#1Ⓒ AngloAmerican The Role of Mining in a Transitioning World June 2023#2"Wealth is matter which has been consciously and intelligently transformed from a condition in which it is less to a condition in which it is more serviceable to human need. Without wealth man cannot exist." Hilaire Belloc, "The Servile State", 1912 "The total volume of workable mineral deposits is an insignificant fraction of the earth's crust, and each deposit represents some geological accident in the remote past, each deposit has its limits; if worked it must be exhausted. No second crop will materialise. Rich mineral deposits are a nation's most valuable but ephemeral material possession." T.S.Lovering, "Mineral Resources from the Land", 1969 "Productivity isn't everything, but in the long run it is almost everything. A country's ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker." Paul Krugman, "The Age of Diminishing Expectations", 1994 Anglo American, 2023#3The history of economic growth and development is synonymous with the accumulation of commodities in the world's physical capital stock 100,000 Real Global GDP - US$bn 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Annual Evolution of Global Steel Stock vs. Real Global GDP 1900-2019 5,000 10,000 Anglo American, 2023 9.2.9.0.·•·´¨¨¨¨¨¨ 15,000 The history of Global economic development is the 30,000 20,000 25,000 Global Capital Stock of Steel - Mt history of capital accumulation. But we must remember what this capital is in reality; it is steel and copper and nickel. It is the product of mining. 35,000 40,000 70 GDP/Capita - Real PPP$ 65 60 55 50 फ्री 45 40 30 25 20 15 10 5 Stock of Steel vs GDP-113 Country Analysis (Area = Annual Steel Demand per Capita) R² = 74% 5,000 China 10,000 USA Japan 15,000 Steel Stock-kg/Capita Singapore 20,000#470% 60% 50% 40% 30% 20% 10% 0% And while the rise of China has captured the headlines, it represents simply the sequential continuation of a well established historical pattern Percentage of Global Copper Consumption wijn 1800181018201830 1840 1850 186018701880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 199020002010 -U.K. Anglo American, 2023 -USA China 80% 70% 60% 50% 40% 30% 20% 10% 0% Percentage of Global Iron Ore Consumption Aur 1800181018201830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 199020002010 -U.K. my food USA China#5UN Sustainable Development Goal #1 "No Poverty"... What will it really take? Copper Demand Implications of SDG#1 (excluding "green" copper) Kg Copper per Person Kg Steel per Person Required Per Capita Uplift in Physical Capital - Copper 233 250 200 150 100 50 0 16,000 14,000 12,000 10,000 8,000 Required Per Capita Uplift in Physical Capital - Steel 14,723 6,000 4,000 2,000 61 Current Installed Stock (Kg/cap) Anglo American, 2023 Required Installed Stock (Kg/cap) 4,285 Current Installed Stock (Kg/cap) Required Installed Stock (Kg/cap) Mt Copper Mt Steel 3,000 2,500 2,000 1,500 1,000 500 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 480 Current Stock 33,749 2,079 Current Stock -2,257 Steel (i.e. Iron Ore & Coal) Demand Implications of SDG#1 Required Stock - Low Required Stock - Mid Required Stock - High Growth Growth Growth 131,388 2,438 142,622 154,061 Required Stock - Low Required Stock - Mid Required Stock - High Growth Growth Growth#6Whatever the precise form of the decarbonisation pathway for the global economy, the one fixed point is the huge increase in the material intensity of the process. Material Intensity of Transportation - EVS vs ICES Material Intensity of Energy - Renewable vs Fossil kg/Vehicle 250 200 150 100 50 0 Electric car ■Copper ■Graphite Zinc Lithium Anglo American, 2023 ■Nickel Rare earths Conventional car