JOHANNESBURG (miningweekly.com) – Continued productivity improvements in underlying operations and better-than-expected prices have contributed to global diversified miner Anglo American’s 4% year-on-year increase in earnings before interest, taxes, depreciation and amortisation (Ebitda) to $9.2-billion for 2018.

CE Mark Cutifani said during a conference call on Thursday that disciplined capital allocation has helped the company to strengthen its balance sheet by more than $10-billion over the past three years, with net debt having decreased by 37% year-on-year to $2.8-billion as at December 31, 2018.

Cutifani expected to report an additional $3-billion to $4-billion improvement in underlying Ebitda by 2022, relative to 2017.

Additionally, the diversified miner generated $3.2-billion of attributable free cash flow and delivered profit attributable to equity shareholders of $3.5-billion in 2018, which is a 12% increase compared with 2017.

Anglo proposed a final dividend of $0.51 a share and reported an operating profit of $6.1-billion, compared with $5.5-billion in 2017.  

The company in 2018 produced 10% more product on a copper-equivalent basis, from half the number of assets that it had in 2012.

As a result, Anglo’s productivity per employee has doubled, supporting a 12 percentage point increase in its mining margin to 42%.

Copper production for the year increased by 15% to 668 300 t, compared with 579 300 t in 2017, with Collahuasi, in Chile, delivering record copper in concentrate production and Los Bronces, also in Chile, increasing its production by 20%.

Metallurgical coal production increased by 11% to 21.8-million tonnes, compared with 19.7-million tonnes in 2017, which was driven by a record performance from Moranbah and production growth at Grosvenor. Both mines are in Australia.

Platinum production increased by 4% to 2.4-million ounces, compared with 2.3-million ounces in 2017, and palladium increased by 3% to 1.6-million ounces, compared with 1.5-million ounces in 2017, which reflects strong performance at Mogalakwena and ongoing operational improvements at Amandelbult.

As reported by Anglo subsidiary Kumba Iron Ore earlier this month, iron-ore production decreased by 4% to 43.1-million tonnes, compared with 45-million tonnes in 2017, owing to  rail performance constraints throughout 2018.

Kumba decided to improve product quality to maximise the value of those tonnes railed to the port, which, in turn, reduced its overall output.

Anglo’s thermal coal export production decreased by 1% to 18.4-million tonnes, compared with 18.6-million tonnes in 2017, as operations continued to transition between mining areas.

Nickel production decreased by 3% to 42 300 t, compared with 43 800 t in 2017, owing to a 40-day planned maintenance stoppage at the Barro Alto mine, in Brazil.

Manganese production increased by 3% to 3.6-million tones, compared with 3.5-million tonnes in 2017, which reflects improved concentrator availability and favourable weather conditions at Anglo’s Australian operations.

Enthusiasm for Anglo’s impressive set of financial results was offset by Cutifani having to report that Anglo had reported five fatalities in 2018, which were related to workplace safety incidents at some of its platinum group metals (PGMs), coal and diamond mines.

Therefore, the company launched an Elimination of Fatalities Taskforce to interrogate the causes of fatal incidents at a more granular, cultural level, to understand how the company can better manage fatal and catastrophic risks.

Anglo’s total recordable case frequency rate for the year showed progress in safety matters, reporting 2.66 injuries per million hours worked, which is a 16% year-on-year improvement.

On new growth for the company, Cutifani commented that Anglo will not bite off more than it can chew. One big project such as Quellaveco – a copper project which the company has in Peru – is a right fit for growth.

Anglo is also exploring the opportunity of a copper find, in Brazil. Cutifani confirmed that the company has intersected significant lengths of copper mineralisation at grades that are being mined around the world today, but the company stopped drilling after six holes and are now doing aeromagnetic surveys over the area to confirm whether the resource justifies development.

“We have a number of small, quick payback opportunities that will make up half of our projected growth that we expect to deliver by 2022/23, so we are using a balanced approach to drive the business forward.

"Anglo’s world-class portfolio benefits from considerable organic growth options, particularly in those products that will supply a cleaner, more electrified world and that satisfy the consumer-led demands of a fast growing global middle class,” Cutifani said.

The company’s focus is on unlocking the significant additional potential that it sees within the business – from further productivity improvements, volume growth from existing and new operations, and the deployment of FutureSmart Mining technologies – and to do so safely and responsibly, maintaining strict capital discipline and creating a sustainable business.