

At Kolomela, waste removal has been optimised, and is expected to increase annual production to 13 Mtpa from 2017, with an unchanged 12 Mt expected in 2016. The modular plant at Kolomela is expected to be commissioned in 2017, providing an additional 0.7 Mtpa.

Full year export sales volume guidance has been reduced to 38-39 Mt compared with previous guidance of 40 Mt. Kumba continues to target a cash break-even price of $32-$40/tonne CFR for 2016, and an FOB cash cost of $30/tonne.

Iron Ore Brazil

Due to pit constraints, full year 2016 production guidance for Iron Ore Brazil has been revised to 15-17 Mt (previously 15-18 Mt) (wet basis).

Iron Ore Brazil's FOB cash cost is expected to be $26-$28/tonne (wet basis). Unit costs have improved since H1 2015 due to the continued ramp up, and to the cost-efficiency and cost-reduction initiatives that are now in place.

Legal

In 2015, Sishen Iron Ore Company (Pty) Ltd (SIOC) received notice from the Department of Mineral Resources (DMR) that the Director General of the DMR had consented to the amendment of SIOC's mining right in respect of the Sishen Mine, by the inclusion of the residual 21.4% undivided share of the mining right for the Sishen mine, subject to certain conditions (which are described by the DMR as 'proposals'). The conditions were not capable of being accepted by SIOC as SIOC believes the Mineral and Petroleum Resources Development Act (MPRDA) does not provide for the imposition of such conditions, they are not practically implementable and they lack sufficient detail to provide the company with legal certainty.

SIOC submitted an internal appeal in terms of section 96 of the MPRDA to the Minister of Mineral Resources, which set out the basis of its objections to the proposals. SIOC has not yet received a response and will continue to engage with the DMR in this regard.

COAL

Production volumes are saleable tonnes.

South African sales volumes exclude non-equity traded sales volumes of 3.2 Mt (2015: 1.4 Mt).

Australia and Canada is the weighted average metallurgical coal sales price achieved. South Africa is the weighted average export thermal coal price achieved.

FOB cost per saleable tonne, excluding royalties. Australia and Canada excludes study costs and Callide. South Africa unit cost is for the export operations.

Financial and operating overview

Australia and Canada

Underlying EBIT decreased by $41 million to $60 million (H1 2015: $101 million). This reflected a $203 million negative price impact from a 23% reduction in metallurgical coal realised price. The HCC benchmark price reduction of 27% was partially offset, however, by a change in mix to produce a higher proportion of benchmark quality coal. Unit costs also decreased by 14% (8% in A$) despite lower production following significant cost reduction initiatives, particularly in the open cut operations. The half year performance benefited too from a 6% weaker Australian dollar. Production was 5% lower than in H1 2015 for a number of reasons: there were two longwall moves, as opposed to only one in H1 2015; the ramping down of operations at Drayton, which will cease mining activities in 2016 following the New South Wales Planning Assessment Commission decision not to support approval of the Drayton South project; and a move to a five-day roster at Capcoal open cut to take out the highest-cost capacity.

Grosvenor produced its first longwall coal in May 2016, seven months ahead of schedule.

South Africa

Underlying EBIT declined by 10% to $116 million (H1 2015: $129 million) against a background of an
$85 million negative price impact from a 17% reduction in the export thermal coal price and 11% lower export sales volumes as a result of planned de-stocking in 2015. On-mine local currency unit costs were flat year on year despite inflationary pressures, supported by a 7% increase in production in the Export mines. This was driven by productivity improvements across all operations, notably at Zibulo, where a new shift system and elements of the Anglo American Operating Model have been implemented which led to an increase in production of 14%. Together, these led to Export-mine US dollar unit costs being 21% lower, in line with the depreciation of the South African rand against the US dollar.

Colombia

Underlying EBIT decreased by 87% to $8 million (H1 2015: $61 million), attributable mainly to weaker prices. This was compensated by a planned reduction, in reaction to the falling price, in production to remove the highest-cost capacity, and by the sustained benefits of significant cost reduction programmes run in 2015.

Markets

Metallurgical coal

Represents the quarterly average benchmark for premium low-volume hard coking coal.

Average realised price of various grades of metallurgical coal, including hard and semi-soft coking coal and PCI coal.

Metallurgical coal prices started to see signs of recovery in H1 2016, supported by a balanced supply side and stronger demand from India and China. A sharp recovery in steel prices led to higher steel production and raw material restocking by mills that had run inventory down to low levels. The spot metallurgical coal price averaged $91/tonne (TSI Premium HCC FOB Australia East Coast Port $/tonne) in Q2 2016, up 19% on Q1 2016, though characterised by higher volatility. High-cost supply continues to exit the market, in particular from the US, and as marginal projects globally are being delayed or downgraded.

Thermal coal

Thermal coal price and realised price will differ according to timing and quality differences.

Prices (Global Coal index Newcastle 6000kcal/kg FOB Australia) declined by 19% year on year. Nonetheless, Chinese import demand was not as weak as anticipated while Indian demand remained reasonably consistent. On the supply side, Indonesian volumes were down and have been constrained by financing and weather-related issues.

