Anglo American Plc Business Information, Profile, and History

Company Perspectives:

Anglo American PLC, with its subsidiaries, joint ventures and associates, is a global leader in the mining and natural resources sectors. It has significant and focused interests in gold, platinum, diamonds, coal, base and ferrous metals, industrial minerals and forest products, as well as financial and technological strength. The Group is geographically diverse, with operations and developments in Africa, Europe, South and North America, and Australia. Anglo American represents a powerful world of resources.

History of Anglo American Plc

Anglo American PLC is considered the world's largest gold-mining organization. Through its 45-percent share in De Beers, the company has a major interest in the distribution of 80 percent of the world's rough-diamond production. The company was formed in 1917 as South Africa's first home-based public limited company, called the Anglo American Corporation of South Africa (AAC), and has since become a unique multinational group, headquartered in London, England. The company dominates South Africa's domestic economy, with interests in an estimated 1,300 South African companies and control of at least one-quarter (and possibly as much as two-fifths) of the South African stock market. The group's corporate structure is based only in part on majority share ownership of subsidiary, associate, and other companies. Much of its control and influence lies in a complex web of connections based on family ties, friendships, and mutual business interests, although that interest is not infrequently accompanied by various forms of financial or commercial pressure.

The corporation--or what might be referred to as the "Oppenheimer empire"--has become in many respects a holding company, with diversified interests, such as gold-mining, being the formal responsibility of a group of associate companies. During the long period of apartheid, the Oppenheimers and the group itself were critical of various aspects of the apartheid system, while at the same time many of apartheid's opponents attacked AAC on the grounds that it was profiting greatly from the system, and in practice was doing very little to change, or to mitigate, its effects. With apartheid's collapse in the early 1990s, AAC has been preoccupied with protecting the empire it built in the face of the pressures to nationalize some of its assets and to lessen its stranglehold on the South African economy.

Early History Beginning in 1902

The roots of AAC's history can be traced back to 1902, when Ernest Oppenheimer arrived in Kimberley representing diamond merchants A. Dunkelsbuhler & Co., a member of the Diamond Syndicate, the cartel that attempted to maintain prices for South African diamonds by regulating production. Working for Dunkelsbuhler and on his own account, Oppenheimer also became interested in gold- and coal-mining, and in 1905 acquired the Consolidated Mines Selection Company (CMS), originally formed in 1887, with properties on the Far East Rand gold field. By 1916, when that field's true value was more widely appreciated, Oppenheimer/CMS was in a stronger position there than any of the other Transvaal mining-finance groups.

CMS had a large number of German shareholders and directors, causing it to be rather unpopular during World War I. Oppenheimer was a naturalized British subject who identified strongly throughout his life with South Africa's British, against its Dutch Afrikaner community. Oppenheimer was nevertheless attacked because of his German origins. These points, coupled with the war-imposed restrictions on British capital exports, led him to seek U.S. financing to develop the field. An American connection in CMS introduced him to Herbert Hoover, through whom Newmont Mining Corporation, J.P. Morgan & Co., and Guaranty Trust became involved. With their support, AAC was formed on December 25, 1917, with £2 million of authorized capital, half of which was issued. Various political reasons have been advanced for the decision to locate the company in South Africa rather than Britain, but the primary reason was to avoid the possibility of double taxation problems.

AAC joined the ranks of the mining-finance groups characteristic of South African mining. Cecil Rhodes and other early financiers concentrated ownership of individual mines in the hands of a few holding companies that provided basic financial, administrative, and technical services for the mines they owned. This process of concentration had begun with the diamond mines, initially because some claimholders had insufficient capital to continue exploitation as workings went deeper, and ultimately because ownership concentration meant more efficient production control. Gold-mining did not face oversupply problems, but given gold's fixed price and the highly speculative nature of mining investment, concentration of ownership meant more efficient use of technical and administrative resources. It also focused wealth and power in the hands of the relative few who sought it and were able to command the necessary capital. A system of interlocking directorships developed, creating a close, interdependent network. A relative latecomer to the field, Oppenheimer soon showed that he was more than a match for his predecessors, as he set out to absorb much of what they had built, and took the concept of group control much further.

