Anglo American Faces Interim Loss Amid Woodsmith Project Write-Down
Anglo American reported an interim loss of 55 US cents per share on Thursday, following a $1.6 billion write-down of its investment in the Woodsmith fertilizer minerals project.
Basic underlying earnings fell to $1.06 per share, marking a 23% year-on-year decline due to a 10% drop in the basket price for metals mined by Anglo, particularly platinum group metals (PGMs) and iron ore.
The write-down occurred as Anglo decided to delay the Woodsmith project amid a restructuring of the group, announced in May shortly after BHP’s £38 billion all-share takeover approach. Anglo had previously impaired Woodsmith by $1.7 billion.
Despite the loss, the group declared a $500 million interim dividend, equivalent to 42 US cents per share, maintaining its 40% payout policy.
Anglo American also announced plans to cut annual costs by $1.7 billion and reduce capital expenditure by $1.6 billion between 2024 and 2026. CEO Duncan Wanblad outlined a strategy to “daylight” the firm’s copper and iron ore production by selling assets.
As part of the restructuring, Anglo intends to sell its platinum and diamond assets by the end of 2025. Additionally, its metallurgical coal mines in Australia are up for sale and are expected to be sold first.
During a media call, Wanblad mentioned that the coal assets would be sold through a “classic two-stage auction,” with several bidders already interested.
He expressed hope for a deal by the end of this year or early next year. However, a fire at the Grosvenor mine on June 29 might disrupt the sale plans.
Wanblad acknowledged that the fire’s damage could affect the sale value, but no write-down was recorded for Grosvenor, which is valued at $1.3 billion.
Wanblad also addressed the challenges of selling De Beers, suggesting that a trade sale or demerger with a possible listing might be considered.
The diamond market’s downturn has led to a 20% drop in the diamond index over the past six months, prompting De Beers to cut annual production by three million carats for the second time this year. Wanblad emphasized that the divestment process would continue despite market conditions, with a likely sale next year.
Anglo’s 40% stake in Samancor, a South African manganese producer, is not a current priority for sale. Wanblad noted that Samancor, shared with South32, produced record manganese ore in South32’s 2024 financial year.
Regarding the Woodsmith project, Wanblad stated that Anglo expects to produce its first mineral fertilizer by 2030, three years later than initially planned.
The project’s cost, estimated at $4.8 billion, has been a significant burden on Anglo’s balance sheet, leading to its slowdown. The company plans to progress studies through next year and will seek an interested syndication partner once they are ready to move forward.
“We will not land partners until we are very clear that we will progress the project ourselves,” Wanblad said, indicating that this might happen in a couple of years rather than next year.
