Weaker metals and diamond prices caused net profits for Anglo American to fall by 94 per cent to $283 million last year.
The FTSE 100 miner had a torrid year as the markets for diamonds and platinum group metals (PGMs) collapsed and it unexpectedly slashed its copper production outlook. Underlying earnings before interest, taxes and other items fell to $9.96 billion, from $14.5 billion, in line with analyst expectations of $9.95 billion.
Duncan Wanblad, 55, chief executive, said the group was adopting a “value-over-volume mindset” to improve returns. “We are systematically reviewing our assets and will take further actions as needed to ensure their competitiveness.”
The dividend was cut to $1.2 billion, or 96 cents a share in total, from $2.4 billion or 198 cents in 2022, on the back of the weaker earnings.
Anglo American is one of the world’s biggest mining groups, producing commodities including copper, iron ore, diamonds and PGMs. Demand for palladium and rhodium, which are used to produce catalytic converters in cars, has been driven down as the automotive industry runs down excess supplies stockpiled during the Ukraine war.
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Rising interest rates and inflation have hit confidence among jewellers to buy new stock and consumer sentiment in China also remains weaker, the company said. Rough diamond output at De Beers, owned by Anglo American, fell by 8 per cent to 31.9 million carats. Average realised diamond prices slumped by 25 per cent. The group wrote down the value of De Beers by $1.6 billion.
Anglo reiterated its guidance to produce between 730,000 and 790,000 tonnes of copper this year and 690,000 and 750,000 tonnes next year, lower than the 826,000 tonnes produced last year. Output at the Kumba iron ore mine in South Africa will reduce in response to prolonged logistics challenges and it will move to one plant at the Los Bronces copper operation in Chile.
Reduced production is aimed at reducing capital expenditure by $1.6 billion between this year and 2026, and cutting operating costs by $1 billion each year.
The cut to guidance in December led to the company’s worst one-day share price fall since the 2008 financial crisis. The group’s market value remains 44 per cent lower than it was this time last year, leading to speculation that a takeover bid or interest from activist investors seeking to break up the group, could emerge.
Capital expenditure has been guided at $1.2 billion this year, including $900 million in the Woodsmith fertiliser mine, which is due to start first production in 2027. The Woodsmith mine involves extracting polyhalite, a little-used type of nutrient-rich fertiliser, from a mile beneath the North York Moors national park near Whitby, and then transporting it for processing via a 23-mile tunnel to Teesside. Despite heavy spending to date, Anglo’s board is yet to sign off on the full costs of completing the mine or to take a final investment decision.