With a strong base in gold and access to U.S. capital, Oppenheimer was able to challenge the Diamond Syndicate and De Beers, the dominant producer. He was helped by influential British and German connections, and by contacts between AAC Director H.C. Hull, former finance minister of the Union of South Africa, and his former political colleague, Prime Minister Jan Smuts. Oppenheimer acquired most of the diamond mines in Namibia--then known as South West Africa--when the German companies operating them were encouraged to sell out to British interests. By the time De Beers and others learned of the negotiations, it was too late to prevent the sale to AAC, and they initially welcomed the stability these acquisitions implied.

AAC's Namibian mines were quickly brought under centralized control in Consolidated Diamond Mines of South West Africa (CDM). Initially CDM cooperated with the Diamond Syndicate, but in 1922, AAC and Barnato Bros. reached a separate agreement for the purchase of the Belgian Congo's diamond output. In 1923 they acquired major interests in the Companhia de Diamantes de Angola, diamond mines in West Africa, and a share in British Guiana's diamond production. CDM subsequently became part of the De Beers group in 1930. (More recently, CDM and AAC have been cooperating with the Namibian government in developing the country's gold resources.)

In 1924, AAC was given an 8 percent share in the Diamond Syndicate. The purchasing agreements AAC had with non-South African producers, including the right to take all of CDM's production, gave AAC apparent control over such producers. This control was more apparent than real, but led smaller South African producers to look to AAC as an alternative to the syndicate, with whom they were increasingly dissatisfied, owing to the prices they were offered. The principle of selling all of South Africa's diamonds through a single channel was seriously weakened. AAC was asked to leave the syndicate, and established a rival organization joined by Dunkelsbuhler, Barnato Bros., and Johannesburg Consolidated Investments Ltd. (JCI), a group originally established by Barnato, and subsequently absorbed into AAC's ambit.

The South African government was concerned about the implications for revenue of limited diamond production and a potentially disastrous price-cutting war between the two syndicates. The Diamond Control Act of 1925 gave the government sweeping powers to take over diamond production and distribution, and to prevent extreme behavior, namely price-cutting. As a member of Parliament, Oppenheimer had been able to introduce an amendment that required the government, if it enforced any provisions of the law, to give preference to South African-registered diamond purchasers; AAC was the only one--while all the others were registered in London.

With AAC continuing to grow financially stronger in the face of declining world diamond demand, the new syndicate was able to outbid the old in an offer to South African producers. On July 30, 1925, the new syndicate's offer was accepted and the old syndicate collapsed. Having gained effective control of distribution, Oppenheimer moved to control production as well. He became a De Beers director, while AAC further strengthened its position by buying properties in two new South African fields and by consolidating and expanding its links with outside producers. Resistance was strong. Oppenheimer's bid, first made in May 1927, to take control of De Beers, only succeeded in December 1929 with the support of the Rothschilds, introduced through Morgan Grenfell. Oppenheimer became chairman of De Beers, clearing the way for the consolidation of production and distribution functions in one organization, the Diamond Corporation, formed in February 1930 under De Beers' and Oppenheimer's effective control.

Negotiations with Sir Chester Beatty and Sir Edmund Davis, which had led to agreements for purchasing west African, Angolan, and Congolese diamonds, also led Oppenheimer to participate in the development of the Northern Rhodesian--now Zambian--copperbelt and that country's lead and zinc mines. Although these rich deposits had been known to exist for several decades at least, technological difficulties had prevented exploitation. Progress in the use of flotation techniques opened up new possibilities after World War I. AAC acted as engineering consultant to several companies formed to exploit these deposits, bringing some of them together in Rhodesian Anglo American Limited (Rhoanglo), formed in December 1928. American capital was also involved in this venture, as it was in the other group operating on the copperbelt, Beatty's Rhodesian Selection Trust.

