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Anglo American

Anglo’s radical downsizing signals lasting mining slump – by Ian McGugan (Globe and Mail – December 9, 2015)

http://www.theglobeandmail.com/

Anglo American PLC, one of the world’s biggest miners, is planning to shrink by nearly two-thirds and shed 85,000 jobs as it attempts to deal with a global commodity slump that has entered a new and vicious stage.

While other miners have trimmed jobs, reorganized themselves and put assets up for sale, Anglo is the first of the world’s leading producers to commit itself to radical downsizing – a sign that it does not see any realistic hope for a near-term rebound in metal prices.

The British company’s willingness to do what was once unthinkable highlights the urgency of the challenges facing global miners. Metal producers borrowed, built and expanded during the commodity supercycle that ended in 2011 only to tumble into a subsequent slump that has erased all the gains made during the boom times.

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Anglo Australian – by Warren Dick (Mineweb.com – December 8, 2015)

http://www.mineweb.com/

Mark Cutifani is stamping his own signature on Anglo – but is it enough?

He’s neither Anglo, nor American. But its taken an Australian, Mark Cutifani – presumably with the assistance of a good old fashioned Kookaburra cricket bat – to to try and beat what was once the world’s premier mining company back into shape.

At the very least, the announcements made at Anglo’s investor day on Tuesday revealed the company – and the executive team driving the change – had realised the cold, hard reality of the situation they found themselves in, and are prepared to do whatever it takes to see out the most brutal of winters in commodity markets.

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Mining chiefs seek the Pope’s blessing – by James Wilson (Financial Times – September 18, 2015)

http://www.ft.com/

If the mining industry wants to try to get something done these days, there is a new door to knock on: the Pope’s.

A clutch of mining leaders, including the chief executives of Rio Tinto and Anglo American, will hold talks in Rome with Vatican officials this weekend in an attempt to spread more understanding of their often controversial industry.

As well as being under severe financial pressure as commodity prices slide, resource companies are also facing mounting public hostility amid concerns about climate change and the potential environmental damage caused by mining.

This can make it riskier and more expensive for the industry to develop projects, particularly as the global quest for new mineral deposits takes it into previously unexplored regions.

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Former Inco exec to receive honourary doctorate from Laurentian – by Staff (Sudbury Northern Life – October 28, 2015)

http://www.northernlife.ca/

The former chief operating officer of Inco Ltd. will receive an honourary doctorate from Laurentian University in June.

Mark Cutifani, now the CEO of Anglo American, returned to Sudbury this week where he took in an international mining safety conference, before delivering an Oct. 27 lecture at Science North in the evening.

He was the guest speaker at Laurentian University’s Goodman School of Mines’ GSM lecture. Cutifani, who worked for Inco from 2003-2007, focused his speech on changing the conversation around mining and how the industry can make positive connections with communities and economies.

The hour-long lecture was well attended, and Cutifani was tested with questions about leadership challenges and the mining industry’s track record with respect to the environment, citing recent developments about Vale leaking toxic runoff into the city’s waterways.

The announcement that he’ll receive the honourary doctorate came from Laurentian’s vice-president, academic, Robert Kerr.

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Big miners kick the empire building habit – by James Wilson (Financial Times – October 26, 2015)

http://www.ft.com/

BHP Billiton and Rio Tinto are being forced to curb their spending amid China’s economic slowdown

When the chief executive of one of the world’s biggest mining groups had to find words to describe his industry’s litany of problems, he turned to a US country song with an apt title: If You Are Going Through Hell.

“If you’re goin’ through hell keep on going,” were the lyrics recited by Freeport-McMoRan’s Richard Adkerson at a London reception this month, as his Arizona-based company battles a plummeting copper price and burdensome debts. “Don’t slow down, if you’re scared don’t show it . . . you might get out before the devil even knows you’re there.”

Forget the devil: mining investors are only too aware that the sector is a long way from paradise. The industry’s fortunes have deteriorated significantly since the end of the commodities “supercycle” — a big upward shift in demand driven by China’s post-2000 emergence as a manufacturing superpower.

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Anglo American slides on De Beers downturn fears – by Bryce Elder (Financial Times – October 19, 2015)

http://www.ft.com/

Anglo American was Monday’s sharpest FTSE 100 faller on worries that its balance sheet strength will be tested by a downturn at De Beers, its most profitable division.

De Beers is likely to be the laggard when Anglo delivers its third-quarter production update on Thursday, said dealers.

The diamonds business, which accounted for nearly a third of Anglo’s first-half operating profit, has been under pressure as stone polishers run down inventories following a weak end to 2014.
Citigroup forecast Anglo’s diamond production by weight to have fallen 11 per cent against the previous quarter.

