LONDON – Anglo American took a further $1.6 billion writedown on its British fertilizer project on Thursday but said it expects to reach a deal to sell its coal assets by early 2025 despite a fire at one of its mines.
CEO Duncan Wanblad is under pressure to boost returns to investors and demonstrate he can deliver on his May 14 plan to radically refocus the company on copper and iron ore, after fighting off a $49 billion takeover attempt from bigger rival BHP Group (NYSE: BHP).
Wanblad aimed to get an early start by selling Anglo’s coking coal assets in Australia, but a fire at its Grosvenor mine threatened to delay a deal and hit its valuation.
Anglo said the company plans to conduct a two-stage auction process for the coal assets, including Grosvenor, adding that the mine would probably only resume operations under a new owner.
“There are so many interested potential buyers for this set of assets,” Wanblad told reporters.
“We expect that hopefully by the end of this year, very early next year…we will have a deal,” he added.
According to analysts at Jefferies, Grosvenor accounts for about 30% of the $4.5 billion value the brokerage attributes to Anglo’s steelmaking coal business.
Anglo’s shares were down around 1% by 0830 GMT.
The CEO said Anglo is still looking for partners at its Woodsmith fertilizer project in northern England. Despite the latest writedown, the company reiterated that operations are one of its three pillars alongside copper and iron ore after its restructuring.
Anglo wrote down $1.7 billion on the $9 billion project a year ago.
The miner also said its nickel assets in Brazil have attracted interest from potential buyers.
“We have had inbound interest from several credible parties and we will be starting a formal process later this year,” a spokesperson said via email.
The company declared an interim dividend of $0.42 per share, down from $0.55 a year earlier and far below the record levels of 2021.
It posted a $672 million loss for the first half, mostly reflecting the impairment at Woodsmith. Core earnings or EBITDA of $5 billion were slightly lower than $5.1 billion a year earlier but above the $4.6 billion seen in an analysts’ consensus estimate.
Anglo cut diamond production by 19% during the first six months of the year amid lower prices. Output guidance at its De Beers unit was revised down to 23-26 million carats from 26-29 million to help preserve cash.
“An expected recovery in PGM and diamond prices could help sentiment while a renewed approach from BHP cannot be ruled out,” said analyst Marina Calero at RBC Capital Markets.
“However, we view the outlook for Anglo as more balanced in the near term as the sale of the steelmaking coal assets gets more complicated,” she added.
The company’s restructuring plan includes the divestment of De Beers and also of its nickel mines, and the demerger of its South African platinum unit.
(Source: ReutersReuters)