Oppenheimer wanted to combine Morgan Grenfell, Beatty, and others in a syndicate to develop the Mount Isa lead mine in northwest Queensland, Australia. Initial surveys were not promising, and AAC withdrew. AAC subsequently became involved in various Australian undertakings, ultimately establishing an Australian subsidiary. Overall, however, the group's direct involvement in Australia has been rather limited.

The 1930s Through the 1980s

The 1930s saw further expansion of AAC's holdings in the Far East Rand, in some cases in conjunction with New Consolidated Gold Fields. AAC also began to move into the Orange Free State gold fields. The areas it acquired initially were generally unpromising. It was only by purchasing a stake in European and African Investments Ltd. in 1943, and subsequently gaining full ownership by acquiring most of the shares of its parent company, Lewis and Marks, in 1945, that AAC laid the foundation for its subsequent domination of Free State gold-mining.

The 1930s and 1940s also saw the establishment of several subsidiary holding companies and the extension of the administration decentralization that characterizes AAC. The precise extent to which effective Oppenheimer family control was maintained through E. Oppenheimer Sons, which absorbed A. Dunkelsbuhler & Co. in 1935, is unclear, but it is clear that personal influence remained strong. Anglo American Investment Trust (ANAMINT) took over AAC's diamond interests in 1936, while West Rand Investment Trust (WRITS) took responsibility for gold mines in the Far West Rand field that were opening up at this time.

The decentralized structure was intended to allow, indeed to stimulate, on-the-spot decision-making, and to enable ideas to filter up from the people most directly involved in day-to-day operations. However, decentralization made it extremely difficult to trace the details of financial connections within the group as the constituent companies remained separately incorporated. Effective control, or at least coordination by central management, had not been sacrificed; information was constantly exchanged, both formally and informally. Interlocking directorships, and the power to appoint directors, were augmented by personal contacts based on friendship and, more importantly, by family connections. Members of the Oppenheimer family held important positions in many of the companies. On another level, AAC recruited people considered potentially high-powered, including a substantial number of former Rhodes scholars.

As the group developed, acquiring or establishing companies in various fields, the decentralized structure remained. Some companies became subsidiaries, with at least 50 percent of their shares held by AAC. In other cases control mechanisms were more flexible, but just as effective. These included holding a greater number of shares than anyone else; the control of essential supplies, markets, or technology; and various financial links.

Between 1945 and 1960, AAC became the world's largest gold-mining group, owing to expansion in the Orange Free State as well as the richer mines in the Far West Rand and Klerksdorp fields. Capital requirements were high, in part because the Free State gold deposits lay at considerably deeper levels than the Rand's. The 1946 African miners' strike, although rapidly repressed, was evidence of considerable upward pressure on African wages. AAC decided to base Free State development on more capital-intensive techniques.

Building on its original financial concept, AAC went farther afield in its search for capital, securing about 27 percent of the £370 million raised from British sources; 23 percent from Switzerland, Germany, elsewhere in Europe, and the United States; and 43 percent from within the AAC group itself. Most innovative, and significant in the longer term, was AAC's drawing on surplus capital and non-mining savings generated within South Africa itself for 7 percent. The greater availability of domestic capital was a particularly important development after World War II, forming the basis for a measure of domestic financing of development, which was associated in part with the expansion of Afrikaner, as opposed to British, capitalism. As internal savings increased over the following decades, they also laid the foundation for South Africa's ability to absorb a substantial portion of shares disposed of through disinvestment by foreign firms, although heavy reliance on foreign investment remained.

By 1960, AAC had taken over the leadership of the gold-mining industry. It was also making heavy inroads into the country's industrial and service sectors. The difficulties of importing manufactured goods from Europe during World War I had stimulated interest in domestic industrialization. Increasingly powerful Afrikaner politicians were wary of mining interests prepared to finance industrial development, partly because of an underlying antipathy to capitalists, and partly because of the politicians' foreign, particularly British, identity. This led in 1928 to the formation of the Iron and Steel Corporation (ISCOR) as a nationalized basis for the country's iron and steel industry. As post-World War II mining developments generated more capital, pressure to create domestic investment opportunities led to increased, though often reluctant, cooperation between the government and the private sector which was increasingly dominated by AAC.

