Anglo American half year financial report 2024

Sustainability performance

Key sustainability performance indicators⁽¹⁾

Anglo American tracks its strategic progress using KPIs that are based on our seven pillars of value: safety and health, environment, socio-political, people, production, cost, and financial. In addition to the financial performance set out above and our operational performance on pages 7-33, our performance for the first four pillars is set out below:

⁽¹⁾    Sustainability performance indicators for the six months ended 30 June 2024 and the comparative period are not externally assured.

⁽²⁾    TRIFR data for the prior period has been restated following adjustments to working hours identified through the year end assurance process. Prior period data related to new cases of occupational disease has been restated due to cases identified in H1 2023 that were not confirmed until H2 2023.

⁽³⁾    Data for current and prior period is to 31 May 2024 and 31 May 2023, respectively. Prior period comparatives have been restated to reflect data model updates and the results of external assurance findings at 31 December 2023.

⁽⁴⁾    Current and prior period data presented is at 31 December 2023 and 2022, respectively. While sites are assessed annually against all requirements applicable to their context, for consistency during the transition period, the metric reflects performance against the Social Way foundational requirements. For further information on progress, see Thriving Communities commentary on page 5.

⁽⁵⁾    Jobs supported since 2018, in line with the Sustainable Mining Plan Livelihoods stretch goal. Current and prior period data presented is at 31 December 2023 and 2022, respectively.

⁽⁶⁾    Local procurement is defined as procurement from businesses that are registered and based in the country of operation - also referred to as in-country procurement - and includes local procurement expenditure from the Group's subsidiaries and a proportionate share of the Group's joint operations, based on shareholding.

⁽⁷⁾    Taxes and royalties include all taxes and royalties borne and taxes collected by the Group. This includes corporate income taxes, withholding taxes, mining taxes and royalties, employee taxes and social security contributions and other taxes, levies and duties directly incurred by the Group, as well as taxes incurred by other parties (e.g. customers and employees) but collected and paid by the Group on their behalf. Figures disclosed are based on cash remitted, being the amounts remitted by entities consolidated for accounting purposes, plus a proportionate share, based on the percentage shareholding, of joint operations. Taxes borne and collected by equity accounted associates and joint ventures are not included. Prior period comparatives have been restated to reflect data model updates.

⁽⁸⁾    Management includes middle and senior management across the Group.

Sustainable Mining Plan

Anglo American's longstanding and holistic approach to sustainability helps to build trust with our employees and stakeholders across society, reduces operational risk and in many cases delivers direct financial value for our business. Our reputation as a responsible mining company supports our ability to access future resource development opportunities, both from the significant endowments within our business and more broadly - critical to delivering our growth ambitions.

Our Sustainable Mining Plan is designed to be a flexible, living plan and we continue to evolve it as we learn and make progress and as technologies develop, while also ensuring it stays relevant and suitably stretching, in tune with our employees' and stakeholders' ambitions for our business. We are reviewing the Sustainable Mining Plan to reflect the Group's future portfolio composition that was announced in May 2024. We are also using this opportunity to ensure that our sustainability ambitions deliver tangible value to our many stakeholders and will set out an update when we have completed the review, likely only once the portfolio transformation has made significant progress. Progress against the existing Sustainable Mining Plan targets is discussed below.

Zero mindset

Occupational safety

Anglo American's number one value is safety, and it is our first priority, always. We are committed to preventing our people from being harmed at work. Keeping our workforce safe is an unremitting endeavour and comes foremost in everything we do. We are unconditional about safety and train, equip and empower our people to work safely, because we believe that everybody, everywhere should return home safe and well at the end of their working day.

In 2024, we continued to focus on three key safety levers that we believe are critical to improving front line safety: supporting operational leaders to spend more time in the field; using our Operating Model principles to deliver planned work; and implementing our new Contractor Performance Management framework across the business. Following the achievement of a record low total recordable injury frequency rate (TRIFR) of 1.78 in 2023, we continued to make solid progress in our safety journey, with our TRIFR further improving to 1.69 in the six months to 30 June 2024 (30 June 2023: 1.91). While encouraged by this continued improvement, we are deeply saddened to have lost two colleagues at Dishaba mine, part of the Amandelbult PGMs complex in South Africa, who were fatally injured after falling down a raised ore-pass. We also lost a colleague at the independently managed, joint venture Jwaneng diamond mine in Botswana. Full investigations are currently under way to understand the circumstances behind these incidents and we extend our deepest condolences to families, friends and colleagues.

Following the underground fire that started at the Grosvenor steelmaking coal mine in Australia on 29 June 2024, all emergency protocols were followed and the workforce was safely evacuated without injury. Our primary focus continues to be the safety and well-being of our workforce and local communities. The mine has been stabilised and we are re-establishing comprehensive underground gas monitoring, prior to being able to assess the steps towards a safe re-entry into the mine.

