[miningmx.com] – ANGLO American posted a record operating profit for
its 2011 financial year following strong contributions from its iron ore, coal and
diamond businesses, but raised the prospect of restructuring at its underperforming
platinum business, the listed subsidiary, Anglo American Platinum (Amplats).
Commenting on Amplats in a media conference call, Anglo American CEO Cynthia
Carroll said platinum industry returns had been shrinking, and that the group had
been dissatisfied with Amplats’ performance.
The company reported a 29% fall in headline earnings in its 2011 financial year, and
dropped its platinum sales forecast for the current financial year to 2.5 and 2.6
million ounces; a 200,000 oz reduction over the previous forecast.
In an effort to get the business back to pre-2008 levels, the group would “look at
the size and shape of the business and see how it could be changed’, Carroll said.
“We are looking at the optimal configuration of the business,’ she later commented
at the group’s results presentation.
Analysts said this could include the possibility of shutting down part of the platinum
business in a development that would provide a spur to the platinum price, especially
considering on-going productivity and labour disputes in the South African industry.
Carroll said all options were on the table. “We’re going to look at the shape of the
portfolio and the size of the portfolio. We’re not focusing on anything else but
getting it right.’
Carroll did raise questions over certain operations, including Unki, the Zimbabwe
project that has been held back following regulatory uncertainty in the country,
including a property tax and indigenisation.
“All the operations [in Amplats] are making money, but some are doing better than
others. We would like to get them more profitable or consider the configuration of
them,’ she added.
MARKET
Carroll said that despite speculation the Chinese economy was slowing, the move
from infrastructure build to consumption would benefit the group’s “late cycle’
commodities such as diamonds and platinum.
Industrialisation of inland provinces would also continue to support the commodity
markets “for the next decade’.
Said Carroll: “We haven’t pulled back from any commodities. We have the most
diverse pipeline of projects.’
There are some $98bn worth of projects, 90 in all, either underway or on the drawing
board for Anglo American going forward, said Carroll. She forecast a 35% increase in
organic volume growth by 2014.
It was the short-term pressure on the balance sheet, however, that was behind
Anglo’s decision not to pay a special dividend.
Anglo Chief Financial Officer, Rene Medori, said the $5.1bn acquisition of the
Oppenheimer family’s stake in De Beers, some $7bn in capital expenditure, capital
gains tax on the sale of a 25% stake in Anglo American Sur to Mitsubishi and existing
$1.4bn in debt had persuaded Anglo’s board not to pay more than the 15%
improvement in dividends paid by the group from the 2011 financial year.