Social and political considerations also became important, particularly after 1948 when the rationale for the apartheid system included the expectation that industries would be established along the borders of homeland territories, providing employment for the Africans increasingly forced to inhabit them. While that hope was never fulfilled, antagonism between the British and Afrikaners began to diminish in the face of a perceived common threat from black Africans, and by the growth of Afrikaner involvement in business. The importance of Oppenheimer's and AAC's financial strength also diminished some of the specific antagonism toward them. Despite the fact that Harry Oppenheimer, who succeeded his father as head of the group after World War II, often criticized the apartheid regime, it was widely accepted that he did not intend to attempt to destroy it, was prepared to work within it, and was pressing for changes that would improve the position of Africans primarily because it made good business sense.

In 1942 the government established the Industrial Development Corporation to promote and finance--through war taxes imposed on the mining industry--the expansion of ISCOR and a range of private industrial concerns. This was in some measure an attempt to create a counterweight to AAC. Its ability to draw on foreign capital sources, as well as foreign technology and other expertise, meant that the counterweight soon fell.

Initially, most of AAC's industrial activity was directly related to mining. It had acquired African Explosive and Chemical Industries through its earlier investments in diamond interests. Its acquisition of Lewis and Marks brought it Union Steel and Vereeniging Refractories. In 1936, AAC established Boart and Hard Metals, concerned with the use of industrial diamonds in mining and other drilling applications. In 1961 it created the Highveld Steel and Vanadium Corporation which, along with Steel Ceilings and Aluminum Works (SCAW), acquired in 1964, formed the basis of AAC's control of South African specialized steel production, as well as created a strong foundation for heavy engineering. The merging of three construction companies--Lewis Construction, James Thompson, and Anglo American Construction--into LTA Ltd. created a construction giant.

Diversification also led AAC into paper manufacturing (Mondi Paper Co., formed in 1967) and, through its 1960 takeover of Johannesburg Consolidated Investments, newspaper publishing (the Argus group and Times Media Limited). Building on motor vehicle distribution in the McCarthy group, it moved--by combining with Chrysler and then Ford--into automobile production as well. In freight services, in conjunction with Safmarine, it led the growth of containerized shipping in the country. Retail stores and large property holdings have also been acquired.

An important merger involving AAC in the 1970s was between Rand Mines and Thomas Barlow. Rand Mines was a mining group that had not acquired interests in the Far West Rand and Orange Free State as its older Witwatersrand mines reached depletion. Seriously ailing, it came under AAC control in the 1960s, but AAC did little to revive it. Thomas Barlow had been a small engineering supply importer, which by 1970 controlled more than 70 companies manufacturing a wide variety of products. Barlow acquired all Rand Mines' issued shares in 1971. AAC held 10 percent of Barlow Rand's shares directly. By 1972, after reorganization and expansion, the merged group controlled 131 subsidiaries and associates in nine countries. Although executive control remained in the Barlow family hands, AAC was not without influence in the firm.

At least as important as its industrial links was AAC's involvement in the financial sector. In 1949, the South African government set up the National Finance Corporation (NFC) to receive large deposits--minimum £50,000--to be used for investment. Much of the NFC's funds came from and went back into mining. AAC, for its part, formed a private merchant bank, Union Acceptances Ltd. (UAL), in 1955, supported by Lazard Freres and Barclays Bank. Offshoots and mergers followed, the most important mergers being those in the 1970s which brought UAL, Syfrets Trust Co., Old Mutual, and Nedbank together as Nedsual, providing commercial banking, insurance, and other financial services. AAC went on to increase its holdings in insurance and other financial services institutions. Although AAC disposed of its Nedbank holdings by the late 1970s, the merger with Nedbank was only one of the moves made that contributed strongly to the destruction of the barrier between British and Afrikaner capital.