Operating performance

Australia and Canada

In Australia, production decreased by 5% as a result of a longwall move at both underground operations in 2016, whereas there was only a single move at Grasstree in H1 2015. Total production was also affected by the decision of the New South Wales Planning Assessment Commission not to recommend the approval of the Drayton South project and the resulting ramp down to cessation of mining activities at Drayton in 2016.

Australian export metallurgical coal production was 2% lower, reflecting the extra downtime incurred in the two longwall moves. This was partly compensated by the early start-up of the Grosvenor project in May 2016 and a deliberate change in mix at Dawson to produce higher-margin metallurgical coal.

Production at the Australian open cut operations decreased by 5%, all of which related to thermal coal; higher-margin metallurgical coal production was 2% higher. The declines in thermal coal production were experienced mainly at Drayton; at Dawson, where there was a change in mix to metallurgical coal; and at Capcoal open cut, which moved to a five-day operation in Q4 2015 in order to reduce costs and to prioritise higher-margin Grasstree production through the shared plant.

South Africa

Total production from the Export operations was 7% higher at 11.7 Mt on the back of productivity improvements following the implementation of elements of the Anglo American Operating Model at all managed operations and a new shift system at Goedehoop and Zibulo. Export production totalled 8.6 Mt, in line with H1 2015, as additional production at Landau and Zibulo was switched to the domestic market, where it received a higher margin.

Export sales were 11% lower as a result of a planned drawdown of 1 Mt of stocks in 2015.

Colombia

Anglo American's attributable output from its 33.3% shareholding in Cerrej-n decreased by 17% to 4.9 Mt due to heavy rainfall in May and June 2016, and ongoing planned reductions to remove the highest-cost capacity in reaction to the falling price environment.

Operational outlook

Australia and Canada

Metallurgical coal production in 2016 is expected to be 21-22 Mt, in line with previous guidance. This is subject to the completion of any asset disposals.

Export Thermal Coal

In 2016, export production from South Africa and Colombia remains unchanged at 28-30 Mt.

CORPORATE AND OTHER

Financial and operating overview

The underlying EBIT loss of $48 million for Corporate and other compares with underlying EBIT of
$11 million in H1 2015.

Underlying EBIT from Other Mining and Industrial fell from $62 million to $3 million following the disposal of Anglo American's interest in the Lafarge Tarmac joint venture in July 2015.

Exploration expenditure fell from $71 million to $53 million, reflecting reductions in iron ore, coal, polymetallics and central support costs. The decreases were mainly attributable to an overall reduction in drilling activities.

Corporate activities and unallocated costs made a net underlying EBIT contribution of $2 million (H1 2015: $20 million). Corporate costs fell by $39 million, which included a $34 million benefit from foreign exchange. This was partially offset by a $31 million reduction in the contribution from the Group's captive insurance company due to lower premium income and adjustments to provisions.

For further information, please contact:

Notes to editors:

Anglo American plc is a globally diversified mining business. Our portfolio of world-class competitive mining operations and undeveloped resources provides the raw materials to meet the growing consumer-driven demands of the world's developed and maturing economies. Our people are at the heart of our business. It is our people who use the latest technologies to find new resources, plan and build our mines and who mine, process and move and market our products Ð from diamonds (through De Beers) to platinum and other precious metals and copper Ð to our customers around the world.

As a responsible miner, we are the custodians of those precious resources. We work together with our key partners and stakeholders to unlock the long-term value that those resources represent for our shareholders, but also for the communities and countries in which we operate Ð creating sustainable value and making a real difference.

www.angloamerican.com

Webcast of presentation:

A live webcast of the results presentation, starting at 9.00am UK time on 28 July 2016, can be accessed through the Anglo American website atwww.angloamerican.com

Note: Throughout this results announcement, '$' denotes United States dollars and 'cents' refers to United States cents; underlying EBIT is operating profit presented before special items and remeasurements and includes the Group's attributable share of associates' 'and joint ventures' underlying EBIT; special items and remeasurements are defined in note 7 to the Condensed financial statements. Underlying earnings, is calculated as set out in note 6 and note 10 to the Condensed financial statements. Underlying EBITDA is underlying EBIT before depreciation and amortisation in subsidiaries and joint operations and includes the Group's attributable share of underlying EBITDA of associates and joint ventures before depreciation and amortisation. Tonnes are metric tons, 'Mt' denotes million tonnes and 'kt' denotes thousand tonnes, unless otherwise stated.

Forward-looking statements:

This announcement includes forward-looking statements. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding Anglo American's financial position, business and acquisition strategy, plans and objectives of management for future operations (including development plans and objectives relating to Anglo American's products, production forecasts and reserve and resource positions), are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Anglo American's present and future business strategies and the environment in which Anglo American will operate in the future. Important factors that could cause Anglo American's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the availability of mining and processing equipment, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or safety, health, environmental or other types of regulation in the countries where Anglo American operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American's most recent Annual Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this announcement. Anglo American expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers (the 'Takeover Code'), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Conduct Authority, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SWX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and any other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Anglo American's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Nothing in this announcement should be interpreted to mean that future earnings per share of Anglo American will necessarily match or exceed its historical published earnings per share.

Certain statistical and other information about Anglo American included in this announcement is sourced from publicly available third party sources. As such, it presents the views of those third parties, though these may not necessarily correspond to the views held by Anglo American.