Manganese Cobalt Others kg/MW 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Offshore wind Copper ■Chromium Silicon Nickel ■Molybdenum Others Manganese Zinc Coal Cobalt Rare earths#7The real issue is not the future of demand but of the mining industry's ability to meet this demand. Total Global Copper "Resource Base" Evolution Total "Resource Base" - Mt Cu 2000 1750 1500 1250 1000 750 500 1880 Quellaveco 1900 Prehistory to 1910 Anglo American, 2023 0.5% CAGR Escondida 0.3% CAGR 1920 1940 Kamoa Chuquicamata O 1913 to 1960 1960 1980 1.2% CAGR 2000 1961 to 2000 0.4% CAGR Grasberg & OT 2020 2040 2000 to 2016 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 116-Year CAGR in Copper Consumption by Origin 0.9% Discovery rate 1.7% Reducing Cut- Off Grade 0.4% 0.4% 3.4% Reduced LoM Increased Scrap Consumption Use Growth#8The long run growth in supply, and hence economic development, rests on the interplay between incentives (i.e. price and cost of capital) and technology. 1918 - World's Largest Mines Chile Copper Co (Chuquicamata) Braden Copper Co (El Teniente) Utah Copper Co Ray Consolidated Chino Copper Co Andes Copper Co (Anaconda) Inspiration Consolidated Nevada Consolidated New Cornelia Miami Arizona Bagdad Consolidated Copper Co Howe Canada Copper Corp Ray Hercules Ohio Copper Burro Mount Total/Average Anglo American, 2023 Ore Reserves Mt Ore 698 264 374 86 97 110 83 69 51 55 21 20 10 12 10 15 4 1,979 Reserve Grade % Cu 2.12% 2.26% 1.37% 2.06% 1.63% 1.40% 1.63% 1.57% 1.58% 1.47% 1.44% 1.33% 2.16% 1.74% 1.77% 0.80% 2.20% 1.83% Contained Metal Mt Cu 14.8 6.0 5.1 1.8 1.6 1.5 1.4 1.1 0.8 0.8 0.3 0.3 0.2 0.2 0.2 0.1 0.1 36.2 2023 World's Largest Mines Escondida Collahuasi Polish Copper PT Freeport Indonesia Toquepala Minesite Norilsk Cerro Verde Chuquicamata Minesite Cobre Panama (Petaquilla) El Teniente Buenavista Kamoa-Kakula Oyu Tolgoi Andina Morenci Quellaveco Olympic Dam Total/Average Ore Reserves Mt Ore 6,919 4,166 1,017 1,725 5,681 1,293 4,077 1,953 2,936 1,346 3,334 235 1,213 1,236 3,918 1,667 441 43,156 Reserve Grade % Cu 0.58% 0.80% 2.01% 1.03% 0.28% 1.20% 0.36% 0.67% 0.38% 0.80% 0.32% 4.47% 0.85% 0.79% 0.23% 0.53% 2.00% 0.60% Contained Metal The ability to drop head grades by ~70% in an economically viable manner has enabled an extraordinary exponential (620%) increase in reserves and hence output Mt Cu 40.4 33.3 20.5 17.8 16.2 15.5 14.6 13.1 11.1 10.7 10.5 10.5 10.3 9.7 8.9 8.8 8.8 260.9#9kt Cu The recent "super-cycle" saw a return to long run demand growth trend but, more importantly, an inflection in the long run trend in mining productivity. 3.E+04 1.E+04 6.E+03 3.E+03 2.E+03 8.E+02 4.E+02 1880 Demand for Copper - 1900 to 2017 000 1900 Anglo American, 2023 China's emergence in the early 2000s represents a continuation of the long run global trend line...it was not the cause of the "super-cycle" O 1920 08⁰⁰ 1940 ఇయి. అరి 1960 1980 2000 2020 Productivity in Mining (Copper)- 1910 to 2017 It is in the supply-side where we see a departure from long run trend. 131072 65536 32768 16384 8192 4096 2048 1024 1910 The "super cycle" is more of a supply side phenomenon then a demand side issue. Occca 1930 20080 au 1950 1970 1990 googo 2010#10It is this interplay that explains the emergence of new structural periods in the price of commodities. Copper Demand - kt 32768 16384 8192 4096 2048 1024 512 256 o Copper Demand • Mining Productivity 1880 Metal Demand and Mined Productivity Anglo American, 2023 Cocochocogo 8 2 x 8 во ово повод 1900 1920 1940 1960 coso coso000 che colo 1980 2000 2020 128000 64000 32000 16000 8000 4000 2000 1000 500 2040 Labour Productivity in Mining - Tonnes of Rock/Man 2000s on - mining productivity starts to flat line, "low hanging fruit" has been picked. Easy gains in reducing the material intensity (i.e. lightweighting and substitution) have run their course and non-Western centres of demand (with markedly different philosophical attitudes to those in the West) start to emerge - real prices rise. 1970s-1990s-following the oil shocks of the 1970s and the emergence of neo-Malthusian economics as captured in the Limits to Growth and the Club of Rome, Western World industrial activity and growth declines just as mining productivity starts to accelerate - real pricesfall.