By Clara Denina and Felix Njini
LONDON (Reuters) -Anglo American posted a $3.1 billion loss on Thursday after a writedown of its De Beers diamond business, as it presses on with shedding unwanted assets.
Anglo aims to focus on copper and iron ore assets after BHP’s failed takeover attempt last year. That means spinning off its platinum and diamond businesses after the sale of its coal and nickel mines.
CEO Duncan Wanblad also said the company was exploring jointly running its Los Bronces copper mine in Chile with that of state-backed Codelco’s Andina operation.
The plan, which analysts said would cut costs and boost production of the two adjacent mines, helped cheer investors.
Anglo’s London-listed closed up 2.5%.
“Two things stood out today – the cost savings are really showing and the other big news for Anglo is the Chilean joint venture,” said George Cheveley, portfolio manager at Ninety One.
Wanblad said the process to sell or divest diamond specialist De Beers would accelerate in the second half of the year.
The prevailing market downturn means the process to divest the diamonds business could only pick up in the second half of this year, the CEO said.
A $2.9 billion De Beers writedown means that Anglo has been able “to bring the carrying value of this business to a more reasonable $4.1 billion,” Jefferies analysts said.
COMPETITION FROM LAB-GROWN STONES
The $3.1 billion loss followed a profit of $283 million for 2023, as metal prices retreated and diamond sales struggled against competition from lab-grown stones.
Other diversified miners including BHP, Rio Tinto and Glencore also reported a second consecutive year of declining earnings due to weaker metal prices, following two record years when prices soared.
Anglo booked a $3.8 billion impairment, mostly related to the diamond unit, and declared a dividend of $0.64 per share, or about $800 million, down from $0.96 a share previously.
De Beers has a stockpile of gems worth about $2 billion, amid a persistent lower price environment, Wanblad said.
Anglo would continue to evaluate either selling or listing De Beers to exit the diamonds business responsibly, he added.
The CEO said that to list and divest the unit, market conditions have to be right, so he would prefer a speedier sale to a trade buyer.
“The market conditions have to be suitable for that to happen effectively,” Wanblad told Reuters. “(But) we’re probably more likely than not to be able to execute on a trade sale than on a listing in the short run.”
The miner’s joint venture plan in Chile was 13 years in the making.
“(Even though) the synergies were very obvious, there’s a lot of pre-work for these things to come together,” Ninety One’s Cheveley said.
The mining sector has seen a jump in M&A activity, which stood at around $26 billion in 2023, and jointly operating assets is also a way to share risks.
Anglo on Tuesday said it’s selling its Brazilian nickel business for up to $500 million. It has so far raised about $5.3 billion from sales of its assets that the CEO said would be used to cut down debt.
(Reporting by Clara Denina in London and Felix Njini in JohannesburgEditing by Kirsten Donovan, Barbara Lewis, Elaine Hardcastle, Emelia Sithole-Matarise and Deepa Babington)
