Anglo facing ‘uphill battle on the trust front’, says bank

Duncan Wanblad, CEO, Anglo American

ANGLO American had an uphill task in winning back the trust of investors, according to analysts at Bank of America.

Commenting in a report on the UK-listed firm’s recent fourth quarter, it said several years of winning trust had been rubbed out by reduced production guidance in December, especially in copper.

All in all, production cuts announced in December for 2024 to 2026 were 13% to 19% below market consensus. Shares in Anglo shed about a quarter a week after the update. The stock is a further 8.4% lower since the beginning of the year.

“Anglo went through a period of earning the trust of markets by (finally) setting reasonable production guidance and delivering to it,” the bank’s analysts said in a report on February 9. “Anglo also built its Quellaveco copper project on time and on budget. This said, post the December update, we feel that Anglo now has an uphill battle on the trust front.”

Duncan Wanblad, Anglo American CEO said in an interview on the sidelines of the Mining Indaba conference that the market outlook for 2024 was likely to be similar to last year’s subdued demand. “Nobody really knows what is going to happen and this year feels like it’s going to continue as a relatively disruptive year in that guise,” he said.

There was a new hazard in 2024 in the number of countries heading to the voting booth. According to the Economist, countries with almost half of the world’s population – about four billion people – will send their citizens to the polls.

All these countries having all these elections all at the same time,” said Wanblad. “Nobody is really sure what’s going to happen with policy, how it’s going to be enacted, where it’s going to be acted.” In this scenario, when it takes five or six years of continuous investment in a mine, people in charge of capital are “nervous”, he said.

Bank of America also speculated about whether Anglo would consider monetising De Beers where a significant write-down is expected following second half losses. In one meeting the bank attended, one investor wondered if De Beers’ retail business was “an under-appreciated source of value”.

Said Bank of America: “As such, we wonder: write downs = prelude to portfolio action?” De Beers was carried on Anglo’s books at $9bn.

The diamond group produced a lower than planned 25 million carats for the year compared to guidance of 30 to 33 million carats, but Wanblad said last year that “the fundamentals for diamonds remain strong and we expect to deliver into a bounce-back next year”.