JOHANNESBURG (miningweekly.com) – Diversified miner Anglo American on Friday announced the reinstatement of a dividend on the back of a strong $4,4-billion half-year operating profit, but cautioned about the near-term outlook for the world economy becoming "more uncertain in recent months".

Anglo CEO Cynthia Carroll said that the company had delivered on safety, operational performance, near-term growth and the sale of noncore businesses.

While safety was 70% better than in 2007, eight people lost their lives in the six months.

Asset optimisation yielded $1,2-billion in savings in the first six months

In declaring an interim US 25 c a share dividend, Anglo said that it intended to follow a progressive dividend policy which would seek to maintain or steadily increase dividends in dollar terms over time, taking into account the earnings potential, investment needs and resultant group cash flows.

Profit attributable to equity shareholders was $2,1-billion; net debt was $10,9 billion; and committed undrawn bank facilities and cash at $12-billion.

Anglo Platinum's operational turnaround was positioning the formerly troubled company in the lower half of the cost curve and $2,2-billion was expected from the agreed sale of Anglo's zinc business, Australian coal assets and Tarmac.

On the near-term outlook for the world economy, Anglo said that leading indicators pointed to less favourable conditions, but the company continued to express confidence in the outlook for the mining industry in the medium- to long-term.

"Our businesses are operating strongly under our new organisational structure, our cost and efficiency programmes continue to deliver ahead of expectations," Carroll said.

She defended her position as Anglo Platinum chairperson, despite the flouting of the letter of the King 3 corporate governance code, of which she told Mining Weekly Online she was well aware.

On overall production prospects, Anglo said that its near-term production growth was a clear differentiator for it and four major strategic projects would deliver higher production for the company.

The Barro Alto nickel project in Brazil, which was on schedule for first production in the first quarter of 2011, was poised to more than double Anglo's nickel production capacity when it reached full production of 36 000 t/y.

The expansion of the Los Bronces copper operation in Chile, which was on schedule for first production in the fourth quarter of next year, would increase low-cost production to 490 000 t/y in the first three years.

While the annual nine-million-ton Kolomela iron-ore project in South Africa was progressing towards first production in the second quarter of 2012, Minas Rio's annual 26,5-million ton first-phase iron-ore project in Brazil was taking steps to obtain key outstanding approvals from the authorities.

"Once the remaining initial approvals are granted, we believe it will take 27 to 30 months to construct and commission the mine and plant and to deliver the first ore on ship," Carroll said.

The six months saw strong demand for steel raw materials, driven by Chinese-led consumption and resulting in favourable demand environments in the iron-ore and metallurgical coal markets.

Earnings were further supported by a resurgence of demand and prices for base metals, most notably in the copper market, where Anglo American's portfolio of assets delivered substantial earnings.

Copper delivered an operating profit of $1,1-million, 96% higher than the first half of 2009 as a result of stronger prices, while volumes were in line with the same period in 2009.

Nickel reported an operating profit of $68-million, $79-million higher mainly as a result of higher prices.

Platinum generated an operating profit of $418-million, $431-million higher, driven by a 67% increase in the dollar basket price of metals sold, and the ongoing benefits of restructuring.

Iron-ore and manganese recorded an operating profit of $1,6-million, 126% higher.

Metallurgical coal delivered an operating profit of $263-million, an 18% decrease on the first half of 2009, primarily due to the impact of lower realised prices and a strong Australian dollar.

Thermal coal's operating profit of $351-million was 10% lower, as a result of the stronger rand, and lower volumes due to challenging weather-related and geological conditions facing South African operations.

Cerrejón provided a strong operating performance, despite lower prices.

Diamonds recorded an attributable operating profit of $261-million, $257-million higher, reflecting improved trading conditions, with higher production in response to an improvement in demand for diamonds, as well as the ongoing benefit of cost restructuring initiatives.

Other mining and industrial businesses generated an operating profit of $290-million, 23% higher, despite the sale of stakes in Tongaat Hulett and Hulamin in 2009.

The zinc business delivered an operating profit of $150-million, 275% higher, mainly owing to higher zinc and lead prices, but also through improved zinc production.

There were further strong performances from the Scaw Metals and Copebrás businesses. Catalão's operating profit decreased 45% to $28-million, primarily the result of lower grades on niobium production.

The production of export thermal coal from South Africa decreased by 6% as a result of heavy rains and geological challenges, while Cerrejón production was in line with 2009 and Australia increased thermal coal production by 5%.

Copper production was maintained at 2009 levels. The earthquake in Chile caused a brief loss of power supply to those operations close to the epicentre, but did not materially impact on operating performance.

Nickel production from South America was flat, while nickel output from Anglo Platinum's South African mines increased by 6%.

Zinc production increased by 5% compared with the first half of 2009.

Equivalent refined platinum production decreased by 4% from 2009, mainly because of the closure of three high cost shafts at the Rustenburg operations during 2009.

Net debt, including related hedges, of $10,9-million was $350-million lower than at December 31 and $672-million lower than at June 30, 2009.

Cash flows from operations of $3,7-billion funded capital investment of $2.1-billion principally in the group's core assets, including combined investment of $1-billion in the Los Bronces, Barro Alto, Minas Rio and Kolomela near-term strategic growth projects during the first six months of the year.

In February, the group participated in the De Beers rights issue, resulting in a $500 000 increase in net debt, offset by $400 000 cash inflows from non-controlling investors participating in Anglo Platinum's rights issue.