Anglo to concentrate on most valuable assets - CNBC Africa

Anglo to concentrate on most valuable assets

Earnings

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Changes to core operating processes at Sishen iron ore mine have begun to increase production. PHOTO: South African LED Network

“Looking at our allocation of capital across the portfolio, we have resolved to refocus on those assets that offer us the greatest source of potential value – over the short and long term – and that best match our chosen areas of focus and skills to drive returns,” said [DATA AGL:Anglo American] chief executive, Mark Cutifani.

“In platinum, we have already outlined plans to reposition the portfolio through the planned divestment of Rustenburg and Union mines and our interest in the Pandora JV operation. We plan to divest a number of other assets at the appropriate time and to redeploy that capital to support our drive for higher returns.”

Cutifani expects Anglo’s divestments and improved business performance to support its long term net debt target of 10 to 12 billion dollars.

“Anglo American’s improved business performance, assisted by depreciating producer currencies, partially offset the headwinds of input cost inflation, the effect of the platinum strike and lower prices, primarily in bulk commodities,” Cutifani said.

“Our Driving Value programme is delivering improved operational performance, reflecting a greater focus on mining processes and costs. Across the portfolio, production volumes were up, with the notable exception of platinum.”

(READ MORE: Anglo American’s FY results impacted by key operating challenges)

However, the global mining company reported a 10 per cent drop in underlying operating profit, which is presented before special items and remeasurements and includes the group’s attributable share of associates’ and joint ventures’ operating profit, for the six months ending 30 June 2014.

Its underlying operating profit decreased from 3.2 billion US dollars for the six months ended 30 June 2013 to 2.9 billion US dollars in 2014.

“The first six months of 2014 for the mining industry have seen ongoing soft demand and declines in average realised prices for most of the commodities Anglo produces, reflecting uncertainty surrounding global economic growth prospects in the developed and developing economies,” said Cutifani.

“At the constrained Sishen iron ore mine in South Africa, a redesign of the pit and changes to core operating processes are beginning to increase production. Kumba’s Kolomela mine continues to perform strongly, at above production design capacity, and serves to partially offset the current challenges at Sishen.”

Underlying earnings grew three per cent to 1.28 billion US dollars in the 2014 period from 1.25 billion US dollars and 2013 while group revenue, including associates and joint ventures, amounted to 16.14 billion US dollars in 2014.

Profit before tax increased by 48 per cent from 1.9 billion US dollars in 2013 to 2.9 billion US dollars in 2014 while underlying earnings per share rose two per cent from 0.98 US dollars to 1.00 US dollars.

(READ MORE: Anglo American to sell stake in Lafarge Tarmac)

Anglo also stated on Friday that it has entered into binding agreement for the sale of its interest in Lafarge Tarmac.

“Anglo American announces that it has reached a binding agreement to sell its 50 per cent ownership interest in Lafarge Tarmac Holdings to Lafarge SA for a minimum value of approximately 1.5 billion dollars in cash, on a debt and cash free basis,” it said.

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