Anglo American PLC took yet another writedown on its struggling De Beers unit as one of the diamond industry’s deepest ever crises continued to weigh on the miner’s profits.
Anglo American is in the process of a complete transformation of its business. As part of a strategy to fend off an approach from BHP Group in 2024, the company unveiled a radical restructuring plan that included exiting diamonds, coal and platinum. Since then it has struck its own deal to buy Teck Resources Ltd to create one of the world’s biggest copper miners.
Yet for now the company is still stuck with diamonds and coal. The diamond industry is mired crisis, while Anglo’s two flagship coal mines have both been halted due to fires.
Photo:Reuters
Anglo yesterday took an additional US$2.3 billion impairment on De Beers, its third such charge in two years, and taking its total writedowns on the unit to US$6.8 billion in the period. The unit now has a carrying value of just US$2.3 billion.
“I certainly hope this is a low point,” Anglo CEO Duncan Wanblad said on a call with reporters.
Anglo reported a 2 percent rise in underlying earnings from its continuing operations, with profits of US$6.4 billion. It cut its final dividend by 27 percent from the same period last year. Copper and iron ore — the businesses that would underpin Anglo’s profitability once its restructuring is complete — remained its biggest earners. Net debt fell to US$8.6 billion.
So far the company has successfully exited platinum by spinning off its South African assets, but divesting its De Beers and coal units is proving more difficult. It also slowed work on a major fertilizer project in the UK as part of its restructuring.
The company yesterday announced an investment agreement with Mitsubishi Corp to support the future development of the Woodsmith mine, which could lead to the Japanese firm taking a 25 percent stake in the project.
Many Anglo investors are focused on the combination with Teck, with the company’s shares rallying more than 50 percent over the past year as copper prices have soared to record highs. Every top-tier miner is trying to increase it exposure to the metal, both by developing mines and looking to acquire their smaller rivals.
Shareholders of both companies have approved the deal and the Anglo is now working on winning regulatory approval.
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