Anglo-American Delivers Strong Results Amidst Market Challenges
Diversified mining group Anglo American reported a resilient performance in the first half of the year, achieving an underlying EBITDA of $5 billion.
By Ryan Chigoche
This performance comes despite the group facing a challenging market environment with lower product prices, particularly in the PGMs and diamonds sector. The mining giant demonstrated its operational strength by improving costs and maintaining steady production volumes.
For the Platinum Group Metals (PGMs), production from own-managed mines (Mogalakwena, Amandelbult, Unki, and Mototolo) and equity share of joint operations decreased by 12% to 1,051,500 ounces against 1,198,700 ounces in the prior period due to the disposal of Kroondal.
However, second-quarter production was 9% higher than the first quarter, positioning the business well into the second half of the year.
Commenting on the results, Duncan Wanblad, Chief Executive of Anglo American, said:
“I am very encouraged by a strong operational performance that delivered steady volumes and a 4% improvement in unit costs, while still facing weak cyclical markets for PGMs and diamonds. We are on track to reduce our annual run rate costs by $1.7 billion and reduce capital spending by $1.6 billion over the 2024-2026 period. We are moving at pace to create a much more agile and structurally profitable mining company focused on our exceptional quality Copper and Premium Iron Ore businesses, which both continue to perform very strongly, while maintaining our growth optionality in crop nutrients. We are committed to completing the key elements of this transformation by the end of 2025, creating a simpler, highly valued mining company with extensive growth options and considerable strategic flexibility.”
In the financials for the period, the underlying EBITDA of $5.0 billion improved cost performance largely offsetting a 10% lower product basket price.
As diamonds and PGMs prices were weak in the period, copper and iron ore performance and margins were strong, contributing $3.5 billion of EBITDA. In the period, the group’s focus on operational performance delivered results, most notably in its copper and premium iron ore businesses, with EBITDA margins of 53% and 43% respectively.
As a result, unit costs improved by 4%, reflecting weaker currencies, operational improvements, and effective cost control.
On the downside, the group reported a US$0.7 billion loss attributable to equity shareholders, impacted by a $1.6 billion impairment of Woodsmith due to the decision to slow down the project’s development.
Net debt is now at US$11.1 billion, reflecting tight discipline to optimize capital allocation and free cash flow. The group is on track to reduce annual costs by approximately $1.7 billion and reduce capex by US$1.6 billion over 2024-2026.
Despite the performance in the reported period, the group reportedly lost two workers who died in an accident at its Amandelbult PGMs mine in South Africa.
As a result of that incident, the company is tirelessly working towards achieving its lowest-ever injury rate, showing a 23% improvement compared to just two years ago.
The steelmaking coal business also improved production and cost performance. As the group divests one of its mines in this segment, the CEO reported that the company is well underway with continued strong interest from a large number of potential new owners.
“We are transforming Anglo-American by focusing on our world-class asset base in copper, premium iron ore, and crop nutrients, thereby accelerating the recognition of value inherent in our business. From that compelling platform, I believe our proven project delivery capabilities, global relationship networks, and longstanding reputation as a responsible mining company will together help us unlock the outstanding mineral endowment options within our portfolio and other growth opportunities that we will aim to secure over time,” said Wanblad, commenting on the outlook.
Anglo-American operates the Shurugwi located, Unki mine in Zimbabwe.
Meanwhile, a $0.5 billion interim dividend, equal to $0.42 per share, consistent with a 40% payout policy, was declared in the period.