Anglo writes down R30bn of De Beers’ value
● Company focused on reducing complexities and managing assets, capital and portfolio for value, CEO Duncan Wanblad says
Diversified mining company Anglo American said muted global GDP growth and the slowdown in consumer demand forced the group to write down $1.6bn (R30bn) of the book value of De Beers, with the group reviewing its portfolio to withstand the headwinds facing the businesses.
The mining house said it would also impair $500m (R9.4bn) for its Barro Alto nickel mine in Brazil.
“There is no doubt that while the immediate macro picture presents some challenges for our PGM [platinum group metal] and diamond businesses, the demand trends for metals and minerals have rarely looked better.
“We are focused on reducing complexities and continue to manage our assets, capital and portfolio dynamically and for value,” Anglo CEO Duncan Wanblad said yesterday.
“This includes syndicating large greenfield projects for value, as we did with Quellaveco, and as we plan to do for Woodsmith at the right time.
“We also look to identify opportunities with adjacent assets where there is significant value to be unlocked, while progressing our sequence of organic project options that offer considerable value growth, predominantly in copper, crop nutrients and quality iron ore.”
Anglo flagged a 31% plunge in earnings before interest, taxes, depreciation, and amortisation (ebitda) in its preliminary results for the year to end-December due to the headwinds facing the diamond and PGM business.
The group’s PGM business registered the steepest ebidta decline, reducing from $4.4bn (R83bn) in the previous financial year to $1.2bn (R22.6bn), while De Beers fell from $1.4bn (R26.4bn) to $72m (R1.3bn).
Anglo’s copper and iron ore business increased ebidta in the period under review.
The group, which is slashing costs in response to the downturn in prices of its key commodities, said it was on course to cut about $1bn (R18.9bn) in annual costs, on top of the $1.6bn (R30bn) in capex cuts over the next two years it announced in December.
Companies in the group’s stable, Anglo American Platinum (Amplats) and Kumba, this week announced major restructuring of their businesses with thousands of jobs on the line.
“We are systematically reviewing our assets and will take further actions as needed to ensure their competitiveness,” Wanblad said.
“We have also this week set out the difficult but necessary reconfigurations of our PGMs and Kumba operations to set them up on a far more sustainable footing, building on the recent 25% cost reduction from our consolidation of senior head office roles.”
Amplats this week started a retrenchment process that is likely to result in the retrenchment of 3,700 employees across its platinum mining business as it seeks to reduce R5bn in costs
— while reviewing contracts with 620 service providers.
Kumba on Tuesday said 490 workers might lose their jobs, and contracts with service providers were being reviewed as the iron ore producer sought to cut costs by at least R2.5bn this financial year.