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Anglo Am cuts after 1st loss in a decade

Friday, February 15 14:27:39

Anglo American slid to its first net loss for more than a decade in 2012 after profits fell across all units and the global miner wrote $4 billion off the value of its flagship Minas Rio iron ore project in Brazil.

Anglo, like rival Rio Tinto a day earlier, promised caution in future spending. Its 44 percent drop in operating profit to $6.2 billion was expected, but the impairments linked to Minas Rio and Anglo's bruised platinum unit resulted in a net loss, or loss attributable to shareholders, of $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. Anglo had already said last month that it would write $4.6 billion off the value of both Minas Rio and platinum projects.

The miner sought to pacify investors with a 15 percent increase in its dividend which helped lift its shares on Friday, though it cautioned future increases would be tempered by its spending plans.

Anglo's spending is expected to peak this year at between $7.5 billion and $8 billion, thanks to costs at Minas Rio and Australian coking coal project Grosvenor. That will ease to between $6.5 and $7 billion in 2014 as the miner progresses to new projects including copper operation Quellaveco in Peru.

Departing chief executive Cynthia Carroll, one of several mining executives to have fallen foul of investors angry over perceived errors and poor returns, 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."

Carroll, who departs at the end of next month to be replaced by AngloGold Ashanti's Australian boss Mark Cutifani said: "We will have to be that much more selective about where we are going to spend our money. The shareholders have spoken, it is clear they are looking at the very short term and we have to strike the right balance."

Projects like Quellaveco and coal asset Revuboe in Mozambique, being built from scratch, have come under scrutiny after the expensive overruns at Minas Rio and rival Rio's costly mistakes at its own operation in Mozambique. But Anglo promised it would proceed with care, adding partnerships would be considered for complex, greenfield projects to reduce risk.

Carroll told Reuters earlier this month the company could consider a partner for Minas Rio. Its copper project Quellaveco will be submitted to the board for approval in 2013. (C ) Reuters