Alongside our continued use of innovative technologies to help make Anglo American a safer and healthier place to work, we are building an ever stronger safety culture, based on the established concept of Visible Felt Leadership. This programme is focused on ensuring all leaders, at all levels in the organisation, are spending sufficient time in the field having quality interactions with our workforce. These interactions are helping to deliver considerable improvements in work conditions and execution methods, as well as empowering our employees and contractors to speak up if they have concerns about the safety of their work activities.

Applying the principles of our Operating Model across all our activities, but particularly to our maintenance work, has played a major role in lowering injury levels across the Group. Planned maintenance allows for better identification and mitigation of risk and ensures work is appropriately resourced and executed, with the right people with the correct skills completing the work safely.

To deliver safe, responsible production, we know that we need to be better at how we work with our contractors and how we support their safety on our sites, ensuring they too feel valued and respected as a critical contributor to everyone's safety. Our Contractor Performance Management programme is a three-year initiative, started in 2023, which has been designed to ensure that the work our contractors undertake is well planned, aligned with our Operating Model and meaningfully risk assessed and resourced with the right skills.

Occupational health

Our health and well-being strategy, aligned with the World Health Organization (WHO) Healthy Workplace model, has been updated to include Total Worker Health concepts that integrate actions to support the health and well-being of our workforce and host communities. This integrated strategy incorporates our WeCare well-being programme and other social performance activities, including our livelihoods support programmes. It requires us to work synergistically to support our people and achieve our health and well-being goals.

Occupational diseases

In the six months to 30 June 2024, there were 9 reported new cases of occupational disease, all of which were related to noise exposure (30 June 2023: 3, 2 of which were related to noise exposure). A significant challenge in reporting occupational disease is that many hazards do not cause immediate symptoms or measurable health harms. Occupational disease is often not detectable or definable until many years after exposure. This means cases reported in a given year are most likely to reflect accumulated past working conditions. This latency challenge underscores the importance of risk assessment and preventative management strategies, continuous environment monitoring, and comprehensive worker occupational health surveillance. These activities are an ongoing focus at Anglo American and, as we continue to improve the rigour of our reporting processes and proactive case management, we may detect further historic cases of occupational disease.

Healthy environment

Our existing Sustainable Mining Plan includes commitments to be a leader in environmental stewardship. These include our aims, by 2030, to reduce operational greenhouse gas (GHG) emissions (Scopes 1 and 2) by 30%; achieve a 50% reduction in fresh water abstraction in water scarce areas; and deliver net-positive impacts in biodiversity across our managed operations.

Climate change

In addition to our existing 2030 operational emissions reduction target, we have stated our aim to achieve carbon neutrality across our operations by 2040, and an ambition to halve our Scope 3 emissions, also by 2040. We continue to make progress across the current portfolio in reducing our emissions, with our Scope 1 and 2 GHG emissions lower than the prior period. Since 2023, our managed operations in South America have been supplied with 100% renewable electricity and the managed operations in Australia are scheduled to move to renewable supply from 2025. At this stage, 60% of the global grid supply for the current Anglo American portfolio would be drawn from renewable sources. We continue to make progress towards addressing Anglo American's largest remaining current source of Scope 2 emissions - our electricity supply in southern Africa. Our jointly owned renewable energy venture with EDF Renewables, known as Envusa Energy, completed the project financing for the first three wind and solar projects in South Africa in February 2024. These three renewable energy projects, known as the Koruson 2 cluster and located on the border of the Northern and Eastern Cape provinces of South Africa, are designed to have a total capacity of 520 MW of wind and solar electricity generation.

Methane emissions from the Australian steelmaking coal operations represent the largest component of our current Scope 1 emissions and we continue to work hard to capture, use and abate those emissions. We have invested significantly over several years, in excess of $100 million per annum, in methane capture infrastructure at our underground steelmaking coal operations. This investment has allowed those operations to capture gas before and during mining. In 2023, this resulted in approximately 60% of methane emissions, the equivalent of about 5.3 million tonnes of CO₂e, being abated and has provided gas to adjacent power stations with our partner and operator, EDL, providing power for the local area.

We have set an ambition to achieve carbon neutrality across our controlled ocean freight activities by 2040, with an interim 30% reduction in emissions by 2030. The delivery in Q1 2024 of the final two vessels of a 10-strong chartered fleet of Capesize+ liquefied natural gas (LNG) dual-fuelled bulk carriers, marks a significant milestone towards achieving our commitment to more sustainable shipping. The LNG-dual-fuelled vessels offer an estimated 35% reduction in emissions compared to ships fuelled by conventional marine oil fuel and are the most efficient vessels of their type today.

Water

With more than 80% of our global assets located in water scarce areas, we need to reduce our dependence on fresh water and are working on a number of projects and technologies to help us achieve our freshwater reduction targets.

At 31 December 2023, Anglo American had reduced fresh water withdrawals by 22%, compared with the 2015 baseline. Although this is encouraging, progress is not always linear due to factors such as variable operational requirements and changing precipitation levels.

