Anglo turnaround hit by setbacks

Anglo American said it’s on track to complete a radical restructuring by the end of next year despite major setbacks at both its coal and diamond businesses.

Anglo announced the restructuring earlier this year as part of a successful rebuttal of a $49 billion (R906 billion) approach from BHP Group, the world’s biggest miner.

That plan centred around exiting diamond mining by spinning off or selling its De Beers unit, separating platinum and selling its coal mines. It also halted the development of its Woodsmith fertilizer mine in the UK.

“We are advancing at pace,” Chief Executive Officer Duncan Wanblad said Thursday. “We are on track to be substantially done with this process by the end of 2025.”

Yet the miner is facing headwinds in that process. A fire and explosion at its flagship coal mine in Australia has complicated that sale while the diamond market continues to languish, deterring potential buyers of the unit. 

Selling the coal business was seen internally and by investors as the most easily achievable part of the restructuring, yet it was thrown into doubt by an explosion and fire at the Grosvenor mine in Australia at the end of last month.

Despite that, Anglo’s Wanblad said that it would still look to sell the entire coal business, including the impacted mine, and would like to see a deal done by the end of the year.

Anglo is also facing major challenges at its diamond unit, De Beers.

The diamond market, which came to a complete halt last year as weak global demand combined with too much supply, has seen early signs of a recovery broadsided by a slump in luxury spending in China.

Anglo cut its diamond production on Thursday for the second time this year in an attempt to deal with the oversupply.

Wanblad said the recovery in the diamond market is now expected to be delayed until next year, but that will not stop the company from planning to sell De Beers.

Anglo said Thursday that it was taking a $1.6 billion (R29.6 billion) impairment at the Woodsmith mine after moving to slow the project.

Anglo reported first-half results on Thursday, posting underlying earnings of $4.98 billion (R92.1 billion), a 3% drop from a year earlier.