Anglo American profits driven by demand from China and soaring prices

By PETER CRIPPS AND KRISTY DORSEY
Published on Saturday 18 February 2012 00:00

SOARING commodity prices driven by demand from China helped miner Anglo American to unveil a record £7 billion profit yesterday.

The group, which owns road surfacing specialist Tarmac and plans to take control of diamond giant De Beers, said operating profits rose by 14 per cent to $11.1bn (£7bn) in 2011 as it cashed in on the appetite of emerging markets for its raw materials.

Rising profits allowed the firm to increase its final dividend by 15 per cent to 46 cents, bringing total dividends for the year to 74 cents, which represents a 14 per cent increase.

Anglo, one of the world’s largest mining companies, is based in London but employs more than 100,000 people at sites across the globe. The products it excavates include iron ore, manganese, coal, copper, nickel, platinum and diamonds.

The firm got three projects up and running on or ahead of schedule during the year, boosting its iron ore, copper and nickel production, although its operations in Queensland and South Africa were hit by flooding.

The group said it has commissioned nine projects, which – along with its recently opened mines – should help it grow faster than its rivals. It expects to approve a further $16bn of projects over the next three years.

Although it predicts some volatility in commodity prices in the coming months, it expects the increase in living standards for the booming middle classes in China and India will drive demand for its products.

The group is also encouraged by signs of a recovery in the US and said developed nations will need to buy its products to upgrade their infrastructure.

Chief executive Cynthia Carroll is one of just four female bosses of FTSE 100 index companies after taking the helm in 2007. She said: “Despite short-term uncertainty persisting in the global economy, particularly in Europe, the longer term outlook for Anglo American’s diversified mix of commodities remains strong.

“We expect sustained growth in the emerging economies, notably in China and India, which will underpin robust demand for commodities, supplemented by early recovery signs in the US.”

The group has agreed to pay $5.1bn to buy the Oppenheimer family’s 40 per cent stake in De Beers, bringing its stake up to 85 per cent, but is waiting for clearance from competition authorities.

Anglo made a record operating profit of $659 million from diamonds in the year, up 33 per cent, thanks to price increases.

A year ago, Anglo American agreed to merge its Tarmac division with Lafarge’s cement, aggregates, ready-mixed concrete, asphalt and contracting businesses in the UK, but that deal is also waiting for sign-off from regulators.

Tarmac reported an operating loss of $35m, compared to a profit of $48m the previous year, after one of its divisions took a $70m write-down.

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