Monday 26 September 2016

Anglo American to sell iron ore unit, profits plunge

Published 16/02/2016 | 08:19

An aerial view of Anglo American's Los Bronces copper mine at Los Andes Mountain range, near Santiago city. REUTERS/Ivan Alvarado
An aerial view of Anglo American's Los Bronces copper mine at Los Andes Mountain range, near Santiago city. REUTERS/Ivan Alvarado

Global miner Anglo American said on Tuesday it plans to sell its iron ore unit, as part of a sweeping strategic overhaul to cope with commodities rout that has triggered a fight for survival even among heavyweights.

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The global commodity rout, which has seen crude oil and copper prices hit multi-year lows this year, has forced Anglo and its peers to sell assets and cut dividends and capital spending to preserve cash and reduce debt.

Anglo, which reported a 55pc drop in underlying core profit, or EBIT, owns about 70pc of Kumba Iron Ore, Africa's biggest miner of the steel-making ingredient.

"The company has initiated a review to consider options to exit from KIO at the appropriate time, including a potential spin-out," Anglo said in statement.

Johannesburg-listed shares in the Anglo, the world No. 5 mining company by value, jumped more than 7pc, reversing earlier losses, to 96.14 rand by 0926 GMT.

Anglo said underlying earnings before interest and tax fell 55pc to $2.2 billion from $4.9 billion a year earlier.

The firm had been expected to post annual earnings before interest and tax of $1.5 billion, according to Thomson Reuters analysts' forecasts, down 70pc year-on-year.

Ratings agency Moody's on Monday downgraded Anglo, citing expected lower commodity prices and doubts over how long it would take the company to pay down debt.

Rival Rio Tinto on Thursday scrapped its generous payout policy in the face of a bleak outlook for the global economy after it slumped to a net loss for 2015 and posted its worst underlying earnings in 11 years.

Reuters

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