Anglo American refuses to be ‘seduced’ by rising commodity costs

Anglo American CEO Mark Cutifani mentioned the worldwide miner wouldn’t be “wowed” by rising commodity costs and splurge on offers or new initiatives after reporting its highest revenue. excessive within the second semester since 2011.

The {industry}, which has been out of favor with traders for the higher a part of the last decade, is having fun with a few of its most favorable circumstances because the fast industrialization of China’s economic system within the early 2000s.

As provide constrained by years of underinvestment struggled to maintain tempo with demand, commodity markets exploded, fueling discussions of a brand new supercycle – an prolonged interval of document costs.

Cutifani mentioned the basics of its key commodities, which embrace copper, platinum and diamonds, had been robust and demand in most sectors was “superb”. Nevertheless, he mentioned the FTSE 100 firm wouldn’t be “gained over by the excessive costs”.

“I have been within the {industry} for 44 years and have seen cycles and tremendous cycles,” he mentioned. “We’re going to keep self-discipline on our capital as a result of it’s instances like this when firms lose sight of the necessities and get into issue.”

The mining {industry} has simply recovered from a spending spree that sparked an industry-wide debt disaster in 2014.

Cutifani was talking after Anglo on Thursday reported a pointy second-half revenue improve, helped by rising commodity costs and easing of foreclosures restrictions

Within the first six months of 2020, Anglo’s underlying revenue earlier than curiosity, taxes, depreciation and amortization fell virtually 40% to virtually $ 3.4 billion, resulting from decrease gross sales at De Beers, blockades that hit manufacturing in South Africa and operational setbacks in platinum and coal.

Within the second half of the 12 months, underlying ebitda – the earnings measure adopted by analysts – rebounded to $ 6.5 billion, Anglo’s finest second half efficiency previously 10 years, as its operations had been coming again virtually to full capability.

“It definitely was. . . a 12 months of two halves, ”Cutifani mentioned.

Anglo mentioned underlying ebitda of $ 9.8 billion for 2020, down 2% from a 12 months earlier, on income of $ 31 billion. Iron ore, copper and platinum group metals (PGMs) generated 90 p.c of the entire.

Anglo’s web debt stood at $ 5.6 billion, from $ 7.6 billion within the six-month interval, and the corporate maintained its coverage of paying 40% of income to shareholders, declaring a closing dividend of 72 cents per share and 100 cents for the entire 12 months.

Diversified miners have turn into one of many fundamental sources of revenue for European traders over the previous 12 months, a pattern that’s anticipated to proceed if commodity costs maintain at present ranges.

E-newsletter twice per week

Power is the world’s important enterprise and Power Supply is its publication. Each Tuesday and Thursday, straight to your inbox, Power Supply brings you important information, cutting-edge evaluation and insider info. register right here.

“Anglo’s differentiated development technique continues to pay dividends, actually, because the group is ready to make the most of each larger costs whereas investing at the next charge than its friends,” mentioned Tyler Broda , analyst at RBC Capital Markets.

Anglo is without doubt one of the few giant mining firms to vow manufacturing development with a big copper mine in Peru set to come back on stream subsequent 12 months. He’s additionally creating a big fertilizer mine within the north of England.

Anglo shares rose 4.5 p.c to a nine-and-a-half-year excessive of £ 29.60 in morning buying and selling.

The one draw back to the outcomes was the efficiency of the Anglo coking coal enterprise, the place income fell to simply $ 50 million from $ 1.7 billion, resulting from “operational incidents” within the enterprise. two mines in Australia that hit manufacturing.

Cutifani mentioned Anglo’s plan to exit thermal in South Africa was prone to end in a cut up, though he didn’t rule out a business sale.

About Edith J.

Check Also

Nestlé shares fall 1% as Md sees headwinds on commodities in 2022

After two days profitable, shares of fast-moving client items firm Nestlé India have been buying …