Feb 21, 2017

Anglo takes key Bowen Basin sites off the bargaining table

Anglo takes key Bowen Basin sites off the bargaining table

Anglo American has confirmed it will retain its Grosvenor and Moranbah coal assets after reporting a net income of $US1.6 billion for the year ended December 31, 2016, compared with a net loss of $US5.6 billion in 2015.

Chief executive Mark Cutifani said the wide-ranging measures the company set out in 2016 to sustainably improve cash flows and strengthen the balance sheet had enabled it to reduce net debt by 34 per cent to $US8.5 billion, significantly below its $US10 billion target.

“As we have set out, the high quality assets across our De Beers, platinum group metals and copper businesses underpin our positions in those respective markets and are the cornerstone of a more resilient and competitive Anglo American, through the economic and commodity price cycle,” he said.

“In addition, we continue to benefit from the performance of a number of other world-class assets across the bulk commodities of iron ore and coal, as well as nickel.

“While we saw strong interest in a number of the major assets for which we held sale processes during 2016 to further strengthen our financial position, we adhered to our strict value thresholds and chose not to transact.

“We will continue to upgrade our portfolio as a matter of course, although asset disposals for the purposes of deleveraging are no longer required. We therefore retain Moranbah, Grosvenor and our nickel assets, ensuring that they continue to be optimised operationally to contribute cash and returns, while being allocated capital to both protect and enhance value.”

This time last year – after reporting its $US5.5 billion loss for the previous year – the company announced the details of a strategy to lift cash flows and reduce net debt, while tightening the group’s focus on a core portfolio of diamond, platinum group metals and copper assets.

It said at the time that the group’s coal assets had been identified as non-core and would continue to be actively managed for further performance improvement, with a view to making appropriate divestment decisions over time.

Mr Cutifani said today that the priority for 2017 was to “deliver further productivity improvements while maintaining capital and cost discipline in order to be in a position to resume dividend payments for the end of 2017, and to restore an investment grade credit rating.”