STOCK WATCH:

The Star Early Edition - - COMPANIES -

MIN­ING group An­glo Amer­i­can’s share price last year re­cov­ered some of the losses it and its peers suf­fered when com­mod­ity prices plum­meted in 2011, but it re­mained to be seen if the shares could re­cover to the pre-2011 lev­els, Ash­bur­ton In­vest­ments se­nior port­fo­lio man­ager Wayne McCur­rie said yes­ter­day.

The com­mod­ity prices de­clined amid eco­nomic uncer­tainty and slow­ing eco­nomic growth, prompt­ing An­glo Amer­i­can to re­duce op­er­at­ing and cap­i­tal costs in or­der to pre­serve its bal­ance sheet. An­glo Amer­i­can has said that its fo­cus was on its core port­fo­lio of di­a­monds, plat­inum group met­als and cop­per.

“When the com­modi­ties fell, An­glo Amer­i­can’s share price also col­lapsed dras­ti­cally. It fell from ap­prox­i­mately R350 to about R50 in 2011. While it has risen to about R220, it is nowhere close to the lev­els be­fore 2011. An­glo Amer­i­can has pre­vi­ously said that a com­bi­na­tion of sub­dued de­mand and, in some instances, over­sup­ply of com­modi­ties had placed sig­nif­i­cant down­ward pres­sure on prices.

The weak de­mand for com­modi­ties trig­gered pro­duc­tion cuts to stim­u­late a price re­cov­ery. “When com­mod­ity prices fell dras­ti­cally, global play­ers de­cided to cut back on pro­duc­tion. As a re­sult, prices for com­modi­ties such as iron ore have risen. Iron ore has im­proved from $40 to $80 (R1 080) a ton.

“So the An­glo Amer­i­can share price has im­proved, be­cause the prices of un­der­ly­ing com­modi­ties have im­proved. Can the share price rise to pre-2011 lev­els. Who knows? Per­son­ally I do not think so,” he said.

He said the mar­ket con­di­tions had strained An­glo Amer­i­can’s bal­ance sheet, hence the de­ci­sion to sell off some as­sets. “They were des­per­ate,” he said.

The An­glo Amer­i­can share price was down 0.18 per­cent to R220.05 at the JSE close yes­ter­day. – Siseko Njobeni

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