Over the same period rough diamond prices slipped as much as 10 per cent with demand squeezed by a strong dollar and a credit crunch among the polishers.

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Anglo American sells lossmaking platinum mines to Sibanye – by James Wilson and Andrew England (Financial Times – September 9, 2015)

http://www.ft.com/

Abidjan and Johannesburg – Anglo American on Wednesday unveiled plans to offload some of its most problematic assets, striking a R4.5bn ($330m) deal to sell lossmaking South African platinum mines.

The proposed disposal to Sibanye Gold ends Anglo’s long ownership of the mines near Rustenburg and further reduces the global mining group’s ties to South Africa, its historic home.

Selling assets has been a priority for Mark Cutifani, Anglo’s chief executive, as he tries to improve the group’s financial performance amid a deep commodities downturn.

Sibanye, a South African miner, will pay R1.5bn upfront in cash or shares for the Rustenburg operations owned by Anglo American Platinum, an Anglo subsidiary focused on platinum production. Sibanye will also pay Anglo 35 per cent of the mines’ free cash flow over a six-year period, with a minimum amount set at R3bn.

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All Eyes on Anglo American After Glencore Cedes to Investors – by Jesse Riseborough and Thomas Biesheuvel (Bloomberg News – September 8, 2015)

http://www.bloomberg.com/

Glencore Plc’s billionaire chief executive caved this week to shareholder demands that the commodity-trader bolster its balance sheet. Now attention is turning to whether rival Anglo American Plc will follow.

The two companies have been among the hardest hit by China’s cooling demand for commodities on concern they’ll be unable to withstand raw-material prices at a 16-year low and pay off a combined $43.5 billion in debt. Measures might include cutting its dividend, which is yielding a record 9 percent, higher than the level in 2009, when the company last scrapped the payout.

The collapse in commodity prices is undermining Anglo’s Chief Executive Officer Mark Cutifani’s efforts to turn around the fortunes of a business that mines platinum and diamonds in Africa and iron ore in Brazil.

Glencore shares rallied the most in almost three years on Monday after the company outlined a $10 billion debt-reduction plan, including selling $2.5 billion in shares and suspending its dividend.

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Anglo American in talks to sell troubled platinum mines – by Andrew England and James Wilson (Financial Times – September 3, 2015)

http://www.ft.com/

Johannesburg and Abidjan – Anglo American is in advanced talks to sell some of its South African platinum mines, as the UK group deepens its efforts to get rid of underperforming parts of its sprawling global operations.

The group said on Thursday that Amplats, its South African subsidiary, was in discussions with Sibanye Gold, a South African gold miner, over a sale of Anglo’s troubled Rustenburg platinum operations north west of Johannesburg.

Selling a slew of poor-quality assets has been a key priority for Anglo’s chief executive Mark Cutifani as he battles to improve the group’s financial performance while miners grapple with a prolonged collapse in commodity prices. Shares in mining companies have slumped amid global concern over the economic slowdown in China, the industry’s dominant customer.

Anglo’s South African exposure, and in particular its prominence in the platinum sector, has been one of the biggest concerns for investors. The Rustenburg operations are particularly problematic as they are lossmaking and have been at the heart of labour unrest in South Africa’s platinum industry.

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Anglo American sells two Chilean mines to Audley for $300 million (Reuters U.K. – August 24, 2015)

http://uk.reuters.com/

Anglo American (AAL.L) is to sell two Chilean copper mines to investment firm Audley Capital for $300 million (£191.5 million), the company said on Monday, as it delivers its balance sheet to help combat a global slump in commodity prices.

Orion Mine Finance Group is principal co-investor with Audley for the open-pit Mantos Blancos and Mantoverde mines. The deal includes conditional future payments which could boost the eventual price tag by $200 million (£128 million), Anglo American said.

Following a review last year Anglo American said it would divest assets that did not meet its return criteria. The investment by Audley Capital was led by John Mackenzie, a former chief executive of Anglo’s copper business.

The potential follow-up payments are contingent on the copper price and also on whether the new investors decide to extend the sulphide life of the Mantoverde mine.

Banking sources had initially touted the mines as having a price tag of up to $1 billion.

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UPDATE 2-Miner Anglo warns of up to $4 bln writedown on iron ore and coal assets – by Eric Onstad and Clara Denina (Reuters U.K. – July 16, 2015)

http://uk.reuters.com/

LONDON, July 16 (Reuters) – Mining group Anglo American has warned of a second multi-billion dollar writedown this year on its coal and iron ore assets, demonstrating the growing impact of sliding commodity prices.

The charge of between $3 billion and $4 billion flagged on Thursday, to be taken in its first-half results, comes on top of a $3.9 billion writedown Anglo took for similar reasons in February, when it also posted a 25 percent drop in underlying operating profit for 2014.