AAC did not merely compete with Barclays. The 1970s expansion saw AAC's holdings in Barclays National Bank reach 17.5 percent of the total shares issued. In 1986, when Barclays International was forced by public pressure to complete its disinvestment in South Africa, AAC acquired the greater part of the shares divested.

On the international scene, using many of the channels it had opened to bring capital into South Africa, AAC also expanded its own holdings, primarily in mining, throughout the world. In London, Charter Consolidated, a 1965 merger of the British South Africa Company, Central Mining, and CMS, gave AAC considerable investment opportunities in Africa, Europe, and Australasia.

Although diamonds replaced gold as AAC's single most important source of profit in the 1980s, and despite wide-ranging diversification, gold remained at the heart of the group's activities. A substantial holding in the U.S. precious metals refiners Engelhard Corporation, along with a stake in the U.K.'s Johnson Matthey, gave AAC access to important sources of highly profitable information about the world's gold trade.

AAC's share in Engelhard was held by its subsidiary Minerals and Resources Corporation (Minorco), officially renamed Minorco in 1974. Minorco grew out of Rhoanglo. It was through Minorco that AAC attempted to take over Consolidated Gold Fields (Consgold) in 1988. AAC and Consgold had been closely associated--directly and indirectly--in many enterprises over the years, but relations between them were based at least as much on rivalry as on common interest, and the attempted takeover came as no surprise. AAC acquired about 25 percent of Consgold. This attempt came up against U.S. antitrust legislation and Consgold was bought by Hanson Trust instead.

AAC was at the center of political controversy in South Africa in the 1980s, not merely because of its economic strength, but because the Oppenheimers and the group itself took a public stand on the apartheid question. Politically active Ernest Oppenheimer and his son Harry were not in favor of black majority rule, but they did press for relaxation of certain aspects of the apartheid regime. Not surprisingly, they were particularly interested in decreasing dependence on migrant labor. A more settled, stable labor force was considered more productive and efficient. Although some stabilization of labor did occur, relatively little could be done in the face of government opposition. In 1987, along with some other mining groups, AAC began to replace migrant workers' hostels with low-cost family accommodations. Like several other changes, this was seen by many as too little too late, and by others as merely a new method of social control. AAC was not prepared to raise African wages sufficiently to allow workers effective freedom of housing choice.

In 1985, AAC's chairman, Gavin Relly, and other senior AAC personnel met representatives of the African National Congress (ANC) in exile. In April 1990, AAC's Scenario Planning team published proposals for South Africa's constitutional development. These placed great emphasis on federalism and devolution of power. More dispersed state power, AAC argued, would facilitate accommodation of divergent interest groups. This, along with a massive image-building campaign in the U.K. press had been part of AAC's campaign to remain a major economic force in the country as its political structure changed inexorably.

A Decade of Change: The 1990s

The rapid unraveling of the apartheid system in the early 1990s quickly changed forever the environment in which AAC operated and gave rise to much speculation about AAC's future, as well as a great deal of maneuvering by AAC to protect its interests. The major political events followed one after another: in 1990 the ban on the ANC was lifted and Nelson Mandela was released from prison; in 1991 the remaining apartheid laws were repealed; in 1992, an all-white referendum approved a new constitution that would lead to eventual free elections; and in 1994 the first nationwide free elections were held and were won by the ANC, with Mandela elected president.

Meanwhile, the 1990s started for AAC with a change in leadership, as Julian Ogilvie Thompson, who at one time was Harry Oppenheimer's personal assistant, took over the chairmanship from the retiring Relly in 1990. At the same time, it was widely known that Oppenheimer's son Nicholas, then deputy chairman of AAC and the head of De Beers' London-based diamond sales operation, was being groomed as the next chairman. The new leadership faced the consequences of AAC's years of dealing with apartheid and the international boycotts and sanctions the system engendered. The company had been forced to reinvest its earnings within South Africa where it had no choice but to diversify in order to use all its excess cash. By the early 1990s, AAC had created, no doubt aided by the apartheid system itself, a powerfully diversified company with admitted control of 25 percent of the South African stock market, a figure that outside observers have placed as high as 40.5 percent. Threats to nationalize certain AAC assets, notably its mines, and to break up the AAC empire seemed quite real, although it eventually became apparent that Mandela had no intention of seizing the company's assets without compensation.

