Anglo dumps coal and iron
ANGLO American is ditching coal and iron ore operations to focus on diamonds, platinum and copper after a collapse in commodity prices plunged it $ 5.6billion (£ 3.9billion) into the red.
The FTSE 100 miner, which had already announced plans to slash its workforce by 85,000 and suspend its dividend, unveiled a further radical restructuring to reduce its $ 12.9billion debt pile. It will retain 16 core assets compared with 45 previously.
After ratings agency Moody’s cut Anglo’s debt rating to junk status earlier this week, the company said it aims to offload up to $ 4billion of assets this year to reduce its borrowings to below $ 10billion. It also aims to cut capital spending by a quarter to less than $ 3billion.
Its annual underlying pre- tax earnings dropped 55 per cent to $ 2.2billion but it wrote down the value of its assets by $ 5.7billion as market conditions worsened, including a $ 2.5billion charge for its Minas- Rio iron ore project in Brazil.
Chief executive Mark Cutifani said it was already talking with potential buyers but disposals would have to fetch “appropriate value for our investors”. He said: “We are taking decisive action to improve our cash fl ows and materially reduce net debt while focusing on our most competitive assets.
“Our core portfolio creates a highly attractive, competitive and well balanced business. We will be signifi cantly stronger in the short term with lower overhead and indirect costs.
“We will focus our portfolio on our global leadership positions in diamonds [ it has an 85 per cent stake in De Beers] and platinum group metals and our worldclass position in copper. This will have the advantage of benefi ting from the shift away from infrastructure investment towards consumerdriven demand.”
Anglo shares went up 5p to 398p.
Canaccord Genuity analyst Nick Hatch said Anglo would likely be seen as a “forced seller” by potential buyers and would need to tread carefully with government and workers in South Africa.
He added: “Speed is of the essence in the context of Moody’s downgrading of its credit rating. It’s a bold plan but there is substantial implementation risk.”