Anglo American will by the end of next year conclude its restructuring exercise it announced after rebuffing BHP’s takeover bid, which included divestments from steel-making coal and diamonds, as well as increasing its focus on copper and premium iron ore.
This comes after the Johannesburg and London-listed diversified resource group said in May its new strategy will see it reduce capital expenditure for its crop nutrients operations by $200 million (R3.6 billion) in 2025 and availing no capex for the segment in 2026.
It also said it would divest its steel-making coal as it was “currently responding to strong buyer interest”.
Anglo American CEO Duncan Wanblad said yesterday the company was pursuing its new strategy “by simplifying the portfolio and focusing on world-class assets in copper, premium iron ore”, and crop nutrients.
“We are working at pace to execute on the asset divestments, including steel-making coal – with the intention of optimising value for our shareholders, while minimising frictional costs, mitigating execution risks, and enabling the delivery of significant sustainable cost savings,” Wanblad said.
“Work is progressing with the aim of substantively completing this transformation by the end of 2025,” he said.
Anglo American’s De Beers diamond-producing subsidiary, which is also up for disposal, has been experiencing difficult trading conditions. In the quarter to the end of June, De Beers’s diamond production dipped by 15% to 6.4 million carats.
“Trading conditions became more challenging in the second quarter as Chinese consumer demand remained subdued,” Wanblad said.
“With higher than normal levels of inventory remaining in the midstream and an expectation for a protracted recovery, we are therefore actively assessing options with our partners to further reduce production to manage our working capital and preserve cash.”
Anglo American’s copper production for the quarter to end June decreased by 6% to 195 700 tons, driven by an 8% decrease in output from the Chilean operations as well as a further 4% downtrend in production from Quellaveco in Peru.
In spite of this, Wanblad said the company had “delivered a strong second quarter performance overall as we continue to embed operational excellence” across its asset base.
For Kumba Iron Ore, total production decreased by 1% to 9.2 million tons as it faced logistical constraints. There was a 12% decrease in output from the Kolomela mine to 2.5 million tons due to the reconfiguration of the mine to align production to lower third-party rail capacity and alleviate mine stockpile constraints.
“In line with our business reconfiguration plan to align production to Transnet’s logistics performance, (half year) volumes were reduced by 2%, matching a 2% decrease in ore railed to port,” said Kumba CEO Mpumi Zikalala.
Sales decreased by 5% to 18.1 million tons due to equipment challenges at Saldanha Bay Port.
Total finished stock for Kumba ticked up from 7.8 million tons in December, 2023 to 8.2 million tons as at end of June, with 600 000 tons at Saldanha Bay Port and 200 000 tons loaded on a vessel, but not yet sold.
Kumba Iron Ore said yesterday it expected basic earnings for the half year to June to be between R6.8bn and R7.3bn, a decrease of between 24% and 29% from the comparative period.
The company’s production of steel-making coal increased by 26% to 4.2 million tons during the quarter, driven by higher production at the Grosvenor underground long-wall operation.
Anglo American’s plans for the disposal of the steel-making coal assets in Queensland, Australia, had been drawn back by the explosion last month at Grosvenor. However, the company is forging ahead with its plans to dispose of the Queensland coal assets.
BUSINESS REPORT