Anglo American posts record profit, more than triples payout

Anglo American (LSE: AAL) joined a growing list of miners that have delivered record profits this week, with full year earnings of US$20.6 billion and a US$2.1-billion final dividend, on the back of soaring commodity prices.

“These are clearly the strongest results we have ever posted,” outgoing chief executive officer Mark Cutifani told reporters.

“Prices have been very much driven by supply struggling to keep up with that demand. And I think that will probably be with us for another year or two,” he said.

Cutifani will retire at the company’s annual shareholder meeting in April but will remain in the company until June to support the management transition. He’s handing the reins to Duncan Wanblad, Anglo’s current director of strategy and business development.

Iron ore, one of Anglo’s main commodities, soared past US$230 a tonne last year, while copper hit US$10,500 a tonne.

Net debt was reduced to US$3.8 billion by the end of 2021 from US$5.5 billion a year earlier while capital expenditure went up by 48% to US$565 million as spending on projects deferred in 2020 because of the coronavirus pandemic picked up again.

Since 2017, Anglo has returned US$12.2 billion to shareholders and invested US$18 billion in the business.

The company’s results are the last of an earnings season in which rival miners Rio Tinto (ASX, LSE: RIO; NYSE: RIO; ASX: RIO) BHP (LSE: BHP; NYSE: BHP; ASX: BHP) and Antofagasta (LSE: ANTO) also posted record results and dividends.

Quellaveco and Ukraine

Anglo American said its giant Quellaveco copper project in Peru was on track to begin production in mid-2022. It expects the asset to generate between 120,000 and 160,000 tonnes of copper this year, and 300,000 tonnes per year for the first ten years at full production.

Quellaveco is one of the few sizable ones in the pipeline in an industry hunting for more of the metal, used in solar panels and electric vehicles, as the world transitions to a greener economy

Asked about Russia’s invasion of Ukraine, chief financial officer Stephen Pearce said he was watching the situation closely.

Russia is a big producer of diamonds, copper, nickel and platinum, and any sanctions imposed could have a big impact on those markets.

“We don’t have a direct exposure,” he said. “It’s really around how product flows.”