It is very pleasing to note that our market capitalisation has tripled in the last seven years. I am sure that under my successor, Cynthia Carroll, the Group will grow even further. We have one of the strongest project pipelines in the industry and I believe Anglo American employees and shareholders can look forward to a sustainable future.

The Group delivered record results for the fourth year in a row. Our profit before tax rose 54% to $9.8 billion and profits after tax and interest rose 46% to $5.5 billion. These results reflect not only record commodity prices but also the dedication of management and employees. The Group delivered ongoing efficiencies and cost savings of $583 million, despite upward pressure on costs. Production volumes also increased for all our main commodities.

After several years of steady improvement, our safety performance in the last quarter of 2006 was marred by a significantly higher incidence of fatal incidents. In October and November, we suffered a number of multiple deaths – including three deaths from lightning strikes.

Anglo American employees, the Board of Directors and I know that, in this respect, some of our current performances are not good enough. Despite areas of excellence in all the business units, our overall safety record needs to improve. We are doing everything we can to understand safety and address the causes of incidents and to renew our emphasis on improving behaviour and ensuring that processes and procedures are fully implemented. My sincere condolences go to the families and friends of those employees and contractors who died.

We believe that every injury is preventable and we must learn the lessons from these fatal incidents to ensure that there are no repeats. We will do this by better shared learning and the consistent application of standards, processes and the right behaviour.

One issue that dominated the news media in 2006, and was debated regularly in our boardroom, was global change. Awareness of climate change – the costs, the opportunities, the pressures and the expectations – reached an all-time high. We were proactive in showing the Oscar-winning documentary, An Inconvenient Truth, at our corporate offices have launched numerous programmes and projects to reduce energy consumption and carbon dioxide emissions.

Energy is a critical issue for us. We are big energy consumers and are devoting intense effort to reduce our consumption. We are also one of the world’s biggest coal producers and believe that, whatever the future holds, coal will be a part of the energy future – because it is widely available at a reasonable cost and is able to provide energy security to many developing nations. We are involved actively in a number of clean coal and carbon dioxide capture and storage projects in order to learn how to use coal in the cleanest possible way. This is why we are examining the Monash energy project in Australia. If approved, the project would convert very low grade coal into low sulphur diesel, with the resulting carbon dioxide being pumped into depleted oil wells in the sea bed in the Bass Strait some distance away.

We believe that the energy market for coal will grow and we see significant commercial reasons for energy efficiency, both for ourselves and for our coal customers. The capturing and use of coal-bed methane has become an important aspect of our business in Australia, and the pilot project we have run for two years in the South African Waterberg area is promising. At our corporate offices, we are also regularly re-examining energy and water use. Energy security is now a major concern in many parts of the world and our own efficiency projects are backed by programmes to ensure our business is not disrupted by power failures.

Sustainable development has been part of our corporate strategy for a number of years and will remain so into the future. For Anglo American, it is as much about the sustainability of the company as ensuring that communities and governments realise a benefit from our operations and view us as a responsible and worthwhile business partner. Many of our operations are in arid parts of the world and compete with communities for access to water. We have ongoing programmes to ensure that we use it wisely and efficiently. Our socio-economic assessment toolbox (SEAT) is one of the many tools we use in engaging communities to achieve mutually accepted outcomes.

Eighteen months ago, we announced a new corporate strategy which is unlocking real value for our shareholders and many other players. We have progressed far down the implementation path:

• During 2006, Kumba Resources was split into two: Exxaro, which was listed on the Johannesburg Securities Exchange (JSE) as the largest black empowered mining company in South Africa, and Kumba Iron Ore, an Anglo American subsidiary in which we hold a 64% share, also listed on the JSE.
• We have now received permission from the South African authorities to pursue a dual listing in Johannesburg and London for Mondi, our pulp and paper business. This should take place by mid-2007.
• European competition authorities have cleared the purchase of Highveld Steel by Evraz. The deal will be finalised when South African approval is obtained.
• Our shareholding in AngloGold Ashanti was reduced to 42% in April 2006 and will be reduced further over time on a value-adding basis.
• The unbundling of Tongaat-Hulett’s aluminium business to shareholders and simultaneous introduction of broad-based black economic empowerment in both Tongaat-Hulett and Hulett Aluminium will occur during the second quarter of 2007. This will reduce Anglo American’s interests in Tongaat-Hulett to 38% and in Hulett Aluminium to 39%.
• We have returned $7.5 billion to share-holders through share buybacks totalling $6 billion and special dividends totalling
  $1.5 billion, and have recently announced a further $3 billion share buyback for 2007.

This is changing the shape of Anglo American. It has presented us with some challenges in the preparation of this report and the need to retain useful comparisons with past performance.

Although diversity issues have become closely associated with the economic transformation process currently underway in South Africa, there are broader principles at stake. Throughout the Anglo American Group, we have to make ongoing progress with regard to racial and gender diversity and opportunities for disadvantaged people.

As a Group, we have become signatories to a number of international initiatives which, we believe, make a major contribution to building more sustainable futures. These include the Global Compact and the Extractive Industries Transparency Initiative, the International Council on Mining and Metals (ICMM) and the World Business Council for Sustainable Development.

I hope you enjoy reading this report, which has been prepared in accordance with the guidelines of the Global Reporting Initiative and emphasises our commitment as a member of the ICMM. The report provides our Group’s response to calls for transparency and accountability and is a reflection of the progress we have made in addressing the sustainable development agenda over the past year. It also sets out targets and directions for the future. This is a broad and complex field and one in which Anglo American is proud to be a leader. As always, we will welcome any feedback from you on the report and on our sustainable development programmes. A reply-card is provided for this purpose.

In closing, I wish Cynthia Carroll every success as chief executive. She will, I know, provide active leadership in this field, as in all others.

Tony Trahar
Chief Executive
28 February 2007