As part of a two-pronged defensive strategy, AAC first moved to protect some of its assets from nationalization by increasing its overseas investments and by transferring assets into the control of subsidiaries and affiliated companies located outside South Africa, with Luxembourg-based Minorco the key affiliate. Minorco expanded its North American mining operations by acquiring the American firm Freeport-McMoRan Gold Company in 1990 (it was later renamed Independence Mining) and the Canadian-based Hudson Bay Mining & Smelting in 1991. In a 1993 $1.4 billion stock and asset swap, Minorco took over the South American, European, and Australian operations of both AAC and De Beers, which meant that all of AAC's non-African, non-diamond assets were now consolidated within Minorco and out of the reach of nationalization.

AAC's second strategy was a longer term plan of making small concessions to the new political order over the course of several years, thus heading off the possibility that the country's new government of national unity would force AAC to make more dramatic changes. Essentially, this represented a revival of AAC's strategy of co-option, previously used successfully with the Afrikaners, now being employed with the new group in power. AAC sought to spin off some of its vast holdings to black South Africans, such as in the 1994 deal in which African Life was bought by a group of black businesspeople.

A more ambitious divestment began in 1995 when AAC divided its Johannesburg Consolidated Investment Company, Limited (Johnnies) subsidiary into three separate companies: AAC American Platinum Corporation Ltd. (Amplats), a trader of platinum and diamonds; JCI Ltd., an operator of gold, coal, ferro-chrome, and base metal mines; and Johnnies Industrial Corporation Ltd. (Johnnic), a holding company with industrial and real estate assets. AAC intended to hold onto its minority stake in Amplats, but to sell its stakes in JCI and Johnnic to black South Africans. As of mid-1996 neither of the stakes had been sold, but a serious bid was developing for Johnnic, whose lucrative holdings included a 13.7 percent stake in South Africa's largest brewing company, South African Breweries; 27.8 percent of a beverages group, Premier; 26.4 percent in an automobile maker, Toyota SA Marketing; and 43.2 percent of a newspaper and magazine publisher, Omni Media. Little interest had been apparent for the JCI stake, with the Economist speculating that black South Africans' business inexperience made running a holding company more attractive than the messy business of mining.

By the mid-1990s, ACC was slowly beginning to unbundle itself of its diverse and massive holdings in South Africa. The company's future was still clouded given the question of whether it was moving fast enough to suit those in the country wishing to see economic power transferred from white to black hands nearly as fast as political power had been transferred. And while Mandela's government seemed content with a go-slow approach, the political situation was still unstable in the country, especially given Mandela's advanced age. Nevertheless, AAC's moves to shelter more of its assets offshore made it much less likely that possible future government intervention in its affairs would prove devastating.

Major Changes in 1998

AAC undertook a major change in October 1998, when it announced a significant reorganization that would result in a company name change and moving company headquarters to London. It was a complicated restructuring. AAC held considerable cross-holdings with De Beers, the South African company best known for its status in the world diamond industry. AAC also held 43 percent of Minorco, a Luxembourg-listed company that held assets outside South Africa with interests in similar industry sectors; and De Beers also owned 23 percent of Minorco.

AAC made a successful offer for the shares it did not already own in Minorco, priced at $2.3 billion; a bid for the minorities of Amcoal, South Africa's largest coal company, valued at $1.6 billion; the acquisition of Amic, another of South Africa's largest industrial companies; and the acquisition of several of De Beers' investments. Cross-holdings would remain between the two companies, but the result was one company, named Anglo American PLC. The company now held all the previous interests in gold, platinum, coal, and so on, and De Beers retained only diamond interests.

