Diversified miner Anglo American has cut its dividend by more than a quarter for its half-year to end-June, hit by production declines for most of its commodities. It did, however, still book its second-highest core profit in its history.
Group revenue fell 17% to $18.11bn (R302bn), the London- and JSE-listed miner reported on Thursday, with underlying core profit, which excludes one-off items, down 28% to $8.7bn, hit by extreme rainfall in Brazil, SA and Australia.
Bad weather affected the group’s production of coal, platinum group metals and iron ore, while its copper output was hit by a record-breaking drought in Chile. Overall average prices for the group fell 2%, cutting into its profit by $1.5bn, just less than half of the decline.
Anglo’s taxes and royalties bill, however, climbed 6% to $3.5bn, due to shifts in relative profit levels achieved in different jurisdictions. Anglo paid about 57% of its taxes and royalties in SA in 2021, about $4.05bn.
Resilient
The miner cut its interim dividend 27% to $1.24 per share, a $1.5bn payout.
CEO Duncan Wanblad said the results reflected a diverse and resilient portfolio, and the group expects the improvement in operational momentum it saw in its second quarter to continue in its second half.
“This is a really good outcome ... although we all believe it could have been better,” he said during an investor presentation.
Copper production fell 17% and iron ore 14%, but diamonds were a standout performer, with production up 10%. That, along with higher prices, helped to lift underlying core profit at De Beers 55% to $944m.
Underlying core profit from iron ore more than halved to $2.23bn, while the contribution from copper fell almost 40% to $1.16bn. Steelmaking coal delivered almost $1.4bn in profit, from a loss of $94m, despite a 22% fall in production.
Inflation
Coal fared best in terms of price, which tripled in the wake of Russia’s invasion of Ukraine. Surging global inflation and the threat of recession in major economies could be a major headwind for the rest of 2022.
Wanblad, who took over from Mark Cutifani in April, said the near-term focus was on the inflationary effects being felt across economies, but in the longer term, the group was very upbeat about demand for its commodities.
This includes copper, a versatile metal used extensively in sustainable technologies. The company announced its first production from its Quellaveco copper project in Peru in July.
Demand for copper could mean the market needs an additional 17-million tonnes by 2040, said Wanblad, though he said that did not imply the company would “go around hoovering up poor-quality assets”.
“That’s equivalent to 60 Quellavecos and I’m not seeing them coming forward, not seeing them being spoken about and not seeing them being committed to in any meaningful way,” he said.
Anglo shares added 1.91% to R572.38 and are up almost 60% in the past three years.
Update: July 28 2022
This article has been updated with additional information.
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