Anglo American cuts debt, looks to resume dividends

Global mining behemoth Anglo American announced that it has slashed its net debt by 34% during 2016, exceeding expectations amid an uptick in metals prices in an interim results presentation in London on Tuesday.

After ditching dividends in the face of falling commodity prices in 2015, Anglo American said it would resume payments by the end of 2017.

"The guidance we gave, which is, we expect, as we improve our cash flow generation and improve the balance sheet position, to be able to reinstate the dividend by the end of 2017. That will remain our position today. I think we are making good progress also to see a potential re-rating in the coming months," said Finance Director René Médori (pictured).

As the company indicated last year, Médori who has been with Anglo for more than a decade, is set to retire at the end of 2017. The Frenchman will step down as a director from the close of the Annual General Meeting on 24 April 2017, following the completion of the 2016 financial reporting process. The Stanford-educated 59-year-old has held a range of senior appointments since joining BOC in 1988.

In addition to resuming dividends, Anglo also announced that it would limit its controversial restructuring plan to offload assets and focus on its core of platinum, copper and diamonds. Instead of trimming its portfolio to 16 core assets, as it had initially planned, Anglo will no reduce its concerns from 40 to 30 assets.

CEO Mark Cutifani said: "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. If any assets go from here, it will be on the basis of cleaning up as we continue to improve the quality of the overall portfolio and ensuring we're robust."

With a difficult South African environment characterized by rising costs, political uncertainty, labour unrest and an impasse with government over black ownership, Anglo was still able to improve the performance of its assets in a country in which it generates close to half of its earnings. Cutifani reaffirmed the company's commitment to doing business in South Africa, where the company was founded in 1917 by Sir Ernest Oppenheimer.

"In South Africa, we continue to work through all the potential options for our export thermal coal and iron ore interests‚ recognising the high quality and performance of these businesses and ensuring that value is optimised for all our shareholders. The retention of these assets remains a viable position given our recent operational and other improvements and our focus on continuing improvements‚" he said.

"Clearly we would like more certainty over policy frameworks and fiscal arrangements so we can continue to invest with confidence. But for us we are committed to South Africa."