Global diversified miner Anglo American has posted a profit attributable to equity shareholders of $8.6-billion for the 2021 financial year after recording solid performances across assets and with strong support from commodity prices.

Underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) was at a record $20.6-billion.

Outgoing CEO Mark Cutifani on February 23 said 2021 was a year of two distinct halves, characterised by strong market demand and prices for many products as economies recouped lost ground on the back of government stimulus.

He attributed this strongest-on-record financial year for the company not only to productivity and market aspects, but also to Anglo’s transformative business model, which it has been shaping over a number of years.

Anglo proposes a final dividend of $2.1-billion, equal to $1.18 apiece, and a $0.50 apiece special dividend, taking the total dividends paid for the year to $4.19 apiece, or $5.2-billion.

Taking into account a $1-billion share buyback programme the company undertook in the year, shareholder returns totalled $6.2-billion for the year, or $4.99 apiece.

This compares with a total dividend of $1 apiece, equal to $1.2-billion, declared in 2020.

Basic headline earnings a share of $7 compares with basic headline earnings of $2.47 posted for the 2020 financial year.

A strong price environment in the first half of the year enabled Anglo to generate $7.8-billion of free attributable cash flow, before moderating in the second half of the year.

Average market prices for the group’s basket of products increased by 43% year-on-year.

Cutifani pointed out that Anglo’s return on capital employed of 43% was well above its targeted 15% through-the-cycle return, as it should be in times of strong pricing.

The company increased its mining Ebitda margin to 56% in 2021 and returned $7.1-billion in taxes and community development expenditure, an increase of 89% year-on-year, to its operating countries.

Since 2017, Anglo has returned $12.2-billion to shareholders and invested $18-billion in the business, including to develop the Quellaveco copper project, in Peru, which is due to start up around mid-year.

The group’s net debt balance stood at $3.8-billion at the end of December, compared with net debt of $5.5-billion at the end of December 2020.

OPERATIONAL PERFORMANCE

Across its various commodities, Anglo has reported a return to 95% of normal production capacity in the year under review.

Particularly, the platinum group metals business reported an improved mining and processing performance, increasing output by 13% year-on-year to 4.2-million ounces and refined PGM production to a record 5.1-million ounces.

This while the diamond subsidiary De Beers delivered higher rough diamond production of 29% year-on-year to 32.3-million carats, in response to strong consumer demand.

The company’s iron-ore businesses experienced improved plant availability and delivered a 3% year-on-year increase in iron-ore output to 62.8-million tonnes.

Copper production was in line with the prior year at 647 200 t, but nickel production decreased by 4% year-on-year to 41 700 t, owing to licencing delays and lower ore grades.

Metallurgical coal output came in at 11% lower year-on-year, at 14.9-million tonnes, mainly owing to the suspension of longwall operations at the Grosvenor operation since May 2020 as a result of an underground incident and an almost four-month-long longwall stoppage at the Moranbah operation as a result of elevated gas levels.

The company explains that the Moranbah operation was further impacted by challenging geological conditions in the second half of the year.

Anglo also advised that Grosvenor is up and running again.

Manganese ore output totalled 3.7-million tonnes in the year under review, marking a 5% improvement compared with the prior year.

Thermal coal export production was down to 9.3-million tonnes, reflecting the demerger of the South African coal operations on June 4, 2021, and a further exit from thermal coal in the South American market.

The group’s copper equivalent unit costs increased by 16% in dollar terms and 10% in local currency terms, owing to stronger producer currencies and input cost increases at most of Anglo’s operations, despite higher production.

Cutifani concluded that the group remains focused on running at full capacity, improving productivity where possible, becoming future-smart, containing inflation and achieving zero harm, as he delivered his last results commentary as Anglo CEO.

Incoming CEO Duncan Wanblad will take the reins officially in April.

Commenting on what lies ahead for Wanblad, Cutifani says he has to navigate a more complex external environment whereby mining companies are increasingly becoming part of the "solution" of whatever a country's challenges may be. He also believes Wanblad will be tasked to create more stability in the organisation, which has sometimes ended up in the wayside as the company was focused on growing cash flow.