Anglo American says its diversified portfolio came in handy in 2014 as it shielded the group from environment characterised by commodity volatility as it presented its full year results for year ended December 31.
The group reported a net loss of US$2.51 billion and made headlines with the US$$3.5 billion Minas Rio write-down that contributed to the company reporting a bigger loss. Although the company shipped its first ore from the Minas-Rio project in Brazil ahead of schedule in October and expect to bring the project in $400 million below the revised budget, the steep drop in the iron ore price in post-tax write down in the carrying value of Minas-Rio, the company stated. Chief Executive of Anglo American, Mark Cutifani admitted 2014 was a hostile year with declines in commodity prices amid generally adverse market conditions.
“Our diversified product portfolio provided us with a degree of insulation from the particularly sharp price falls for the bulk commodities of iron ore and coal, albeit in an environment where
weaker commodity prices accounted for $2.4 billion of underlying EBIT reduction,” Cutifani said.
Diamonds provided a great deal of cover to Anglo as De Beers’ total sales rose 11% to $7.1 billion, with rough diamond sales up 12% to $6.5 billion. The company said higher rough diamond revenue was driven principally by a 12% increase in consolidated sales volumes to 32.7
It added that average realised diamond prices were in line with 2013 at $198/carat, driven by 5% higher average rough price index in 2014, offset by a marginally lower product mix.
“The performance of our diamond business, De Beers, is a clear demonstration of the benefits and value of our diversified business model,” Cutifani said.
“The integration of De Beers into Anglo American is complete; De Beers contributed $1.4 billion of underlying EBIT in 2014, 28% of – and the second largest contributor to – the Group’s total, and delivered a 15% return on capital employed (ROCE).”
In our Platinum business, the CEO said the company has made substantial progress towards creating a business fit for the future. “We have defined the shape of our future platinum portfolio, restructured the assets that we plan to divest, set disposal processes under way and aligned our plans with government and with our employees.”
Cutifani is optimistic that despite the headlines of economic uncertainty and geopolitical tensions, the underlying fundamentals of our business – applying world class technical skills to world class assets – remain attractive over the long term.
“In the immediate term, I expect tough trading conditions to prevail during 2015, but we are determined to continue to build on our already very significant operational improvements, drive towards an effective and efficient organisation and culture, and to be unwavering in our capital discipline.”
Anglo American has invested in a wide range of mining activities including; coal, diamonds, platinum, copper, nickel iron ore and manganese, amongst others.