Anglo American has joined other mining companies with the aim of providing record profits and cash returns, as its CEO said he expects commodity prices to remain strong.
Shows his final set of results, Anglo’s outgoing boss Mark Kotipani Said commodity markets were more crowded than “most people appreciate,” especially for products like iron ore for steel production.
“The prices were very much due to the supply that is having a hard time keeping up with this pace. And I think it will probably be with us for another year or two,” he said.
Tight supplies of everything from aluminum to oil to grain have sent commodity prices to highs in the past year, while also pushing markets backwards – a pricing structure that signals a shortage.
Iron ore, one of Anglo’s key products, peaked at over $ 230 a tonne last year, as did copper, which touched $ 10,500 a tonne.
The price increases have helped establish the mining sector as one of the big winners from the recovery in global economic growth and have allowed miners to pay huge dividends to investors.
This week Rio Tinto announced $ 16.8 billion in dividends – the second largest in British company history – following Glencore and BHP, who also recorded strong results and handed over large sums of money to investors.
“These are without a doubt the most powerful results we have ever published,” Kotipani said.
Anglo reported basic earnings before interest, tax, depreciation and amortization – the index followed by analysts – of $ 20.6 billion a year through December, up 111% from last year, to revenue of $ 41.5 billion.
The FTSE 100 generated nearly $ 8 billion in free cash flow in 2021 and ended the year with a net debt of $ 3.8 billion, down from $ 5.5 billion. Inflationary pressures added $ 500 million to costs.
It announced a final dividend of 1.18 cents per share plus a special one-time payment of 50 cents, worth more than $ 2 billion in total.
Including dividends and repurchases announced alongside half-year results in July, Anglo will return more than $ 6 billion to investors by fiscal year 2021, a record for the 104-year-old company.
Asked about the conflict in Ukraine, Anglo’s CFO Stephen Pierce said he was following the situation closely. Russia is a major producer of diamonds, copper, nickel and platinum, and any sanctions imposed could have a major impact on those markets.
“We have no direct exposure,” he said. “It really has to do with how the product flows.”
According to JPMorgan, Anglo has the highest exposure to Russia-focused metals among the largest mines registered in London, with 70% of 2021 profits coming from palladium, rhodium, platinum, diamonds, nickel and copper.
Dominic Okine, an analyst at JPMorgan, said he did not expect to change his profit forecasts for Anglo following the results, but noted the company’s high exposure to “Russia-focused goods that have the opposite risk in the current situation”.
After nearly a decade at the top of the company, Kotipani is leaving his post later this year. His replacement is Duncan Vanblad, a South African mining engineer who has spent his entire career at the company and is currently head of the strategy division.
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