Earnings Call Transcript for Anglo American plc (AAUKF) Q2 2024

Anglo American plc (OTCQX:AAUKF) Q2 2024 Earnings Conference Call July 25, 2024 4:00 AM ET

**Company Participants:**
– Stuart Chambers – Chairman
– Duncan Graham Wanblad – CEO
– John Heasley – Finance Director

**Conference Call Participants:**
– Ian Rossouw – Barclays
– Liam Fitzpatrick – Deutsche Bank
– Bob Brackett – Bernstein
– Alain Gabriel – Morgan Stanley
– Richard Hatch – Berenberg
– Chris LaFemina – Jefferies
– Matt Greene – Goldman Sachs

**Duncan Graham Wanblad:**
Alright. Good morning, everybody. I think it’s just on the hour, so we’ll start. And welcome to you all. It’s been a pretty busy half, and I’m pleased to say that through all of that, we’ve delivered a very strong result. Despite prices falling for us by 10% for the basket of commodities that we produce, the revised plans that we put in place have delivered an excellent performance, especially in our copper and iron-ore businesses. This, alongside some very good cost control, delivering significant progress on our cost-out targets has led to an EBITDA of $5 billion, that was down just 3% on half one of last year. John will unpack that a bit later. However, the focus is now absolutely unchanged and squarely on those three key strategic priorities that I laid out for you all back in February of this year, which is operational excellence, portfolio simplification, and growth. Building on the reset of many of our mine plans of last year. And I’m going to start there and talk a little bit about how that translated into the half one financial performance before moving into portfolio restructure and growth. So the first priority, operational excellence has to be in safety. Ensuring our colleagues go home safely every day is my number one priority. Over the last couple of years, we certainly have seen a step-change in our injury rate performance. It’s now delivering a 23% improvement since 2022 and our lowest ever first half performance for the Group. But clearly, it’s still not good enough, far from it, in fact, because we still had two fatalities at Amandelbult in June of this year. We are absolutely focused on putting a stop to this. And the fire at Grosvenor I think is a very clear reminder for us all of the potential hazards in this industry and the importance of systems, people, processes, and culture. I’m very pleased to say that these did actually all come together for us, and we were able to evacuate the whole of that mine without any injury at all. One of the priorities of our organizational redesign last year was to strengthen the leadership accountability across the group and free up our leaders to spend more of their time on-site and focusing on operational delivery. Our leaders spending more time in the field is having — and by spending more time in the field, they get a chance to have more quality interactions with our workforce, and that has brought about an improved understanding of both the challenges of the operations, but also some of the opportunities in improving the way we deliver the work. These interactions have led to considerable improvements, I think, in housekeeping, in job conditions, in work execution methods, and certainly in improved training programs, all of which, I can see is now contributing to a more engaged and a more productive workforce. I am confident that we are transforming both the organization and our operational capabilities to ultimately eliminate fatalities for good. Now you’ve seen this slide before, it’s a simplistic representation of our operating model, but it is the foundation of operational excellence. Excellence relies firstly for us on having a good plan. That plan, of course, needs to be stretching, but yet it must be realistic. Rigorous execution of that plan is then absolutely key, but just as important to the delivery of that plan are all the processes and routines that not only correct any deviations to that plan in a safe and timely manner but also improve either the efficiency of the execution or indeed improve the plan itself. So this doesn’t only result in stable and cost-effective production, but absolutely also in safer operations. So this is a journey, and I believe we now have good foundations, and we can see some of the outcomes related to that progress in terms of evolving our operating model. While production is broadly flat compared to the first half of ’23, we are importantly tracking in line with our plans with operational momentum enabling a 2% step-up in the second quarter on the first. As I mentioned earlier, copper and iron ore have performed particularly well. We had an excellent performance really in copper, and we are tracking to our plans as we move through the current lower grade mining phases at both Los Bronces and Quellaveco. As per the plan, the Los Brances plant is going to be put on care and maintenance at the end of this month. Collahuasi performance benefited from an increase in throughput, and as a whole, the business has progressed extremely well on their cost-saving targets. In iron ore, Minas-Rio has maintained strong operational performance with good momentum going on into the second half. The reconfiguration of Kumba coupled with our focus on operational excellence there is also beginning to deliver results with some great outcomes in terms of cost reduction and productivity improvements are concerned. Performance at PGMs has been improving through the half with the benefits of the revised mine plan at Mogalakwena now on track to come through in the second half of this year, and we’ve already seen some of the early-stage improvements from the turnaround at Amandelbult, particularly in the second quarter of this year. We did benefit a bit there from selling down the inventory, which of course has also helped us focus on our streamlining of working capital across the whole of the



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