Thursday, March 28, 2024
HomematerialsAnglo American examines iron ore unit sale after earnings plunge

Anglo American examines iron ore unit sale after earnings plunge

Miner Anglo American on Tuesday posted a full-year net loss and announced plans to sell assets including Kumba Iron Ore as commodity prices slump.

"We've got a couple of options (for the Kumba sale), whether we do a sell down or in fact do a spin-off," CEO Marc Cutifani told CNBC in an interview. He said the group was a smaller player in iron ore and wanted to focus on diamonds, platinum and copper.

"It's about focusing on consumer-based commodities," he said.

Shares in the group opened up over 6 percent, but was down 7 percent by mid-morning trade.

"At the end of the day, we have to make some tough calls," Cutifani told CNBC.

A slowdown in the Chinese economy has hit the mining industry hard. On Monday, ratings agency Moody's cut Anglo's debt rating to junk, citing a deterioration in commodities market conditions.

Cutifani defended the group's position, telling CNBC it had bids on the table for a number of its assets. Moody's "may have to re-think" its announcement in the next months, he said.

The net loss for 2015 came in at $5.62 billion. Underlying profit before interest and tax came in at $2.2 billion from $4.9 billion last year, a 55 percent drop.

The group is planning to raise $3 to $4 billion from disposals in 2016.

"We of course recognize the current challenging environment in which to deliver disposals. We are already engaged with parties interested in several of our assets, but we will only complete those transactions which deliver appropriate value for our investors," said Cutifani, in a company statement.

The group will continue to focus on diamonds through its De Beers business. Cutifani said the group was "cautious" and added it may take another two to three months before he could comfortably say the market had turned.

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