Anglo American profits on demand for commodities

Friday 17th February 2012

Mining giant Anglo American has announced record operating profits for 2011, which it attributes to higher commodity prices in the first half of the year.

The company added that it expects demand for commodities to remain "robust" for the rest of the year.

The forecast accompanied Anglo's 2011 results, which showed operating profits rose 14% to hit a record $11.1billion (£7bn).

A strong performance by its iron ore business offset weaker prices and volume for its copper operation.

The increase was driven largely by rising commodity prices over the year, including a 42% rise in the price of metallurgical coal, a 39% rise in thermal coal and a 26% hike in iron ore prices.

Anglo American said in its preliminary full-year results that it anticipates a rapid "catch-up" in living standards in China and India to continue to drive high demand and keep prices high, aided by the need for infrastructure replacement in the developed world.

Profit before tax was $10.8 billion, down slightly on 2010's figure which was boosted by the sale of assets.

In November last year, Anglo agreed to take a controlling stake in the diamond producer De Beers, by buying out the Oppenheimer family.

Diamond prices jumped by more than a third last year, which helped De Beers report a 62% rise in profits last year to $698 million.

"Anglo American's full year results this morning were roughly in line with market consensus,” said Sheridan Admans, investment research manager at The Share Centre.

"Looking ahead, earnings should see some support from its iron ore, copper and nickel business. Three of the four flagship projects were completed in the last financial period, which should see a higher output.

"However, we expect the European debt situation to persist throughout 2012. A sustainable solution to resolving the problems continues to have a number of challenges as the potential risk of default has risen significantly recently.

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