Anglo American is facing some challenges as it moves to restructure its portfolio after reporting a $3.1 billion (R57bn) loss to shareholders for the 2024 full year which was also weighed down by $3.8bn in net impairments.

The company, however, accrued $1.3bn in cost savings and recorded an earnings before interest, tax, depreciation and amortisation (Ebitda) of $8.5bn at a margin of 30%.

This was despite the impact of lower commodity prices which tanked 10% during the period under review as well as “challenging rough diamond trading” conditions under De Beers.

Anglo American, which is demerging De Beers, said “the work to separate De Beers is well under way, with action taken to strengthen cash flow” in the near term. It has had to reduce its carrying value in De Beers.

“Given prevailing diamond market conditions, we have reduced our carrying value of De Beers by $2.9bn,” said Anglo American CEO, Duncan Wanbald.

Javier Blas, commodity columnist for Bloomberg, said after writing down the value of De Beers by $1.6bn in 2024, Anglo American was “taking a further $2.9bn impairment” in the company.

“(It is) difficult to see how Anglo American can monetise its diamond business — as it has promised to shareholders,” added Blas.

The impairments in De Beers brought up total impairments in Anglo American to $3.8bn, including impairements in Anglo American Platinum.

Despite this, Anglo American is returning $800 million in total dividends for the 2024 financial year to shareholders although this represents a reduction from the 0.96 US cents per share pay out in 2023 to 0.64 US cents in the latest period under review.

Basic headline earnings per share of $0.72 were also significantly reduced from $2.06 per share in the prior comparative period. Shares in Anglo American traded 3.5% higher at R573.76 in the afternoon trade on the JSE on Thursday.

Greg Davies, head of wealth at Cratos Capital, however, noted that Anglo American had delivered “strong operational performance” underpinned by $8.5bn in underlying Ebitda and $1.3bn in cost savings achieved “ahead” of schedule.

“Portfolio simplification progressing well with sale of steelmaking coal and nickel businesses agreed,” he said.

Wanbald said Anglo American was “making excellent progress” with its our portfolio simplification. This exercise, with the related demergers and divestments was meant to achieve balance sheet flexibility.

“We have agreed the sale of our steelmaking coal business for up to $4.8bn in gross cash proceeds and have this week agreed the sale of our nickel business for cash consideration of up to $500m,” he said.

In terms of its premium copper commodity, Anglo American has secured an extra 2.7 million tons of copper over 21 years from 2030, with minimal new investment needed. The company had also strengthened its Chilean global copper position.

Anglo American said Thursday that it had signed a memorandum of understanding With the Chilean state-owned mining company Codelco for a framework to implement a joint mine plan for the two companies’ respective, adjacent copper mines of Los Bronces and Andina in Chile.

The joint mine plan will increase copper production with minimal additional capital required, generating an expected net present value uplift of at least $5bn pre-tax.

BUSINESS REPORT