In the five months to 31 May 2024, fresh water withdrawals increased to 17,261 ML (31 May 2023: 14,096 ML), owing to higher water use across most sites, driven principally by an increase in production at Steelmaking Coal, adverse hydrological conditions at several operations and an increase in dewatering, particularly at Kumba (Iron Ore). While annual variability is expected until such time as major fresh water savings and replacement projects are delivered, we believe we are still on track to meet our 2030 target of a 50% reduction in fresh water withdrawals in water scarce areas.

Biodiversity

As custodians of the land and ecosystems around our operations, we seek to improve the footprint of our operations and direct our efforts towards delivering positive and lasting environmental outcomes for host communities and our wide range of stakeholders. Within our Sustainable Mining Plan we have a commitment to deliver Net Positive Impact on biodiversity across Anglo American by 2030, compared with the 2018 baseline.

We have now completed detailed biodiversity baseline assessments across all our managed operations, defining and assessing significant biodiversity features including key habitats and species, as well as identifying those ecosystems that require protection and restoration. Detailed biodiversity management programmes have been developed for each site and have been independently reviewed by our NGO partners.

We have continued to refine our measurement processes to develop, in partnership with two long term NGO partners, a new science-based metric called Quality Habitat Hectares (QHH) that will help us to measure our contribution to internal and global biodiversity targets, as well as nature-positive outcomes. QHH enables an objective assessment of quantity and quality that are reliable and replicable through incorporating the extent, type and condition of ecosystems and species impacted in and around our operations.

We believe that the development of a metric such as QHH represents a significant advancement in the metals and mining sector, offering a new tool for measuring and reporting on nature related impacts and dependencies. This metric can serve as a catalyst for enhancing transparency and accountability across industries, encouraging businesses to disclose their interactions with nature more openly. By adopting such measures, companies can align their approach with the mitigation hierarchy, which prioritises avoiding, minimising, and compensating for biodiversity impacts.

Thriving communities

We continue working to strengthen and broaden our social performance competencies through embedding our social performance management system - the Social Way - across Anglo American. Through the implementation of the Social Way - which we believe is one of the most robust and comprehensive social performance management systems in the mining sector - and through our collaborative regional development initiatives, we are working actively to support local and regional economies, as well as the lives and livelihoods of the communities where we operate.

Since the launch of our Sustainable Mining Plan, we have supported more than 139,000 off site jobs through livelihoods programmes. One example of where we are offering support beyond traditional social investment is our Impact Finance Network, which provides tailored technical assistance to help match third-party impact capital to host-region, non-mining impact businesses and enterprises. Since 2021, we have supported a pipeline of over 100 businesses across southern Africa and South America, having helped close deals with a cumulative value of $65 million, and support for over 20,000 livelihoods. Building off the work in southern Africa, we now have a strong footprint in South America. We are into our third year of operation in Chile, are about to launch the post-pilot phase in Peru, and intend to roll out a pilot in Brazil before the end of 2024.

While we did not meet our ambitious goal of full implementation of the Social Way at all sites by the end of 2022, we continue to progress embedding the system and have implemented a significant majority of the core elements. In 2023, we re-baselined the site-level implementation pathways and by the end of the year, our operations reported 96% delivery against those implementation pathways. The Social Way is critical to underpinning many of our ambitious 2030 Sustainable Mining Plan targets, demonstrating our commitment to partnering with host communities and governments.

Trusted corporate leader

Tightly linked to our safety imperative and our Values, we strive to create a workplace that places people at its heart. We are committed to promoting an inclusive and diverse environment where every colleague is valued and respected for who they are, and has the opportunity to fulfil their potential.

By the end of 2023, we exceeded our consolidated target of 33% female representation across our management population, reaching 34%. For the six months to 30 June 2024, the percentage of females in management increased to 35%. We have also seen positive improvements in other key performance metrics such as the percentage of women in the workforce which increased to 26% in the period (30 June 2023: 25%).

To demonstrate the high standards to which we operate, we have been at the forefront of developing and adopting some of the most trusted sustainability certification programmes for the mining sector, including the Initiative for Responsible Mining Assurance (IRMA) and the Responsible Jewellery Council (RJC).

Having met our Sustainable Mining Plan interim target in 2022 of having half of our operations undergo third-party audits against recognised responsible mine certification systems, we continue to work towards our 2025 target for audits of all operations.

Some of the most recent achievements for our sites that were assessed against IRMA's comprehensive mining standard include:

-    Our Mototolo and Amandelbult mines in South Africa became the first PGMs mines in the country to complete the audit - achieving the IRMA 75 and IRMA 50 level of performance, respectively;

-    Confirmation from IRMA that the Unki PGMs mine in Zimbabwe retained its IRMA 75 level of performance; and

-    Our Minas-Rio and Barro Alto mines in Brazil are the first iron ore and nickel-producing mines in the world to complete an IRMA audit. Both mines achieved the IRMA 75 level of performance.

The success of our business is shared with a wide range of stakeholders, including national governments and host communities, through the significant corporate tax, mining tax and royalty payments that we make. Total taxes and royalties borne and taxes collected amounted to $2.5 billion, an 11% decrease compared with the first half of 2023, reflecting lower revenues and profit before tax.