Anglo American scales peak as its turnaround gains pace

ANGLO American hit a year-long share price high today after a positive production update fuelled by the drastic turnaround in fortunes for Mark Cutifani’s group.

The shares rose 4.5% to 1113p, meaning the stock is up a whopping 272% since New Year’s Day after the commodities slump which had driven Anglo and others into the ground showed signs of fading away.

Production at Anglo’s mines, which range from digging sites in South Africa to Chile, was in positive territory apart from a 9% output fall in copper and flat production in thermal coal.

Cutifani (pictured) said “operational improvements” were behind the better performance. The completion of works to rebuild two of its big furnaces in Brazil, which were shut for several months to fix design faults, drove nickel production up 66%.

Minas-Rio iron ore site in Brazil bolstered its production by 53% .

Another bright spot for Anglo was its De Beers diamonds business. Production rose 4% to 6.3 million carats in the third quarter, responding to a rebound in demand for the precious stones following a downturn last year.

Anglo was slammed by lower demand for iron ore, which is used to make steel, and more of its products following the fallback in demand from China as it tries to pivot away from heavy industry towards a service-led economy. It had borrowed heavily in the boom years to invest in mines and other sites and was left saddled with a hugely expensive debt pile.

It was forced to suspend its dividend last year and posted a $813 million half-year loss but investors have been encouraged by Cutifani’s action to shore up the ship.

He is progressing with plans to shrink the mining business to 16 divisions from 45 and is also trying to slim debt, which had fallen to $11.7 billion by June end from $13 billion at the start of the year.

He has also promised to bring back the dividend in 2017.