The combining of companies created several benefits. Anglo American became one of the world's largest mining and natural resources companies, with an array of interests in gold, platinum, and diamonds, and an central presence in coal, base and ferrous metals, industrial minerals, and forest products. The formation of Anglo American allowed the group to compete more effectively around the world and to exploit new business and growth opportunities, supported by improved access to international capital markets.

Before the closing of the public offer, Minorco divested itself of its gold interests and interests in Engelhard Corporation and Terra Industries. Based on the closing share price of AAC on October 14, 1998, and reflecting the terms of the share offer for Minorco, Anglo American had a market capitalization of nearly £6.1 billion, enough to be included in the FTSE 100 index. The company commenced trading shares on the London Stock Exchange in May 1999, with secondary listings on the Johannesburg Stock Exchange and Swiss Exchange SWX.

Focusing on Core Business: 2001 and Beyond

At the time of its listing, Anglo American announced shareholder value enhancement as its key objective. The company focused its efforts on enhancing its core portfolio of businesses and holdings. To that end, by early 2001, it had successfully accomplished a number of steps in this process, including significant expansionary growth in many divisions; major acquisitions in its Industrial Minerals, Coal and Forest Products divisions; the accelerated disposal of non-core industrial interests, which led to the sale of US$840 million of assets in 2000; and the exchange of the major portion of its non-core holding in FirstRand in return for certain listed mining assets valued at around US$730 million.

Rumors began to swirl in January 2001 that the longstanding marriage between Anglo American and De Beers was about to dissolve. The following month, Anglo American announced the creation of DB Investments(DBI), in conjunction with Central Holdings Limited and Debswana Diamond Company (Proprietary) Limited. The result of this deal was the elimination of the complicated cross-holding between De Beers and Anglo American, which had dampened the share price of both groups for some time. Anglo American's interest in De Beers rose from 32.2 percent to 45 percent.

The results of this move were overwhelmingly positive for Anglo American. It greatly simplified Anglo American's structure and with the removal of the cross-holding it brought an immediate cash inflow of US$1,072 million and US$701 million on redemption of preference shares in DBI. It also increased the free float of Anglo American shares to approximately 90 percent.

Anglo American made financial news pages in March 2002 with the announcement by the mining group that it had taken a US$488 million charge in 2001 to cover the cost of restructuring its base metals operations. Amidst an extremely disappointing year for base metals, most of the exceptional costs resulted from the company's miscalculations of the dollar costs of its copper investments in Zambia. This led to the proposed closure of Konkola Copper Mines, which accounted for nearly two-thirds of Zambia's copper production. Anglo American had acquired the assumed low-cost assets two years prior, but its withdrawal from Zambia alone resulted in an exceptional charge of US$353 million. Operating profits fell 5 percent to US$3.3 billion before the exceptional costs of US$513 million.

Base metals were severely hit in 2001 by the worst prices in 30 years, while steel and stainless-steel prices also waned. But by early 2002, analysts were predicting an upturn for base metals and platinum, while coal was not expected to see a change for the better.

