Global miner Anglo American (LON:AAL) joined the ‘disappointing results club’ this morning as the London-listed mining group reported that its first-half operating profit dropped almost 40% – reportedly driven by weak commodity prices and mounting costs.
The group published an operating profit of $3.7 billion in the January-June period, while earnings reached $4.9 billion, representing a 31% drop and below the forecasted $5.2 billion.
Further disappointment came as Anglo announced another setback to its flagship iron ore project, Minas Rio, in Brazil. Licensing issues have delayed production at the mine, which is now expected to start exporting the commodity by the end of 2014, a year behind schedule.
“We are in a very challenging country and environment. There are 50 projects that have been put into the delay category, “ said Anglo American CEO Cynthia Carroll.
She added that many of the regulations in place were not there just six months ago; Carroll met Brazilian President Dilma Rousseff Thursday night to emphasize that point, hoping to find an end to the obstacles the company is facing in the South American country.
Despite the macroeconomic uncertainty and likely higher capital and operating cost within the industry, Carroll said Anglo American was committed to returning cash to shareholders – increasing its interim dividend by 14% to 32 cents per share.
Operating profits from the copper division, the second-largest business for Anglo American, fell 30% as the expansion of its Los Bronces copper mine in Chile was affected by adverse conditions including bad weather, stoppages and operational problems at Collahuasi.
Anglo shares dropped 1.65% to 1,931.50 pence on Friday in early morning trade in London.
The company also said it will deliver a cut of nearly $200 million out of the capital expenditure (capex) programme of Anglo American Platinum (Amplats) by the end of 2012.