Anglo American reaps benefits of restructuring with solid results

Anglo American, which has been through an extensive restructuring, delivered annual results showing the benefit of the exercise, nearly halving net debt, doubling free cash flow and paying a total $1.02 per share dividend, the highest in a decade, CEO Mark Cutifani said.

Anglo, a major diversified mining company with controlling stakes in leading diamond and platinum companies as well as copper, coal, nickel and iron ore interests, doubled attributable profit to $3.2bn for the year to end-December, and operating profit grew to $5.5bn from $1.7bn the year before.

Net debt fell by half to $4.5bn. A few years ago it was $13bn in a low commodity price environment, prompting Anglo to dispose of a number of assets and work hard on improving productivity and cost reductions across its portfolio.

"Anglo American is a fundamentally different business. We are more resilient, we are more competitive, we are delivering solid returns and the good news is we see a lot more opportunities to improve," Cutifani said.

Anglo had 47% fewer assets than it did in 2012 yet it was generating 9% more product, he said, while productivity per person had improved by 80% over that time.

"Dividends remain a key priority for us," he said. Anglo returns 40% of underlying earnings to shareholders.

Anglo was looking at internal growth options and was likely to bring a partner into the undeveloped Quellaveco copper project in Peru, which could cost up to $6bn to develop.

Anglo was in talks with various parties and would take a decision to the board in June, Cutifani said.

The closely watched Minas Rio iron ore mine, which has cost $13bn to buy and build and put Anglo’s balance sheet under immense pressure, secured licences in January to allow it to expand its mining footprint and ramp up to full production of 26.5-million tonnes in 2020, he said.

There were a number of internal project in metallurgical coal and diamonds in Namibia that Anglo was looking at for growth, including options in platinum in SA.

Anglo was cautious when it came to growth, Cutifani said.

"Growth has been a dirty word in the industry for some time, and so it should be because of the stupid things people have done," he said, adding that Anglo would match production to market demand and not overproduce it minerals.

In 2017, Anglo benefited from strong price improvements of 57% and 29% for metallurgical coal and copper respectively, while palladium realised a 44% increase.

Diamond prices were 13% lower.

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https://www.businesslive.co.za/bd/companies/management/2018-02-22-anglo-american-reaps-benefits-of-restructuring-with-solid-results/