Anglo American, which swung to a full-year loss after a $4.6 billion (R40.7bn) write-down at its biggest project, rose to the highest in five months in London as chief executive Cynthia Carroll said 2013 would be better.
Anglo gained as much as 3.8 percent to £20.885 (R286.69), the highest intraday level since September 17, and closed at £20.39. The net loss was $1.49bn, compared with a profit $6.17bn in 2011, reflecting the blows to earnings from the slashed valuation on the Minas-Rio iron ore venture and wildcat strikes in South Africa, Anglo said.
Carroll departs next month after resigning in the wake of delays at the Brazilian mine. London-based Anglo on January 29 raised its cost estimate for Minas-Rio a sixth time to as much as $8.8bn.
AngloGold Ashanti chief executive Mark Cutifani will succeed Carroll.
“It is possible now that the worst is over for Anglo,” Christopher LaFemina, an analyst at Jefferies, said in a report. “While Minas-Rio still has risks, we believe the upside potential to the revised $8.8bn capital expenditure budget is minimal.”
Anglo may prove an attractive acquisition target for Glencore International chief executive Ivan Glasenberg, who is due to complete a $36bn takeover of Xstrata next month and create the world’s fourth-biggest mining company.
“I don’t think Anglo American is vulnerable,” Carroll said in an interview with Manus Cranny on Bloomberg Television. “We just have to keep going at it and doing better every single day – improving, applying best practices and that is exactly what we are doing in every part of our business.”
Anglo’s underlying earnings declined by 54 percent to $2.84bn, it said on Friday, beating the $2.4bn average estimate of 18 analysts.
The company increased its dividend by 15 percent to 53 cents a share as an improving outlook boosts optimism about demand for commodities.
“The fundamentals for this industry are very, very strong,” Carroll said. “As we look at China and the growth and the development of urbanisation going 50 percent to 60 percent over time, that would demand about a billion tons of steel for China into the future.”
Anglo’s iron-ore and platinum production fell last year as unprotected strikes disrupted mines at its Kumba Iron Ore and Anglo American Platinum units. Walkouts that started in platinum mines in August spread to gold, coal and iron-ore operations, with about 120 000 workers downing tools across the industry at the peak of the unrest, according to the Chamber of Mines.
Anglo’s performance was “a result of markedly weaker commodity prices, ongoing cost pressures and an operating loss in our platinum business”, Carroll said on a conference call.
This would be a better year, helped by demand from Asia, she added. “We expect China to continue to grow at about 7 percent per annum.”
The company’s Brazilian write-down is among more than $50bn that mining chief executives have announced in the past 12 months as managers reassess expensive takeovers.
Barrick Gold said on Thursday it was taking a $3bn charge on its Lumwana copper mine in Zambia, on the same day that Rio Tinto reported its first-ever annual loss after $14bn of write-downs, mostly on aluminium assets.
Carroll said mining execu-tives need to be disciplined to keep a balance between meeting shareholders’ demands for short-term gains and maintaining a robust balance sheet. “There has to be a balance of give and take, as we need to grow for the long term.”
Asked about her future plans, Carroll, 56, said she intended to stay in the commodity business.
“I’ve been in commodities for decades,” she said. “I ran international global businesses for decades and I’m not going away. I’m committed to capital-intensive industrial businesses, and that’s probably where I’m going into the future.”
Shares of Anglo gained 1.88 percent in Johannesburg to close at R280.50. – Firat Kayakiran from Bloomberg