Miner feels impact of falling prices

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Anglo American has warned it will likely take a charge on last year’s results, becoming the first major mining group to explicitly acknowledge the impact of recent falls in prices of iron ore, coal and other commodities.

The company, which also posted annual production slightly ahead of guidance for key commodities, said it expected to take certain one-off non-cash impairments but gave no figures for the likely hit.

Anglo, whose shares have lagged rivals for much of the past decade, is undergoing a restructuring focused on improving mining operations and selling less profitable assets. But its turnaround efforts are clashing with a rout in prices of copper, coal and iron ore, which make up much of its earnings.

A flood of new iron ore supply from major miners BHP Billiton and Rio Tinto has smothered demand growth and hammered prices in the last year, hitting their smaller and higher-cost rivals.

Analysts expect Anglo to take charges of between $1bn (£658m) and $5bn relating specifically to its costly Brazilian iron ore project Minas Rio and its Australian coal operations.

Other large miners such as Glencore and BHP Billiton are also expected to announce impairments but to a smaller degree.

Minas Rio, the biggest-ever foreign investment in Brazil, had been plagued by delays and cost overruns since Anglo bought it in 2007-2008 for about $5.5bn.