Anglo profits hit by dollar's decline but diamond sales add sparkle

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Anglo American gained $400m (£213m) in profits from the jump in commodity prices last year but this was wiped out by adverse currency movements.

The mining giant reported a 2 per cent increase in net profits for 2003 to $1.59bn. Tony Trahar, Anglo's chief executive said that was a "remarkably steady performance in a world marked by major currency fluctuations and considerable political uncertainty". Turnover was 22 per cent higher at $24.9bn.

While a sharp jump in commodity prices, in the second half of the year, added $400m to profits, compared with prices from 2002, the company was hit by consistently unfavourable movements in the US dollar, the Australian dollar and the South African rand. Currency changes took $578m off profits.

"It was a year of two halves," Mr Trahar said. "The first half was pretty gloomy but the second half saw a rise in prices that has continued into this year."

Anglo's best performer was its diamonds business, which saw operating profits rise $21m to a record $562m. There were also strong contributions from base and ferrous metals and industrial minerals. The company saw lower earnings from gold, platinum and coal.

The mining group took more than $1bn in turnover from exports to China, where diamonds and gold did particularly well. Mr Trahar said China was absorbing 20 per cent of world consumption of many commodities. "The growth cycle there might endure for decades. At the moment, there is not nearly enough capacity in many of these products to meet China's demand," he said.

Mr Trahar added that the prospects for Anglo this year were "very encouraging".