Diamond’s aren’t Anglo’s best friend


Diamond’s aren’t Anglo’s best friend

Published Date: 2020-07-31 | Source: Stephen Gunnion | Author: Stephen Gunnion

Diamond’s aren’t Anglo’s best friend

The diversified resources group says first-half sales volumes at subsidiary De Beers fell close to a half.

Disruptions to mining production and supply chains, along with slumping demand for diamonds, cost Anglo American $1.1 billion in underlying EBITDA in the first six months of the year. The diversified resources group says operational disruptions across southern Africa were primarily due to national lockdowns in SA and Botswana in response to Covid-19.

Releasing interim results, Anglo said the pandemic had a major impact on the diamond market, affecting all stages of the diamond supply chain and resulting in a 45% decrease in rough diamond sales volumes at subsidiary De Beers. However, it said continued strong performances from its Minas-Rio iron ore operation in Brazil and its Collahuasi copper mine in Chile helped contain an overall decrease in group production to 11% for the six months. The lockdown affected output of platinum group metals (PMGs), iron ore, thermal coal and diamonds, with De Beers reporting a 17% decrease in rough diamond production. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) at De Beers slumped to just $2 million from $518 million last year. EBITDA, a key performance indicator, from coal was similarly hard hit, with its other operations reporting smaller declines.

Group revenue declined by 17% to $12.5 billion for the six months to end-June and EBITDA fell 39% to $3.35 billion. Net profit came in 75% lower at $471 million, with earnings per share down by 74% to 38c. Its cut its interim dividend by 55% to 28c per share.

Since the imposition of the restrictions, Anglo said its operations had built up production levels from around 60% of total capacity in April, to approximately 90% by the end of June.

Its shares fell 2.5% to R411.29 yesterday.

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