[miningmx.com] — ANGLO American on Friday posted an interim operating profit of $6bn, an increase of 38% on 2010, as it succeeded in cashing in on record commodities prices, especially copper, iron ore as well as coking coal.
The group’s underlying earnings were $3.1 billion, 41% higher than the same period in 2010, while the operating profitability of core operations – which didn’t form part of Anglo’s divestment programme – were up 45% to $5.9bn. An interim dividend of 28 US cents was declared.
“Robust demand and disruption to supply resulted in higher prices across the group’s portfolio of commodities,’ read commentary accompanying the results.
“Copper reached a nominal record of 460 c/lb during February, while the iron ore market saw record quarterly contract and index prices. A record metallurgical coal price settlement was concluded for the second quarter at $330/t for high quality coking coal, reflecting reduced availability of supply. Export thermal prices also increased significantly, with export prices freight on board South Africa up 39% compared with the first half of 2010.’
All of Anglo’s core segment recorded an increase in operating profit, while it achieved asset optimisation and procurement benefits of $1.3bn during the interim period, having already exceeded 2011’s full year target of $2bn of benefits during 2010.
Cynthia Carroll, CEO, said the company’s performance was reflective of the operational and business improvement foundations put in place over the last three years.
“Furthermore, our commitment to sustain investment in our growth projects through the downturn is now paying dividends; new production is already coming on stream and will drive very substantial incremental cash flows as the projects ramp up from this year onwards.’
Carroll said Anglo was able to mitigate against a number of factors that negatively affected performance, which included poor weather in Australia and South Africa, dollar weakness, input cost pressures and lower ore grades.
“We expect a stronger second half to the year to build upon the momentum of the second quarter,’ said Carroll. “Our post-flood production recovery plan for our metallurgical coal business in Australia and the firmly embedded practices of our global supply chain have shown particular success, to name just two examples.’
GROWTH PROJECTS
Carroll said Anglo’s four major growth projects made good progress during the period. Barro Alto began production in March and would more than double Anglo’s nickel production when it reaches full capacity in 2012.
The Los Bronces copper expansion project would start production in the fourth quarter, doubling the mine’s output over the first three years to 490,000 tonnes per year.
Subsidiary Kumba Iron Ore’s Kolomela project was 94% complete with certain elements of the plant already handed over for commissioning.
“In Brazil, our 26.5 million tonnes per year Minas-Rio iron ore project continues to make good progress, with civil works for the beneficiation plant and construction works for the tailings dam all getting under way since March,’ said Carroll. “The project is on track to deliver first ore on ship in the second half of 2013 at a first quartile cost position and we have begun the pre-feasibility work for the project’s very significant expansion potential to 80 million tonnes to 90 million tonnes per year.’
Looking forward, Carroll said the outlook remains robust for the mining industry.
“While there undoubtedly remain a number of headwinds affecting the global economy in the near term, the long term healthy demand growth from the major emerging economies, together with widespread supply constraints, continues to support highly attractive market dynamics,’ she said.
