Second year of losses for Anglo-American
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Deputy Business Editor
Saturday 15 February 2014
Fresh strikes by platinum miners in South Africa and losses related to Anglo American’s nickel business in Brazil left the mining giant unable to avoid a second year of straight losses.
Under its new chief executive, Mark Cutifani, Anglo is in the middle of a turnaround plan that will see it mothball unprofitable platinum mines and cut thousands of jobs.
Although its South African-listed platinum division Amplats returned to the black last year after violent strikes 18 months ago, Mr Cutifani warned that a new wave of pay disputes that started last month could hit profits again this year. The company wrote $1.9bn (£1.1bn) off the value of its mines last year.
“We still have a lot of work to do,” Mr Cutifani said. He stressed that the company had to hold its ground on the labour negotiations to secure the long-term viability of South African platinum mining. The dispute involves mines owned by Anglo, Lonmin and Impala Platinum.
Anglo’s 7 per cent fall in underlying profits to $2.7bn was in stark contrast to its rival Rio Tinto, which this week returned to profit, proving that it was recovering faster from the financial crisis.
Anglo’s spending is expected to peak this year at $7bn to $7.5bn, mainly due its Minas Rio iron ore project in Brazil
Meanwhile De Beers, the diamond group 85 per cent owned by Anglo American, said yesterday that prices are set to rise. According to De Beers’ index of its own rough diamonds, prices have gained 2 per cent since the start of the year. Underlying profits in 2013 were up more than a third.
The world’s largest diamonds group predicted that the economic improvement would strengthen jewellery sales this year, albeit only slightly as strong demand in the US and China looks set to be partially offset by weakened demand in India.
Full-year production of diamonds rose 12 per cent last year to 31.2 million carats from 27.9 million in 2012, highlighting the reason why Anglo upped its stake in the business the previous year.
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