Anglo profit steady as metals rally offset by gems, coal

Anglo American reported earnings that were little changed from a year earlier and beat expectations, after a wider commodity rally helped balance out another difficult year for its diamond business and a collapse in coal profits.

The company is the last of the major miners to report earnings in what has been a bumper season for investors, with BHP Group and Rio Tinto Group handing back record dividends. The payouts and a recent surge in metal prices, have stoked fresh speculation about a new commodities supercycle, driven by tight supplies and strong demand as the world moves to decarbonise.

So far Anglo’s returns have been more muted than some of its rivals, while it has been more aggressive about pursuing growth.

It is planning to finish building a giant copper mine in Peru next year and is developing a potash mine in the UK.

It is also the most diversified of the big miners, producing products like platinum and diamonds that tend to flatten out its earnings.

This year, its De Beers diamond unit reported its smallest profit since at least the early 2000s, and coal earnings plunged after weaker prices and production setbacks in Australia.

Anglo will return 72 cents a share to investors. The dividend, which is calculated as 40% of underlying earnings, compared with 47 cents a year earlier. However, when including the interim dividend, the total for 2020 will be lower than 2019.

The company reported underlying earnings of $9.8 billion (about R143.8 billion) compared with $10 billion a year earlier.

“While Anglo’s dividend is solid, it could have paid more,” said Ben Davis, an analyst at Liberum.

“It’s clearly positioning itself more towards growth than rivals BHP and Rio.”

Anglo’s chief executive Mark Cutifani told reporters yesterday: “The fundamentals for commodities are strong, demand across most sectors is very good and supply is constrained.

“We think the market is in a good place.”