Anglo warns on world economy

THE global economic outlook is not improving, mining giant Anglo American has warned, after revealing that weak commodity prices have left it with flat profits for the first half of the year.

The minerals house, whose wide product range makes it a barometer of world growth, also acknowledged that investor confidence had been shattered by the recently-leaked draft mining charter in South Africa, where the company still makes more than half its profits.

'The recent significant declines in equity markets have raised concerns that the wealth effect of these declines may affect consumer confidence, thereby impacting growth,' said chief executive Tony Trahar.

'On the back of these uncertainties we remain cautious about the outlook for commodity prices.' He said investor confidence in Anglo could be repaired only by the release of a final South African mining charter which enhances sentiment towards the sector.

The draft document, which suggested mining companies could be forced to hand over control of new projects to black groups, triggered a sell-off in mining shares.

'With political wisdom it is clearly possible to create a mining industry in South Africa that benefits all, proudly reflects the South African people and continues to be internationally competitive,' Trahar said.

Operating profit in the six months to 30 June was down 0.4% from the same time last year at $762 million and the dividend is held at 15 cents. Profits grew in six Anglo divisions but it was hit by sharply lower platinum prices.