Global miner Anglo American PLC saw 2012 earnings halve and its bottom line dip into the red, hit by tumbling profit at all core units and write downs to its flagship Minas Rio iron ore project in Brazil.
Anglo came in within market forecasts with a 44 per cent drop in operating profit to $6.2-billion (U.S.), and underlying earnings fell more than 50 per cent. But the miner also sought to woo investors with a 15 per cent increase in its dividend, which helped lift its shares almost 2 per cent at the open.
After the impact of impairments to the Brazilian project and Anglo’s bruised platinum unit, the loss attributable to shareholders totalled $1.5-billion.
Minas Rio, where delays and permit troubles have driven costs to more than three times original estimates, has been seen as Anglo’s most significant failure of recent years and is partly responsible for the exit of boss Cynthia Carroll.
Carroll, who hands over the Anglo helm at the end of next month, is only one of several mining executives to have fallen foul of investor demands for better returns and anger over perceived mistakes, including overspending on deals and – in Anglo’s case – big-ticket projects like Minas Rio.
Carroll, however, said she had no regrets.
“We did not go after a huge acquisition, or an enormous company. We did not have attempted acquisitions and then failed acquisitions, like some of our competitors. What we did do, and this was the mandate I was given when I arrived, was to pursue iron ore,” she told reporters.
“Minas Rio is a resource that has increased fourfold since we have gone into it and it is going to be bigger. The quality of this resource is phenomenal.”
The miner had said would write $4.6-billion off the value of both Minas Rio and platinum projects now deemed uneconomical.
Earnings fell across the board for Anglo, however, as weaker prices and higher costs through 2012 took their toll, with both iron ore and copper down by more than a third.
South African strikes, particularly in platinum, have been a large part of Anglo’s troubles; its Anglo American Platinum unit posted its first annual loss earlier this month and said there could be more labour disruption ahead as it pushes through a major overhaul.