Anglo American Plc, which swung to a full-year loss after a $4.6 billion writedown at its biggest project, rose to the highest in five weeks in London as Chief Executive Officer Cynthia Carroll said 2013 would be better.
Anglo gained 1.3 percent to 2,039 pence, the highest level since Jan. 11, by the close in London. The net loss was $1.49 billion, after a profit of $6.17 billion in 2011, reflecting blows to earnings from the valuation of the Minas-Rio iron ore venture and wildcat strikes in South Africa, Anglo said.
Carroll departs in April after quitting following delays at the Brazilian mine. London-based Anglo on Jan. 29 raised the mine’s cost estimate a sixth time to as much as $8.8 billion. AngloGold Ashanti Ltd. CEO Mark Cutifani will succeed Carroll.
“It is possible now that the worst is over for Anglo,” Christopher LaFemina, an analyst at Jefferies, said in a report. “While Minas Rio still has risks, we believe the upside potential to the revised $8.8 billion capex budget is minimal.”
Anglo may prove an attractive acquisition target for Glencore International Plc CEO Ivan Glasenberg, who is due to complete a $36 billion takeover of Xstrata Plc next month and create the world’s fourth-biggest mining company.
“I don’t think Anglo American is vulnerable,” Carroll said in an interview with Manus Cranny on Bloomberg Television. “We just have to keep going at it and doing better every single day improving, applying best practices and that is exactly what we are doing in every part of our business.”
Underlying earnings fell 54 percent to $2.84 billion, Anglo said in a statement, beating the $2.4 billion average estimate of 18 analysts surveyed by Bloomberg. The mining company increased its dividend by 15 percent to 53 cents a share as an improving outlook boosts optimism about demand for commodities.
“The fundamentals for this industry are very, very strong,” Carroll said in the interview. “As we look at China and the growth and the development of urbanization going 50 to 60 percent over time, that would demand about a billion tons of steel for China into the future.”
Anglo’s iron-ore and platinum production fell last year as strikes disrupted mines at its Kumba Iron Ore Ltd. and Anglo American Platinum Ltd. units. Walkouts that started in South African platinum mines in August spread to gold, coal and iron-ore operations, with about 120,000 workers downing tools at the peak of the unrest, according to the country’s Chamber of Mines.
Anglo’s performance was “a result of markedly weaker commodity prices, ongoing cost pressures and an operating loss in our platinum business,” Carroll said on a call. This year would be better, helped by demand from Asia, she said. “We expect China to continue to grow at about 7 percent per annum.”
The Brazilian writedown is among more than $50 billion that mining CEOs announced in the past 12 months as managers reassess expensive takeovers. Barrick Gold Corp. said yesterday it was taking a $3 billion charge on its Lumwana copper mine in Zambia, the same day that Rio Tinto Group reported its first-ever annual loss after $14 billion of writedowns, mostly on aluminum assets.
Carroll said mining executives need to be disciplined to weigh shareholders’ demands for short-term gains against the need for a robust balance sheet. “There has to be a balance of give and take, as we need to grow for the long term,” she said.
Asked about her plans, Carroll, 56, said she intends to stay in the commodity business. “I’ve been in commodities for decades,” she said in the interview. “I ran international global businesses for decades and I’m not going away.
“I’m committed to capital-intensive industrial businesses, and that’s probably where I’m going into the future.”