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Anglo American will return $4.1bn to shareholders after surging commodity prices helped the miner record the best half-year profits in its 104-year history
The London-listed company reported pre-tax profits of $10.1bn for the six months to June, from $1.7bn in the same period a year ago, on revenue of $21.7bn. It declared dividends of $3.1bn and said it would repurchase $1bn of shares.
The result is ahead of Anglo American’s performance in 2020 when it generated pre-tax profits of $6bn and paid $1.25bn in dividends. Steelmaking ingredient iron ore and Anglo’s platinum group metals unit were the main profit drivers.
“The first six months of 2021 have seen strong demand and prices for many of our products as economies begin to recoup lost ground, spurred by stimulus measures across the major economies,” said chief executive Mark Cutifani.
Anglo American was founded in South Africa by Ernest Oppenheimer in 1917 and still has a large footprint in the country. It owns diamond producer De Beers and has a number of big copper mines in South America.
Aided by strong demand from China and big economies revving up, the mining industry has emerged from the coronavirus pandemic in a strong financial position. From copper to rhodium, commodity prices have soared over the past year, delivering huge windfalls for major producers.
Based on production and commodity price forecasts, PwC expects the world’s top 40 miners to record after-tax profits of $118bn in 2021, up 68 per cent from the previous year.
As a result, diversified miners are set to become one of the biggest sources of income for European investors this year. On Wednesday, Rio Tinto said it would pay $9.1bn in half-year dividends as it cashed in on soaring prices for iron ore.
Overnight Vale, the Brazilian iron ore producer, reported a 600 per cent rise in second-quarter net income to $7.6bn
Anglo American is one of the few big mining houses promising production growth with a large copper mine in Peru due to come on stream next year. It is also developing a fertiliser mine at a national park in the north of England.
Woodsmith involves sinking two 1.5km shafts to access a huge deposit of polyhalite — a mineral that can be used as fertiliser — and building a 37km underground tunnel to take the material to a port on Teesside.
During the first six months of the year Anglo American exited thermal coal, spinning off its South African mines into a new company and selling its share of a Colombian mine to Glencore.