The world’s fifth largest diversified mining group is being weighed down by weak global growth, a vast impairment charge on assets and labour strikes at its South African operations.
“Against a backdrop of weaker growth in the world economy in 2013, particularly in the emerging and developing economies, commodity demand remained soft with a decline in average realised prices for most of the commodities Anglo American produces,” commented Mark Cutifani, chief executive of [DATA AGL:ANGLO AMERICAN PLC.], on the group’s annual results for the 12 months ended 31 December 2013.
Underlying earnings fell 7 per cent to 2.7 billion US dollars while the group took a 1.9 billion US dollar impairment charge on a number of mines in its platinum division, where its workers are on strike.
Despite these challenges, Cutifani stated that there were significant operating improvements in copper, metallurgical coal and diamonds in the second half of the year.
The sharp fall in the South African Rand in the final quarter drove a six percent increase in underlying operating profit to 6.6 billion US dollars, with underlying earnings before interest, taxes, depreciation and amortization (EDITDA) rising 7 percent to 9.5 billion US dollars.
A total dividend of 85 US cents per share was declared for the year.
On the operations side, the company has made major progress at their two biggest copper mines in Chile, Los Bronces and Collahuasi as well as having redesigned their Sishen mine pit in South Africa to increase production.
“We have started to make solid progress at Los Bronces and Collahuasi, our two biggest copper interests in Chile, where improvements in waste stripping volumes and process tonnages supported a significant improvement in copper production,” explained Cutifani.
“At the currently constrained Sishen iron ore mine in South Africa, a redesign of the pit and changes to core operating processes should result in consistently higher production from 2015 onwards. The Sishen challenges have been partially offset by solid performance from Kolomela, which is now operating at well above nameplate capacity.”
At their underground metallurgical coal mines, production improved by 30 percent, with Moranbah North lifting longwall output by 39 per cent.
Anglo American’s 85 percent stake in De Beers, a leading diamond company, contributed to the group’s total underlying operating profit against a backdrop of rising demand. De Beers’ operating profit increased 112 percent to 1,003 million US dollars compared with 2012.
“De Beers had a good year and was able to increase output against a background of rising demand,” he added.
Meanwhile, the group’s platinum business faced the significant challenges of cost pressures, declining productivity, trade union militancy and continuing price pressure.
“We finalised a root-and-branch review of the business to address the changed fundamentals of the platinum industry and to understand the primary drivers of the dramatic reduction in profitability across the sector,” said Cutifani.