Principal Subsidiaries:Anglo Platinum: Amandelbul UG2; Bafokeng Rasimone; Lebowa Platinum; Maandagshoek; Pandora Joint Venture (50%); Polokwane Smelter; Potgietersrust Platinums; Precious Metals Refinery; Rustenburg Base Metals; Rustenburg Platinum; Twickenham Mine; Union Section UG2 Expansion Project; Waterval UG2 Project. AngloGold: Boddington (Australia; 33%); Cerro Vanguardia (Argentia; 46%); Cripple Creek & Victor (USA; 67%); Ergo; Geita (Tanzania; 50%); Great Noligwa; Jerritt Canyon (USA; 70%); Kopanang; Moab Khotsong; Morila (Mali; 40%); Morro Velho (Brazil); Mponeng; Navachab (Namibia); Sadiola (Mali; 38%); Savuka; Serra Grande (Brazil; 50%); Sunrise Dam (Australia); Tanami (Australia; 40%); Tau Lekoa; TauTona; Union Reefs (Australia); Yatela (Mali; 40%). De Beers: De Beers Marine Namibia (Namibia; 85%); Debswana (Botswana; 50%); Finsch; Kimberley Mines; Koffiefontein; Namaqualand Mines; Namdeb (Namibia; 50%); Premier; Snap Lake (Canada); The Oaks; Venetia; Williamson Diamonds (Tanzania; 75%). Anglo Coal: Callide (Australia); Carbones del Cerrejón (Colombia; 33%); Carbones del Guasare (Venezuela; 25%); Cerrejón Zona Norte (Colombia; 33%); Dartbrook (Australia; 78%); Drayton (Australia; 88%); Eyesizwe Coal (11%); German Creek (Australia); Goedehoop; Greenside; Kleinkopje; Kriel; Landau; Moranbah North (Australia; 88%); New Denmark; New Vaal; Richards Bay Coal Terminal (27%). Anglo Forest Products: Aylesford Newsprint (United Kingdom; 50%); Cartonboard and Corrugating Paper; Europapier (Austria; 70%); Fibre Supply Forests; Frantschach Packaging (Austria; 70%); Frantschach Swiecie (Poland; 61%); Global Forest Products (49%); Merebank; Mining Timber; Mondi Packaging (Europe); Mondipak; Neusiedler (Austria); Richards Bay; Sawmilling; SiyaQhubeka Forests (65%); Anglo Industrial Minerals: Botswana Ash (Botswana; 21%); Cleveland Potash (United Kingdom); Copebrás (Brazil; 73%); Steetley Iberia (Spain); Tarmac Central Europe (Germany, Poland and Czech Republic); Tarmac France (France and Belgium); Tarmac Group (UK); Tarmac International Holdings (Far East and Middle East). Anglo Ferrous Metals: Australian Manganese (40%); Boart Longyear; Columbus Stainless (14%); Highveld Steel (78%); Samancor (40%); Anglo Base Metals: Anaconda Nickel (Australia; 24%); Barro Alto (Brazil); BCL (Botswana; 23%); Bindura (Zimbabwe; 53%); Black Mountain; Catalao (Brazil); Codemin (Brazil; 90%); Collahuasi (Chile; 44%); Gamsberg; Hudson Bay (Canada); Kolwezi Tailings (Congo; 30%); Konkola Copper Mines (Zambia; 33%); Lisheen (Ireland; 59%); Loma de Níquel (Venezuela; 91%); Mantos Blancos (Chile); Namakwa Sands; Nkomati (25%); Palabora (29%); Quellaveco (Peru; 80%); Salobo (Brazil; 50%); Skorpion (Namibia); Tati (Botswana; 43%).

Principal Competitors:BHP Billiton Ltd; Rio Tinto PLC.

Chronology

• Key Dates:
• 1917: Sir Ernest Oppenheimer founds Anglo American Corporation of South Africa (AAC).
• 1926: AAC becomes the largest single shareholder in De Beers.
• 1942: AAC's involvement in coal becomes significant through SA Coal Estates.
• 1963: The major industrial and commercial interests of AAC are incorporated into Anglo American Industrial Corporation (Amic); Scaw Metals is acquired as a prologue to entering the steel industry on a large scale.
• 1967: AAC creates the Mondi group and gains entry into the paper/timber industry.
• 1975: Anglo American Coal Corporation (Amcoal) is formed and acquires Greenfield's Collieries, becoming one of the world's largest private sector coal exporters; the company acquires its first offshore expansion through Minorco's acquisition of Hudson Bay Mining & Smelting.
• 1981: AAC becomes the first South African mining house to encourage the recognition of black trade unions.
• 1982: Jwaneng Diamond Mine in Botswana opens and becomes one of the world's chief gem producers.
• 1993: Minorco acquires the non-African assets of AAC, excluding diamonds, while AAC acquires all the African assets of Minorco.
• 1998: AAC combines with Minorco to establish Anglo American PLC.
• 1999: Anglo American PLC lists on the London Stock Exchange and enters the FTSE 100.
• 2001: Anglo American PLC eliminates its cross-holding with De Beers, increasing its interest in De Beers from 32 percent to 45 percent.