Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Anglo American PLC (JSE:AGL, Financial) delivered strong results despite a 10% fall in commodity prices, achieving an EBITDA of $5 billion, down just 3% from the previous year.
- The company made significant progress in cost control, achieving a 4% reduction in total unit costs compared to last year.
- Operational excellence initiatives led to a 23% improvement in injury rate performance since 2022, marking the lowest ever first-half performance for the group.
- Copper and iron ore businesses performed particularly well, with copper production costs down 15% and iron ore maintaining strong operational performance.
- The company is on track to deliver $1 billion in cost savings by the end of the year, with $0.5 billion already achieved from corporate streamlining and $0.2 billion from operational savings.
Negative Points
- Revenues were down 8% or $1.4 billion, largely due to a 10% reduction in the group's basket price, driven by iron ore and PGMs.
- De Beers' revenue fell by 21% due to lower diamond volumes and deteriorating trading conditions, particularly in the Chinese market.
- The fire at the Grosvenor mine in late June disrupted operations, and the full extent of the damage is still being assessed.
- The company faces challenges in the steelmaking coal segment, with higher production costs expected in the second half due to fixed costs at Grosvenor.
- The Woodsmith project experienced a $1.6 billion impairment due to a three-year delay in first production, now expected in 2030.
Q & A Highlights
Q: Could you give us an idea of the cost implications of the service plan and transactions to reshape the business, including tax implications?
A: John Heasley, Finance Director, Executive Director: There will be tax implications, but it's too early to provide specifics. The tax basis of the assets is not public, and revealing details could be prejudicial. However, we've considered likely tax consequences in our financial planning.
Q: Can you provide an update on the capital cost assumptions for Woodsmith and how they change with the project's slowdown?
A: John Heasley, Finance Director, Executive Director: The commercial assumptions remain unchanged, with minor adjustments for demobilization and remobilization. The impairment reflects the time value impact of a three-year delay, not a significant change in capital costs.
Q: Is it possible to sell Moranbah separately from Grosvenor, or is the integration too high?
A: Duncan Wanblad, Chief Executive Officer, Executive Director: Technically, it is possible to separate Moranbah and Grosvenor, as Moranbah was the original site with integrated infrastructure.
Q: Can you provide more details on the remaining $800 million cost savings for next year?
A: John Heasley, Finance Director, Executive Director: The $800 million savings include $600 million from overhead reductions due to business simplification and $200 million from operational efficiencies. This has been independently reviewed and verified.
Q: Are there more opportunities to find additional savings or release value from streaming agreements?
A: Duncan Wanblad, Chief Executive Officer, Executive Director: We are continuously looking for opportunities to optimize costs and release value. The $800 million savings target is significant, and we are confident in achieving it through ongoing operational excellence and cultural changes.
Q: Can you provide a better sense of the timing for the Amplats spin-out within 2025?
A: Duncan Wanblad, Chief Executive Officer, Executive Director: We aim to complete the spin-out by the end of 2025. The process involves regulatory approvals and complex separation work, but we are committed to moving as quickly as possible.
Q: What are the next milestones for the Amplats spin-out process?
A: Duncan Wanblad, Chief Executive Officer, Executive Director: Key milestones include regulatory approvals and the preparation of necessary documents. We expect to provide more updates by February next year.
Q: Is the government of Botswana fully on board with your plans for De Beers?
A: Duncan Wanblad, Chief Executive Officer, Executive Director: We have a strong relationship with the government of Botswana, and they are committed to achieving a mutually beneficial outcome. We are considering both IPO and sale options for De Beers.
Q: Can you provide more details on the Collahuasi expansion timeline and the key sticking points?
A: Duncan Wanblad, Chief Executive Officer, Executive Director: The timeline includes administrative processes, data collection, and community consultations. These steps are necessary to ensure high-quality engagement and compliance with regulatory requirements.
Q: What is preventing Quellaveco from maintaining higher throughput rates in the near term?
A: Duncan Wanblad, Chief Executive Officer, Executive Director: The current constraint is the mine plan, which needs to be optimized to match the plant's increased capacity. We are working on redesigning the mine plan to ensure sustainable operations without high-grading.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