Anglo, the fifth-biggest diversified global mining group by stock market capitalisation, is not alone in feeling the pinch of tumbling commodity prices.

BHP Billiton said on Wednesday it will take a $2 billion impairment on its U.S. shale operations, the third writedown in three years.

Anglo has been fighting the impact of struggling metals prices by trying to improve the efficiency of its mining operations and by selling less profitable assets, including coal mines in Australia.

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Anglo American Seen Cutting Dividend as Commodity Prices Retreat – by Kevin Crowley and Jesse Riseborough (Bloomberg News – July 15, 2015)

http://www.bloomberg.com/

Anglo American Plc could cut its dividend for the first time since 2009 as tumbling commodity prices reduce the cash available to pay investors.

Analysts at Barclays Plc, JPMorgan Chase & Co. and Investec Ltd. have all said the company may make a cut when it reports first-half results next week, without specifying the scale of any reduction. Anglo, which spent $1 billion on dividends in 2014, hasn’t reduced the payout since it was halted during the global financial crisis.

The speculation underscores the challenge faced by Chief Executive Officer Mark Cutifani, who is seeking to almost double the company’s return on capital by improving mines and selling assets. He’s doing that at a time when prices for copper, iron ore, thermal coal and platinum, representing half of Anglo’s revenue last year, are trading in or close to bear markets.

Cutifani “has been dealt a very rough hand,” said Gavin Wood, the chief investment officer of Kagiso Asset Management in Cape Town, which manages $6 billion of assets, including Anglo shares. “They need to cut back on costs, on capital expenditure, preserve cash and weather it out.”

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Former Kinross Gold CEO working on potential bid for Anglo assets – by Rachelle Younglai (Globe and Mail – July 14, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Kinross Gold Corp.’s former chief executive Tye Burt is interested in Anglo American PLC’s three copper mines in Chile, according to people familiar with the matter.

Mr. Burt is working with another former Kinross executive, Hugh Agro, to create another mining company after being ousted as Kinross’s CEO for a deal gone awry.

Mr. Burt and Mr. Agro, the former M&A executive at Kinross, are now seeking financing for a potential bid on the Anglo assets, the sources said.

Mr. Burt is one of many people who were given the opportunity to examine Anglo’s Mantoverde, Mantos Blancos and El Soldado mines.

Others include former Xstrata PLC CEO Mick Davis, who now runs a private mining entity called X2 Resources LLP, sources said.

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Mick Davis, Glencore among bidders for Anglo’s Chile copper mines – by Silvia Antonioli and Freya Berry (Reuters U.S. – June 17, 2015)

http://www.reuters.com/

LONDON, June 17 (Reuters) – Mining and trading company Glencore and X2, a vehicle set up by former Xstrata CEO Mick Davis, are among the companies that placed bids last week for two Anglo American copper mines in Chile, sources said this week.

British investment firm Audley Capital was also among the first round of bidders, the sources added.

The Mantos Blancos and Mantoverde copper mines in Chile together could fetch up to $1 billion, according to banking sources, but two mining sources familiar with the mines gave more conservative valuations of around $500 million or less.

“The deadline to submit the bids was a week ago and X2 is still in the running,” a first banking source said. “Mick (Davis) seems keen on those assets.” An industry source said although Glencore was still in the process it was unlikely to make a high enough bid to win the assets.

“They are both mines towards the end of their life although with some investment Mantoverde’s life can be extended,” a second industry source said. “I would think a smaller firm like Audley is more likely to get them. Certainly the John MacKenzie connection is strong.”

Audley Capital’s mining CEO John MacKenzie was Anglo American’s head of copper until 2013.

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Coal Giants Left Unscathed by Growing Divestment Campaign – by Thomas Biesheuvel and Jesse Riseborough (Bloomberg News – June 3, 2015)

http://www.bloomberg.com/

The biggest names in mining have so far found themselves immune to a rapidly expanding campaign that’s seeking to curb the use of the most polluting fossil fuel.

From Norway’s $900 billion sovereign wealth fund to France’s biggest insurer and the Church of England, investors are starting to turn the screw on coal producers by selling down their holdings.

The criteria they use to select candidates for divestment exempts some of the biggest producers, however. That’s because those companies are large, diversified miners and only get a small part of their revenue from coal.

Dodging the divestment bullet, at least for now, are companies such as Glencore Plc, the world’s biggest exporter of coal used in power stations, BHP Billiton Ltd., Rio Tinto Group and Anglo American Plc. Between them they mine more than 350 million tons, about one third of the world’s coal trade.

“There’s a view that if they stop investing in it, or take a stance, that coal will go away,” said Mick Buffier, chairman of the World Coal Association and also an executive at Glencore. “Our view is different. Coal will continue to be needed. It’s going to be used by these developing nations. ”

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