#11We must be careful to distinguish between incremental gains and true "Schumpeterian" moments of creative destruction in the industry. Tonnes of Copper per Man Year - Log Scale 256 128 64 32 16 t 2 1 Immediately post the first world war, gains are driven by the mass electrification of the US copper industry and the relative movement in the value of labour versus power 1.4 1860 Anglo American, 2023 Labour Productivity in U.S. Copper Mining Gains in the 1980s/90s driven by a change in the nature of the capital equipment used in mining, in particular by an increase in the physical dimensions of this equipment and new hydrometallurgical techniques 2.4 4.4 11.7 10.8 9.3 11.3 18.9 1870 1880 1889 1902 1909 1919 1929 247 27.3 32.1 41.5 42.5 39.4 107.71 134.2 112.6 102.3 1939 1954 1958 1963 1970 1980 1990 2000 2010 2015#12The most recent step change in mining productivity was driven by scale...from 40t to 400t haul trucks...it is this "order of magnitude" change that is required to offset grade declines. Mining Productivity and Scale of Capital Equipment - Caterpillar Trucks citrino Mining Labor Productivity - Tonnes of Rock per Man Year 120,000 100,000 80,000 60,000 40,000 20,000 0 1950 Anglo American, 2023 1955 1960 1965 1970 Productivity 1975 1980 Truck Size 1985 1990 1995 2000 2005 Best Fit Gompertz "S-Curve" for Truck Size 2010 2015 450 400 350 300 250 200 150 100 50 O 2020 Cat Haul Truck Size - Short Ton#13Mining is the most productive use of labour in the modern economy... productivity in the supply of raw materials underpins the productivity of every other activity. Factor Share of Value Add by Sector 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Mining Anglo American, 2023 Agriculture Utilities IT & Media Rental Services Financial Services Transport & Postal Manufacturing Recreation Services Construction Wholesale Trade Retail Trade Capital cost shares ☐Labor cost shares Accommodation & Food Services Other Services Scientific and Technical Services Administrative Services#14However, while our stated preference is for a just transition to a sustainable future...our revealed preference tells a markedly different story. V/EBITDA 50 45 40 35 30 25 20 15 10 5 0 45 Retail - Online 27 Software - Internet Anglo American, 2023 25 Hotel & Gaming 24 Entertainment 21 20 Alcoholic Beverage Valuation by Sector Software - Entertainment 18 Restaurant & Dining 16 Apparel 16 Green & Renewable... 16 Computers/Peripherals 15 Recreation 12 Advertising 10 Cable TV 8 Tobacco 6 6 Metals & Mining Oil & Gas E&P 5 Coal 4 Steel#15So what does this all mean...higher real commodity prices. 25,000 20,000 15,000 10,000 5,000 0 Copper - Real 2022$ 2,814 8,822 2022 2002 Forecast for Actual 2022 Anglo American, 2023 7,292 22,861 2042 2022 Forecast for Actual 2042 Given Same Error 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 412 Gold-Real 2022$ 1,801 2002 2022 Actual Forecast for 2022 1,411 6,173 2022 2042 Actual Forecast for Given Same 2042 Error 350 300 250 200 150 100 50 28 Iron Ore - Real 2022$ 2002 Forecast for 2022 121 2022 Actual 73 322 2022 2042 Actual Forecast for Given Same 2042 Error#16AngloAmerican Thank you O Anglo American, 2023