Tony Trahar, chief executive, Anglo American
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Anglo returns $5bn to shareholders
Allan Seccombe
Posted: Fri, 04 Aug 2006

[miningmx.com] -- Anglo American is returning $5bn to shareholders after a strong interim period that saw attributable profit up 60% to $2.94bn, and the prospects for a similarly strong send half are good, CEO Tony Trahar said on Friday.

Anglo American has enough firepower in its balance sheet after reducing debt by $2.3bn to $2.7bn to fund any major transactions that might come up and it would prefer to not sit on any cash it could not immediately use, Trahar said.

The $4bn share buyback comes hard on the heels of a $2bn share buyback that is almost completed. The new scheme should be completed in the early part of next year, he said, adding that if there was surplus cash on Anglo’s books after the disposal of a range of assets another buyback scheme could be implemented.
enough firepower
Anglo is paying out $1bn in dividends for the period, made up of a $0.33/share dividend supplemented by a special dividend of $0.67/share, which makes the total interim dividend 257% higher than that paid out at the same time last year.

Anglo American's JSE-listed shares were last up 3.5% at R300 each, far outpacing the overall market, which was up less than one percent.

Trahar said the outlook for commodities in the second half was good, saying robust prices were seen continuing into the remainder of the year, there were few signs of inventory build up and that it was taking a long time for new projects to come on line.

Profits at Anglo’s base metals division saw operating profit more than double to a record $1.85bn. Anglo production of nickel and zinc, key components in steel production, hit an all-time high, but copper was slightly lower.

“Base metal markets tightened further and metal inventories have fallen following improving demand and mine supply having been constrained by unforeseen disruptions, particularly in the case of copper,” Anglo said in a statement accompanying its results.

Anglo has a $6bn project pipeline and it has another $10bn-$15bn worth of projects that are under consideration.

Anglo American said last October it is pulling out of businesses it considers non-core. It has reduced its stake in AngloGold Ashanti from 51% and is expected to fully sell down its remaining 42% holding in the company over the next two to three years.
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Trahar declined to comment on how the sale would be conducted but said there had been interest in its holding in the world's third largest gold producer. AngloGold Ashanti CEO Bobby Godsell, who serves on the Anglo board, has said the exit must be as quick and painless to cause the least disruption to the shareprice as possible.

Restructuring Anglo could take between two and three years, but the company hopes the main elements will be completed within the next nine months, Trahar said.

Anglo has agreed terms to sell its 79% stake in Highveld Steel and Vanadium in South Africa to Russia's Evraz. The deal is conditional on regulatory and competition approval.

Anglo plans to demerge and list its paper and packaging company Mondi. There has been talk of the company having a market capitalisation of around $7bn, but Trahar said it was too soon to talk about such things. Anglo is trying to decide how much debt to leave in the company.

Anglo has reviewed its decision to sell Tarmac. The business has been restructured to keep the core extractive business within Anglo as well as a cash-generative part of the business. The non-core parts of Tarmac will be sold.