Anglo American profits drop due to soaring energy prices

Anglo American has reported a 47% slump in its 2022 profits, weighed down by surging energy costs and the impact of adverse weather on production volume.

The miner’s profit attributable to equity shareholders was $4.5bn in the 12 months to 31 December 2022, versus $8.56bn a year ago.

Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) dropped by 30% to $14.5bn from $20.63bn while revenues decreased by 15% to $35.12bn from $41.55bn.

The board announced a final dividend of $0.74 per share last year, which aligns with the firm’s 40% payout strategy, compared with $1.18 a share in 2021.

Production of iron ore at Minas-Rio and Kumba, nickel at Barro Alto, and steelmaking coal at Capcoal and Dawson was hit by extreme rain in Brazil, South Africa, and Australia.

Nickel production dipped 5% to 39,800t last year from 41,700t in 2021, while total copper production rose by 3% to 664,500t from 647,200t.

Iron ore production fell 7% from 59.3 metric tonnes (mt) to 63.8mt.

Offsetting this was De Beers’ rough diamond production, which grew 7% from 32.3 million carats to 34.6 million carats.

Anglo American also booked a $1.7bn charge amid higher costs linked to its Woodsmith fertiliser project, which is said to have the world’s largest known polyhalite deposit.

The miner now looks to invest nearly $1bn a year to bring the UK project to production by 2027, compared with the 2024 target by its previous owner.

Anglo American CEO Duncan Wanblad said: “Underlying EBITDA of $14.5bn, a 30% decrease compared with the record achieved in 2021, reflects inflationary headwinds and higher energy prices combined with lower production volumes, which, together, lifted our production costs amid dampened prices for many of our products. We delivered a return on capital employed of 30% – above our targeted 15% through-the-cycle return – and a mining EBITDA margin of 47%.

“Our commitment to capital discipline and to a strong and flexible balance sheet is paramount to remain resilient to the external environment and retain optionality for value-adding growth. Net debt increasing to $6.9bn, or less than 0.5 x underlying EBITDA, reflects the growth investments we are making in line with our belief in the strong long-term fundamentals.” 

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