Anglo American has announced the details of wide-ranging measures that will sustainably improve cash flows and materially reduce net debt, while focusing the Group on its core portfolio of world-class diamond, platinum group metals (PGMs) and copper assets. We will continue to manage our Bulks commodities for value with a view to exit over time. The Company will focus on competitive, long life assets with considerable organic growth opportunities that mine consumer-driven materials that are expected to benefit from long term growth trends as the global economy evolves and developing economies mature. These measures continue the transformation of the Company to create the new Anglo American, positioned to deliver robust profitability and cash flows through the price cycle.
Key points on the announcement include:
Focus on De Beers, PGMs and copper
- Materially streamlined core portfolio of 16 assets
- Improved competitive profile – advantaged cost positions, world class ore bodies and balance of geographic and end markets
- Asset quality, mineral endowment options and scale to support future opportunities
- Differentiated, premium positioning for expanding consumer product-based markets
Portfolio transformation under way
- Nickel, Niobium & Phosphates and Moranbah and Grosvenor metallurgical coal disposal processes under way
- Further progress made on other previously announced disposal processes, including certain platinum and thermal and metallurgical coal operations in South Africa and Australia
Cash flow enhancements further strengthen balance sheet
- $1.9 billion of cost and productivity improvements in 2016, expected to continue into 2017 and beyond as the organisation is aligned with streamlined portfolio
- Step-change 50% ($250 million) central and global support cost reduction in medium term
- 25% year-on-year reduction in total capex expected, to $3.0 billion in 2016
- Dividend suspended and will resume with payout ratio when appropriate
- Strong liquidity maintained with c.$15 billion of cash and undrawn facilities
The full portfolio repositioning will take some time to ensure appropriate value realisation, particularly in the current environment. We are already engaged with parties interested in several of our assets, but we will only complete those transactions which deliver appropriate value for our investors.
Our core portfolio creates a highly attractive, competitive and well balanced business, with the leverage of scale, technical expertise and mineral endowment options, which offer considerable upside potential over the long term. This is a period of considerable change in Anglo American’s long history of evolution and the Company appreciates the support of all our employees and stakeholders in helping to deliver the sustainable value that we all demand and expect.
Additional information can be found in Anglo American’s press release http://www.angloamerican.com/media.