Anglo American clobbered by the rand

SOARING commodity prices helped Anglo American to post record profits last year but it was not enough to impress investors. The shares were among the FTSE 100's biggest fallers yesterday as investors focused on an ongoing squeeze between South Africa's soaraway rand and the sickly dollar.

Most of Anglo's sales are denominated in the US currency while costs are paid in rand. This makes the current exchange rate a big headache for the world's third-biggest miner.

The dollar was worth 7.55 rand on average in 2003 but it ended 2004 at just 5.65.

Anglo profits still soared 83% to $2.9bn on the back of massive rises in the price of metals, coal and other commodities. Demand from China helped the copper price to soar from an average 81 cents a pound in 2003 to 130 cents last year. The price of nickel, platinum and lead rose by similar margins.

Tony Lea, finance director, said Anglo was enjoying this buoyant phase in the cycle but warned that the current high prices could encourage rival producers to rebuild capacity too quickly. 'Much will depend on the industry maintaining discipline,' he said.

China is rapidly building industrial capacity and this year is expected to become a net exporter of steel.

Anglo, down 32p at 1305p, is more relaxed about ongoing global demand with recovery in the US and Japan likely to coincide with more growth in China. Only Europe looks like spoiling the growth party.