Looking ahead the company confirmed that its Grosvenor metallurgical coal project in Queensland is on track to begin longwall production by 2016.

Outgoing Anglo chief executive officer Cynthia Carroll said the lower profit was due to 29% weaker met coal prices which could not be offset by the 24% increase in production and the cutting of low margin production.

“Production increases have been driven by productivity improvements at open cut and underground operations,” she said.

“Moranbah delivered record Q4 2012 longwall performance.”

Unit costs were down by 10% year on year and 20% lower in the 2012 second half compared to the first half.

Carroll said the greenfield Grosvenor metallurgical coal project, situated immediately to the south of the Moranbah North mine in the Bowen Basin, was expected to produce 5 million tonnes per annum of high quality met coal from its underground longwall operation over a projected life of 26 years and to benefit from operating costs in the lower half of the cost curve.

“Grosvenor forms a major part of the group’s strategy of tripling hard coking coal production from its Australian assets, using a standard longwall and coal handling and preparation plant design,” she said.

“In its first phase of development, Grosvenor will consist of a single new underground longwall mine, targeting the same well understood Goonyella Middle coal seam as Moranbah North and will process its coal through the existing Moranbah North CHPP and train loading facilities.

The Grosvenor project is in execution, with engineering work progressing to plan, construction underway and longwall production targeted to begin in 2016.

Also underway is a prefeasibility study for expansion, comprising the addition of a second longwall at Grosvenor.

Anglo American thermal coal division’s underlying operating profit of $793 million was 36% lower, mainly as a result of lower export thermal coal prices for both South African and Colombian coal and, in South Africa, above inflation cost increases.

It was partially offset by increased sales volumes, mainly from the full incorporation of Zibulo as an operating asset and despite the closure of high-cost production sections.