Anglo American Doubles Profit on Metals Prices, Resumes Dividend Payments

Anglo American Plc, owner of stakes in the world’s biggest platinum and diamond producers, said it’s resuming dividend payments after first-half earnings more than doubled on higher metals prices.

Underlying earnings climbed to $1.84 a share from $0.91 a year earlier, the London-based company said in a statement today. That result beat the $1.79 median of seven analyst forecasts compiled by Bloomberg. The dividend is $0.25 a share.

Chief Executive Officer Cynthia Carroll last year suspended dividends for the first time in more than 60 years and cut more than 23,000 jobs after metal prices plunged in 2008. She is selling zinc, steel and phosphate assets to focus on the iron ore and copper that’s needed in expanding Asian economies.

The first development phase of Anglo’s Minas Rio iron ore project in Brazil, its biggest, suffered further delays and could cost around $750 million more than its previous estimate of $3.8 billion.

Anglo, which bought the assets for $5.5 billion in 2008, said a cost of $210 million will be incurred related to changes in the licensing and design of the mine. A further $180 million a quarter may be incurred because of “increased schedule- related costs,” it said. Anglo estimates that these costs will be incurred within a nine-month period from June.

Asset Sales

“While the delay was largely anticipated, the magnitude of the capital increase will likely come as a surprise,” UBS AG said in a note.

Anglo’s shares were little changed at 2,536 pence in London as of 8:39 a.m. local time, after earlier having fallen as much as 1.9 percent.

Anglo agreed in May to sell its zinc mines to Vedanta Resources Plc for $1.34 billion and said in February it would sell parts of its Tarmac construction materials unit for $400 million. Last year, the company raised $2.4 billion from sales of assets, mainly its stake in AngloGold Ashanti Ltd.

“We estimate that these assets sales could fetch up to $6- 8 billion and coupled with the potential $2-3 billion stake sale in Minas Rio could raise up to $10 billion,” Credit Suisse said in a note. That would “reduce debt levels significantly and potentially make Anglo American debt free in 2011,” it said.

Underlying earnings is profit attributable to equity shareholders and adjusted for the effect of special items, re- measurements and related tax and minority interests.

To contact the reporter on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net

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