Anglo American slid to its first net loss for more than a decade in 2012 after profits fell across all units and the global miner wrote $4 billion off the value of its flagship Minas Rio iron ore project in Brazil.
Anglo, like rival Rio Tinto a day earlier, promised caution in future spending. Its 44 percent drop in operating profit to $6.2 billion was expected, but the impairments linked to Minas Rio and Anglo's bruised platinum unit resulted in a net loss, or loss attributable to shareholders, of $1.5 billion.
Minas Rio, where delays and permit troubles have driven costs to more than three times original estimates, has been seen as Anglo's most significant failure of recent years. Anglo had already said last month that it would write $4.6 billion off the value of both Minas Rio and platinum projects.
Anglo's spending is expected to peak this year at between $7.5 billion and $8 billion, thanks to costs at Minas Rio and Australian coking coal project Grosvenor. That will ease to between $6.5 and $7 billion in 2014 as the miner progresses to new projects including copper operation Quellaveco in Peru.
Departing chief executive Cynthia Carroll, one of several mining executives to have fallen foul of investors angry over perceived errors and poor returns, said she had no regrets.
"We did not go after a huge acquisition, or an enormous company. We did not have attempted acquisitions and then failed acquisitions, like some of our competitors. What we did do, and this was the mandate I was given when I arrived, was to pursue iron ore," she told reporters.
"Minas Rio is a resource that has increased fourfold since we have gone into it and it is going to be bigger. The quality of this resource is phenomenal."
Projects like Quellaveco and coal asset Revuboe in Mozambique, being built from scratch, have come under scrutiny after the expensive overruns at Minas Rio and rival Rio's costly mistakes at its own operation in Mozambique. But Anglo promised it would proceed with care, adding partnerships would be considered for complex, greenfield projects to reduce risk.
Carroll told Reuters earlier this month the company could consider a partner for Minas Rio. Its copper project Quellaveco will be submitted to the board for approval in 2013.
TOUGHEST YEAR
Earnings fell across the board for Anglo in 2012, after what the company said was one of the toughest years both for its own operations and the industry, as weak prices and higher costs took their toll. Iron ore and copper, major contributors to profit, fell by more than 30 percent, hampered by strikes in South Africa and operational troubles at Anglo's copper mines.
"It is about (fixing) platinum, building Minas Rio and getting through the issues in copper. Then they are through it, but that is two years of hard grind - they have a lot of work to do," analyst Des Kilalea at RBC Capital Markets said, adding Anglo's higher dividend had been a key positive surprise.
Operating profit from iron ore fell by 33 percent to $2.95 billion, as lower prices added to losses linked to a strike at unit Kumba Iron Ore's Sishen mine in South Africa. It contributed almost 50 percent of Anglo profit, more than in 2011 as other units like coking coal shrank even further.
Comments
Comments are closed.