Anglo American restarts its dividend after slashing debt

MINING group Anglo American has surprised investors by restarting its dividend six months early, boosted by a surge in profits that helped it pay off more debt than it planned.

The FTSE 100 miner, which was laid low by a two-year downturn in commodity prices that forced it to cancel shareholder payouts and sell off some of its assets, reported a 68pc jump in earnings before interest, tax and other charges to $4.1bn (£3.6bn) in the six months to June 30.

Net profits were $1.4bn, $800,000 loss in the same year ago.

Much of the improvement was due to soaring prices in iron ore and coal, two commodities Anglo had attempted to back out of during the downturn. By contrast, earnings from its three favoured commodities – diamonds, platinum and copper – were broadly flat.

Anglo’s net debt fell to $6.2bn, well ahead of its target of $7bn by the end of this year, and half what it was a year ago. As a result Anglo will reinstate its dividend six months earlier than expected, paying 48 cents a share.

Mark Cutifani, chief executive, credited Anglo’s performance to “extensive self-help work” as well as improved versus period a a commodity prices. “We’ve been able to get cost reductions to bite quickly,” he said, pointing out that production rose 9pc even though the miner has fewer assets than last year.

Investors have been concerned that Anglo could be affected by changes to the mining charter in South Africa, where it was founded 100 years ago, and where it still has a large number of mines. The Chamber of Mines has threatened legal action against the government over proposals to impose strict new ownership rules on mines that are designed to help historically disadvantaged groups.

“The concern is that this new document makes almost any new investment in the mining industry impossible,” said Mr Cutifani. “I don’t think that serves South Africa well. We’ve all got to get back round the table [to negotiate].”

Anglo shares closed up 3.2pc at £12.34.