Anglo American CEO Duncan Wanblad, speaking at the release of the mining firm’s annual results, which saw a decrease in annual profit, said the fundamental demand picture for future-enabling metals and minerals, particularly those that were responsibly sourced with traceable provenance, was ever more compelling.
“Our new Quellaveco copper operation in Peru increases our global production base by 10% and is the cornerstone of our value-adding growth potential of 25% over the next decade, with further optionality beyond, from copper to crop nutrients.
“As most of the world’s major economies accelerate their decarbonisation efforts and as the global population increases and continues to urbanise, we aim to keep growing the value of our business into that demand,” he said.
The miner yesterday reported its preliminary financial results for the year ended December 31, 2022, saying that the decline in revenue and profitability reflected inflationary headwinds and higher energy prices, combined with lower production volumes. This raised production costs amid reduced prices for much of the group's output.
As a result it reduced its final dividend for 2022 by 37% to $0.74 (R13.75). The total payout for 2022 dropped by 60% to $1.98.
Anglo flagged a pretax profit of $9.48 billion, a 46% decrease from $17.63bn in 2021. Revenue fell by 15% to $35.12bn, while underlying earnings before interest, tax, depreciation, and amortisation was $14.5bn, a 30% decline compared with the record achieved in 2021, which was $20.63bn.
Diluted headline earnings per share were down 29%, largely due to lower commodity prices. Operating costs were up $25.88bn, 8.0% higher.
Wanblad said: “We continued to feel the effects of dislocations in the global economy on our business in 2022 - in energy, and across supply chains and labour markets.
“Extreme weather has disrupted the lives of so many, with exceptional rainfall also setting back several of our operations, while the energy crisis caused policymakers to react to mitigate sharply higher inflation,” he said.
Total platinum group metal production dropped by 6.3% to 4.02 million ounces. Iron ore production decreased by 7.1% to 59.3 million tonnes, but total copper production of 664 500 tonnes increased by 3%.
Annual platinum group metals output is projected to decline to between 3.6 million and 4.0 million ounces, while iron ore production guidance ranges between 57 million and 61 million tonnes.
The 2023 guidance for steel-making coal was between 16 million and 19 million tonnes.
Anchor Capital investment analyst Seleho Tsatsi said earnings normalised after an exceptional 2021.
“The year-over-year earnings and free cash flow declines in 2022 were strong. If we look at Anglo’s business over a longer time frame, however, it becomes clear that with hindsight, 2021 was an unusually strong year rather than 2022 being particularly poor,” Tsatsi said.
Looking forward, Tsatsi said the strength in iron ore and coal prices was offsetting the weakness in the platinum group metal business.
“Infrastructure commodities like iron ore and coal have been buoyed by enthusiasm over a Chinese reopening. Although pricing is the key driver, Anglo does have some volume growth. That volume growth is concentrated in copper and met coal,“ he said.
BUSINESS REPORT