JOHANNESBURG (miningweekly.com) - After an extensive restructuring, diversified miner Anglo American raised its dividend for the 2017 financial year to $1.02 a share - its highest dividend in nearly a decade.
The "fundamentally different business" nearly halved its debt to $4.5-billion and doubled its free cash flow by 93% to $4.9-billion in the year ended December 31.
The company, which has controlling stakes in diamond and platinum companies, as well as copper, coal, nickel and iron-ore interests, doubled its attributable profit to $3.2-billion for the year.
Operating profit grew to $5.5-billion from $1.7-billion the year before.
The company's underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) of $8.8-billion was up by 45% year-on-year, with the company having achieved a return on capital employed of 19%.
"This is a significant improvement from where we started five years ago," Anglo American CEO Mark Cutifani said in a media conference call on Thursday.
He added that the solid returns were the result of the company "doing what we said we will do", while aiming to be more resilient, competitive and capable of delivering solid returns.
Anglo had 47% fewer assets in 2017, at 37, compared with 68 in 2012. Its assets in South Africa have decreased to 17 from 31.
Cutifani highlighted that the company had focused on generating more product, while productivity per person had improved by 28% last year alone. This, he enthused, was "the best single year we've ever had."
Since 2013, Anglo's productivity and net production per person has improved by 80%.
"Our cash flow is $6.6-billion higher than it was in 2012, and our return on capital import has gone from 9% to 19%," Cutifani noted.
Meanwhile, commenting on the actions taken by South Africa's newly-elected President Cyril Ramaphosa to get the economy back on the right track and to deal with the legislative uncertainty in the mining industry, he added that expectations remain high, however, the mining industry still has room for improvement.
"He's reached out to the mining industry and has made it clear that he sees mining as a key industry going forward in terms of revitalising and driving growth in the economy," Cutifani said.
Outside of Africa, he noted, Anglo was considering internal growth options and was likely to bring a partner into the up to $6-billion development of the greenfield Quellaveco copper project, in Peru.
"We're in talks with potential parties over the next few months, which will be included in the decision being taken to the board in June," he added.
Further, the Minas Rio iron-ore mine, in Brazil, which cost $13-billion to buy and build and which had put Anglo's balance sheet under immense pressure, secured licences on January 26 for the expansion of its mining footprint and its ramp-up to full production of 26.5-million tonnes in 2020.
There are also internal projects in metallurgical coal and diamonds in Namibia that Anglo is looking at for growth, as well as opportunities in platinum in South Africa. However, Cutifani mentioned that the company remains cautious when it comes to growth.
"Growth has been a dirty word in the industry for some time - and so it should be, because of the stupid things that a number of people have done in terms of investing in the wrong opportunities at the wrong time," he said, adding that Anglo's strategy is to match production to market demand and not overproduce minerals.
Looking forward, the company remains focussed on restructuring the business, while further improving efficiency and its capability to get the best out of its assets, which have an average life of 30 years.
"2017 has been a strong year and reflects the hard work that we've done. We've delivered on our commitments and we've shown what we can do as a business. We see significant opportunities moving forward, as we intend to continue building on the foundations that we have set and keep improving over the next three to five years."
In 2017, Anglo benefited from strong price improvements of 57% and 29% for metallurgical coal and copper respectively, while palladium prices increased 44%. Diamond prices, however, decreased by 13%.