The underlying earnings of diversified mining company Anglo American have more than doubled in the six months to June 30, when the generation of cash in the half-year was greater than in all of 2016.

Earnings hit the $1.5-billion mark and cash flow soared to $2.7-billion.

Production was up 9%, underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) soared 68% to $4.1-billion.

The Ebitda margin rose to 40%, net debt fell to within a hair’s breadth of full-year guidance and real costs dropped by 30%-plus.

“As a consequence, we’ve announced the restart of our dividend at a 40% payout ratio, being 48c a share,” Anglo CEO Mark Cutifani told a conference in which Creamer Media’s Mining Weekly took part.

Every person in the business is now producing 70% more than in 2013.

In six months, net debt was pulled down to $6.2-billion, improving the net debt-to-yearly-Ebitda ratio to 0.8 times.

“The most important point to make is that this year we’re on track to deliver our $1-billion improvement with another $600-million delivered in the first half of this year,” said Cutifani.

The company now has 37 assets from a previous 68 assets, but with increased production.

“The benefits of our relentless focus on driving efficiency through the operations and on upgrading the quality of our portfolio have resulted in a step change in operational performance and profitability,” commented Cutifani.

The first half’s surge in free cash flow was the outcome of extensive self-help work and tightly controlled capital expenditure within a stronger price environment.

The company now sees itself in a position to consider value accretive growth options and capital returns from within what it sees as an undeveloped mineral endowment.

On growth prospects, Cutifani said: “We’ve got to deliver cash flow and make sure that our returns are right so that we deliver that cash flow at the right cost.”

Anglo’s return on capital employed is now up to 18%, which it sees as the accretive growth starting point.

The company sees excellent in-house growth opportunities in small, rapid payback projects in diamonds and copper and even in iron-ore and copper.

“We’ve also got some hard work still to do on the platinum group metals side in getting costs out of the business. We’ve got lots of opportunities in a great portfolio that we can do quickly and smartly for high return. We also have some much bigger options that we’re developing on a broader basis,” Cutifani added.

Average market prices increased by 30%, with prices for metallurgical coal soaring 151% and those for Kumba iron-ore rising by 29%, but prices for rough diamonds falling by 12%.

The continuing ramp-up at the Minas-Rio iron-ore operation, in Brazil, lifted operating cash flows, as did higher sales volumes by De Beers, reflecting stronger demand for lower-value diamonds.

Copper sales volumes were down on weather-induced port closures and the eight-week suspension of mining operations at the El Soldado mine, in Chile, owing to regulatory issues, which caused a 6 000 t production loss.

Rough diamond production increased by 21% in the first six months of 2017, reflecting the ramp-up of Gahcho Kué, in Canada

In South Africa, iron-ore production at Sishen increased by 35%, following improvements in mining productivity gained from fleet efficiencies and higher plant yields.

Total platinum metal-in-concentrate was 3% higher on continued strong performance at Mogalakwena, in South Africa, and Unki, in Zimbabwe.

Production from Coal South Africa’s export mines was broadly in line with the corresponding period in 2016.

Copper production at Los Bronces, in Chile, was 4% lower on planned maintenance of both processing plants and 1% higher at Collahuasi, also in Chile, on higher ore grades.

Nickel production fell 5%, owing to unplanned first-quarter maintenance at the Barro Alto mine, in Brazil.

Anglo’s copper equivalent unit cost has increased by 12%, compared with the first half of last year, as a result of 9% stronger producer currencies, as well as 4% inflation and cost escalation and geological issues affecting the Grosvenor ramp-up.

Efficiencies at De Beers contributed to a 3% decrease in unit costs, despite unfavourable exchange rates and an increasing proportion of waste mining costs being expensed at the Venetia diamond mine, in South Africa, where the stronger rand weighed on cash costs, affecting unit iron-ore, platinum and coal costs.

Capital expenditure (capex) fell to $0.8-billion, compared with $1.2-billion for the first half of last year, owing to a 75% decrease in expansionary capex at Minas-Rio, Grosvenor and Gahcho Kué.

Expansionary capex was focused on the ongoing construction of De Beers’ Venetia underground mine, in Limpopo province.

Stay-in-business capex rose 13% to $0.4-billion, and stripping and development capex increased by 10% to $0.3-billion.